Counsel and industry are pushing to boost private label
securities (PLS) as the reform of government sponsored
enterprises (GSEs) rises up the regulatory agenda. But
uncertainty surrounds the best manner in which to do
Freddie Mac and Fannie
Mae play critical roles in the US market for residential
mortgage backed securities (RMBS). But their presence in the
RMBS market suppresses the private mortgage market.
"Right now, PLS can’t compete with Federal
Housing Administration (FHA) loans or the GSEs," said
Christopher Killian, managing director at Securities Industry and Financial
Markets Association (Sifma).
For Killian, however, GSE reform is not something to be
rushed."What do you do to get private
label securities going, when that side of the market is smaller
than it should be?," he said.
Lewis Cohen, Hogan Lovells "Do you pull
back on government involvement in order to stimulate the
private label side, or...