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December 4, 2008 4:23:15 PM CST

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Feds Outline New, Tougher Credit Rules

Posted Mar 13, 08 6:51 AM CDT in Business 

(Newser) – A panel led by Treasury Secretary Henry Paulson is seeking a major overhaul of rules affecting mortgage lenders and a credit market decimated by risky subprime loans and loose oversight, the Wall Street Journal reports. Among panel recommendations to be released today:

  • Strengthen mortgage lender and broker oversight
  • Establish licensing standards for mortgage brokers

  • Require credit-rating firms to differentiate between complex-structured products and conventional bonds
  • Require issuers of mortgage-backed securities to reveal "the level and scope of due diligence" and the underlying assets of the securities
  • Require disclosure of whether "issuers have shopped for ratings"
  • Urge global bank regulators to require banks hold sufficient capital to cover risky investments
  • Update standards for how banks manage liquidity

Sources Wall Street Journal, Bloomberg

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Dow Jones • Federal Reserve • subprime crisis • subprime mortgages • Henry Paulson • Fannie Mae • mortgage backed securities • NYMEX


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