He notes that the new risk-retention rules in mortgage securities mandate a lower rate of losses than the securitizers actually took in the subprime crisis. In other words, Congress claims to have improved the safety of securitization by mandating “skin in the game” that amounts to less than what the securitizers actually had.
Bloomberg reports BlackRock’s Fink Says Housing Structure More Unsound Now. BlackRock Inc, BLK, Chief Executive Officer Laurence D. Fink said the U.S. housing market is “structurally more unsound” today than before the financial crisis because it depends more on government-backed mortgage companies such as Fannie Mae and Freddie Mac. “We’re more dependent on Fannie and Freddie than we were before the crisis,” Fink said today at a conference held by the Investment Company Institute in Washington, noting that he was one of the first Freddie Mac bond traders on Wall Street