Loan Securitization to Last, But Experts Say Reforms Loom

Investor's Business Daily (04/10/08) P. A1; Krause, Reinhardt
Financial experts expect mortgage-backed securities to rebound, but only if much-needed reforms are implemented. Wall Street banks that purchased mortgages from issuers and then pooled them to spread the risks likely will face the toughest reforms. Robert van Order, professor of finance at the University of Michigan and a former chief economist at Freddie Mac, states, "The key going forward is that loan originators take bigger equity positions in securities, that they keep more skin in the game. And investors will look for more transparency and information in deals." In the meantime, such financial companies as Goldman Sachs and Morgan Stanley continue to struggle in their efforts to find buyers for mortgage debt.