The Treasury will release a blueprint for regulatory modernization in the coming weeks, Treasury Assistant Secretary Swagel announced. The scope of this review includes the spectrum of market participants, including brokers, originators, issuers and underwriters, credit rating agencies, and investors, he explained.
The reform process will look inward to consider policies that contributed to, or failed to mitigate, the underlying problems, he said. The list here includes policies regarding regulatory capital, disclosure, accounting, and valuation.
“One final lesson of recent events in the United States is in regard to the availability and use of information”, Swagel said. “The lack of information about the quality of the mortgages underlying MBS, CDOs and the gamut of related instruments has made pricing difficult, and this in turn has contributed to a flight to quality.”
“We are encouraged now that efforts are being made by private-sector participants to develop a standard framework for the collection and disclosure of mortgage-level information.”
Full speech
© Graham Bishop
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