US Treasury secretary outlines recommendations on mortgage supervision
WASHINGTON, DC – US regulators have announced a toughening up of rules for mortgage brokers, lenders and credit agencies, to restore market confidence and eradicate the unscrupulous lending practices that triggered the subprime and credit crises – now threatening to drag the US into recession.
Secretary of the Treasury Henry Paulson used his speech at Washington’s National Press Club to outline the 20 pages of recommendations outlined by the President’s working group for financial markets, which blames the global credit turmoil on a “dramatic weakening” of underwriting standards.
Paulson recommended stronger licensing standards for mortgage brokers, stringent federal and state-level supervision over all mortgage providers and more transparency of loan terms to the borrower.
He also criticised the financial innovation behind complex structured products such as structured investment vehicles (SIVs) that sliced up subprime debt and rebundled it into complex packages subsequently sold across the globe.
The Treasury secretary urged banks to keep lending, lest the economy slip into recession if lending dried up amid the already strained environment.
Paulson said: “We are encouraging financial institutions to continue to strengthen balance sheets by raising capital and revisiting dividend policies; we need those institutions to continue to lend and facilitate economic growth.”
More on Structured Products
UBS bolsters New York equities desk, among other moves in June
Product will pay 5.95% annually if FTSE 100 or Euro Stoxx 50 are above 65% barrier on coupon date
Lack of liquid options on European mid-cap benchmarks leaves investors stuck with the blue chips
New product issuance in Europe could dry up as result of overbearing new rules, says Graf
Sign up for Risk.net email alerts
Sponsored video: Elseware
Oxford professor David Vines argues that the carrot is as important as the stick
Sponsored webinar: IBM
Watch highlights of this year's London conference
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.