Banks Want U.S. to Back Mortgages
WASHINGTON ( TheStreet) -- The financial industry doesn't want the government to exit the mortgage market, and with good reason: The government provides the liquidity, cost-efficiency and safety that the private market simply can't.
"The balance sheets of commercial banks cannot accommodate the amount of capital that is needed to maintain the mortgage finance system," Greg Baer, one of Bank of America's (BAC) top lawyers told the Treasury Department in an official comment letter regarding housing-finance reform.
At a Treasury event on
All along the mortgage pipeline -- from bankers to securitization experts to buyers of mortgage-backed securities to Lewis Ranieri, the so-called "father" of those MBS -- all agreed that the government must stand behind the country's mortgage industry, if there is to be an industry at all in the near-term."An explicit guarantee will be required to ensure a reliable flow of mortgage credit," said Mike Heid, co-president of Wells Fargo Home Mortgage. Barbara Desoer, who holds a similar position at Bank of America said that while she doesn't foresee a need for GSEs to hold mortgage-backed securities in the long-term, guarantees will be a necessity. Free-market conservatives have advocated an
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