The SCCL Skinny
The final version of FRB single-counterparty credit limits (SCCLs) show again how radically U.S. mortgage finance will change with any end to a conservatorship that does not take bank-regulatory policy into careful consideration. Once out of conservatorship, GSE successors will come under strict SCCLs that prevent any of them from playing anything like the GSEs’ current role in U.S. housing finance. If transition isn’t carefully handled, a GSE receivership could lead to considerable financial-market disruption above and beyond housing finance.