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Retention Rules Provision Could Kills MBS, Warn Analysts

A provision in the risk-retention rules proposed by the Federal Deposit Insurance Corp. and the Federal Reserve could deal a serious blow to the reviving mortgage-backed securities market, Bloomberg.

A provision in the risk-retention rules proposed by the Federal Deposit Insurance Corp. and the Federal Reserve could deal a serious blow to the reviving mortgage-backed securities market, warn JPMorgan Chase analysts. Under the provision, in addition to the 5% to cover the risk issuers of the securities would have to set up so-called “premium capture cash reserve accounts,” which relates to bonds linked to interest payments on securitized assets above the amount needed to pay other debt sold in the deals.

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