Given the importance of Fed thinking to Treasury GSE-reform recommendations, we continue to track this closely. In this report, we assess the new, revised version of the Hancock-Passmore concept: a USG catastrophic-risk guarantee which is now expanded from MBS to all ABS. Reflecting the traction beneath this idea, Treasury’s Barr and FHFA’s DeMarco spoke against a federal ABS guarantee at the September 15 FinServ hearing. However, their concerns may be overwhelmed by all the policy initiatives staring securitization in the face, forcing reliance on some form of USG backstop if mortgage and other secondary markets are to revive.
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