US lenders may be forced to hold stakes in securitisations
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US mortgage lenders could be forced to retain a stake in any pools of loans they repackage and sell off under new reforms proposed by the Securities and Exchange Commission yesterday.
According to the Financial Times, the move is aimed at remedying some of the practices that led to the credit crisis and rehabilitate a major cog in the financial system.
Under the proposals, issuers will be required to retain at least 5 per cent of each class of securities they issue, which they will not be able to hedge against.
The industry’s “originate to distribute” model where lenders were able to pass on the risks of their lending without any incentive to check the quality of the loans was slammed as one of the biggest contributers to the crisis.
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