Banks To Keep A Slice Of Debt

Below is a great article from The Wall Street Journal.  The proposal, which is only under consideration and still in the early stages, would call for issuers of pools of mortgage loans to retain a slice of the debt, which is created through a process called securitization. In simple terms, banks would be required to keep some “skin in the game.”

This is a good thing and could have probably prevented part of this mess.  Banks and Wall Street didn’t do their due diligence.  They were trying to underwrite as many loans as they could and get them out the door.  There is a great book call “Chain of Blame: How Wall Street Created The Credit Crisis” and it goes into great detail about what went on.  It would make you sick to your stomach if you read it.