Dugan: Risk-Retention Moves May Backfire

By Sloan, Steven | American Banker, February 3, 2010 | Go to article overview

Dugan: Risk-Retention Moves May Backfire


Sloan, Steven, American Banker


Byline: Steven Sloan

WASHINGTON - Calling proposals that would require lenders to retain a portion of the loans they securitize "imprecise" and "indirect," Comptroller of the Currency John Dugan said Tuesday that policymakers should focus on tougher underwriting standards.

"Instead of going at the underwriting problem indirectly through 'skin in the game' requirements, why not attack it directly?" he asked during a speech to the American Securitization Forum. "If quality underwriting is the goal, then why not ... establish minimum underwriting standards directly by regulation, at least for residential mortgages? Why not apply these standards to all mortgages, whether retained or securitized, so that there is an entirely level playing field?"

Dugan's argument stood in contrast to provisions of a bill passed by the House in December that would require banks to retain 5% of the loans they securitize.

The idea, which is mirrored in proposed Senate legislation, is aimed at preventing banks from making bad loans and then avoiding any risk by selling them to investors.

In an interview after the speech, Dugan said he has been "surprised all along why this part of the problem hasn't attracted more attention."

He does not oppose the idea of requiring banks to retain some of the risk associated with their loans, but in light of recent accounting changes adopted by the Financial Accounting Standards Board, Dugan said, he worries that the proposal could shut down the securitization market, which is vital to financial markets. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Dugan: Risk-Retention Moves May Backfire
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.