Government and private-sector housing-finance experts asked Congress to make permanent increased loan limits for government-supported mortgages. The lift would help homeowners in high-cost states such as California and Florida. Thomas Hamilton, vice chairman of SIFMA's MBS and Securitized Products Division Executive Committee, said that without the lift, lenders were reluctant to make major changes in their business practices "for a program that has an uncertain future."
Global CDO issuance fell 94% in the first quarter, according to SIFMA data. Issuance in currencies other than the dollar and the euro was virtually nonexistent. The latest issue of SIFMA's Research Quarterly also showed a 39.8% decline in ABS issuance.
Regulators around the world can see several gaps after reviewing the subprime-mortgage bust, Securities and Exchange Commission Chairman Christopher Cox said. The problem spread into securities markets only after becoming a horrible problem for banks, Cox added. The SEC has been probing whether credit-ratings agencies veered away from previous standards to publish higher ratings for mortgage-backed securities when the sector boomed.
Moody's Investors Service cut its rating of some American International Group bonds one notch to "Aa3," the fourth-highest investment grade. The lower rating of AIG's senior unsecured debt came as Moody's said the world's biggest insurer might face more losses from the U.S. subprime-mortgage fallout. Standard & Poor's and Fitch Ratings reduced their ratings on AIG earlier this month.
The global marketplace has advanced dramatically in the past 25 years, writes Peter Weinberg, founding partner of Perella Weinberg Partners and former chief executive officer of Goldman Sachs International, but an aversion to sovereign-wealth funds by U.S. and European governments, companies and consumers threatens to set back globalization. Instead, Western companies, and by extension their governments and citizens, should embrace and reward the interest of these funds.