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US to overhaul securitisation markets
FT Alphaville — The US Treasury is planning to overhaul securitisation markets with tough new rules designed to reduce the incentive for lenders to originate bad loans and flip them on to investors. The rules will force lenders to retain part of the credit risk of the loans that are bundled into securities, and to end the gain-on-sale accounting rules that helped spur the heart of the financial crisis. The plan is part of a wider regulatory overhaul to be unveiled on Wednesday.

Do the Treasury Proposals on Securitization Reform Go Far Enough?
naked capitalism — ... case you missed it, securitization has slowed down to a trickle. In the US, non-agency securitization was $900 billion in 2007, $150 billion in 2007, and a mere $16 billion through April. Now some of that was dodgy CDOs and other subprime spawn that is better off not coming back. However, if the securitization machine remains impaired, the alternative is on-balance sheet bank lending, and the authorities do not appear interested to going back to banking circa 1980. As the Financial Times notes today: ...

FT.Com: The 5% Rule in Securitization
Fund My Mutual Fund — We're harsh critics of so many of the now government institutionalized bad practices in these virtual pages, so let me be the first to say if the following does come true - as reported by FT.com, I'll be the first to applaud. ...

Securitisation
Across the Curve — ... The FT published a story this morning regarding an Obama Administration plan to overhaul the financial system which would force lenders to keep 5 percent of the credit risk of bundled  securities. In this way securities firms would have “skin in the game” and would have less incentive to construct a pile of junk. ...

Treasury to impose the 5% rule on securitized securities
BloggingStocks — ... Now U.S. Treasury Geithner wants to change the rules and force lenders to retain at least 5% of the loans they generate. In a way, this is akin to a margin requirement for these securities. Obviously the banks oppose such a measure because it would tie up a portion of their capital. ...

Words from the (investment) Wise June 21, 2009
The Big Picture — ... serious market failure that fed the housing boom and deepened the housing bust’. “Securitised markets - which financed more than half of all credit in the US in the years immediately preceeding the crisis - are essential for the US economy. Without a recovery in these markets, the flow of credit will not return to more normal levels, even if US banks overcome their problems.” Source: Krishna Guha, Tom Braithwaite, Francesco Guerrera and Aline van Duyn, Financial Times, June 15, 2009. Bloomberg: Congress backs war-funding bill, ...