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: Mortgage Lender Implode-o-Meter

Bank Regulations Miss the Point

By Implode-Explode Heavy Industries

"An often overlooked concept found in both House and Senate reform bills seeks to ensure that loan originators have an additional financial interest in the long-term success of the loan by requiring lenders to retain a portion of a loan's risk on their books if they sell the loan to the secondary market. Though well-intentioned, this approach to risk retention has the potential to have unintended consequences stifling the recovery of both the residential and commercial real estate markets. More important, it would be duplicative of the current risk-retention requirements and require lenders to put aside large amounts of capital, limiting the credit available to consumers."

Full post as published by Mortgage Lender Implode-o-Meter on May 11, 2010 (boomark / email).