All Set for Securitization
As with Treasury’s earlier recommendations specific to the agency-RMBS market, the Friday capital-markets report emphasizes the importance of changing the capital rules to enhance asset securitization. Indeed, the capital questions are still more critical in this arena because other asset classes of course generally do not have agency guarantors and thus favorable capital, liquidity and risk-retention treatment. Treasury now is also gunning for the liquidity and risk-retention rules along with SEC disclosures to press a far-reaching agenda unlikely to advance in the near future due to Obama Administration hold-overs and the slow slog required for any inter-agency action. That said, even a bit of change along Treasury’s lines would make PLS a lot more probable.