Cuddling Up to CRT
On Wednesday, we assessed a Brookings paper making CRT recommendations we thought illadvised.
Today, we turn to a thorough assessment of substantive options from the Urban Institute.
Looking ahead to Treasury/FHFA administrative reorganization of the GSEs, the Urban Institute
paper posits new private-sector CRTs, products critical to any successful privatization of key housingfinance
functions. However, there are significant technical obstacles to the products proposed in this
paper. We continue to think a simpler model relying on new-age covered bonds will work better than
re-engineering complex CRTs for which global demand will always be limited.