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Feds Outline New, Tougher Credit Rules

Paulson pushes stricter standards for mortgage lenders

By Jim O'Neill,  Newser User

Posted Mar 13, 2008 6:51 AM CDT
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(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

Treasury Secretary Henry Paulson listens to opening remarks from members of Congress on Capitol Hill in Washington, Wednesday, March 5, 2008, prior to giving his assessment of efforts to heal the American economy while testifying before the House Appropriations subcommittee on Financial Services and General Government, Wednesday, March 5, 2008,...
Treasury Secretary Henry Paulson listens to opening remarks from members of Congress on Capitol Hill in Washington, Wednesday, March 5, 2008, prior to giving his assessment of efforts to heal the American...   (AP Photo/J. Scott Applewhite)
Treasury Secretary Henry Paulson addresses the 2008 Government Relations Summit and Mutual Community Bank Conference at the Mandarin Oriental Hotel, March 11, 2008 in Washington DC.
Treasury Secretary Henry Paulson addresses the 2008 Government Relations Summit and Mutual Community Bank Conference at the Mandarin Oriental Hotel, March 11, 2008 in Washington DC.   (Getty Images)
Federal Reserve Chairman Ben Bernanke (R) listens to Treasury Secretary Henry Paulson (L) testify during a Senate Banking, Housing and Urban Affairs Committee hearing.
Federal Reserve Chairman Ben Bernanke (R) listens to Treasury Secretary Henry Paulson (L) testify during a Senate Banking, Housing and Urban Affairs Committee hearing.   (Getty Images)
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