On Fri, 24 Apr 2009, Doug Henwood wrote:
> Decreases incentive to scrutinize creditworthiness, increases systemic
> risk.
Questions:
1) Are you okay with agency securitization (Fannie Mae, Sallie Mae), or do want to shut them down too?
2) Is there any evidence that we've had this problem with credit card and car loan securization? Credit card companies can be justly accused of lots of crimes, but I thought their aggregate models of how likely people are to pay have held up. Similarly with auto loans, although auto companies have tons of other problems.
My impression is that we only had this specific problem with mortgage securitization. And for that it seems a perfectly good solution would be to utterly nationalize the market -- let Fannie Mae be the only originator.
What am I missing?
Michael