Miscellaneous: Let the race to the bottom begin – and may the odds be ever in your favour

Today, the Financial Times reported that international investors were increasingly worried about the differences in treatment of securitized mortgages in the European Union and the United States [here]. While in the US capital requirements for securitizations follow the prescriptions of the Basel Committee of Banking Supervision (BCBS), the European Commission is considering legislation under its new Capital Markets Union (CMU) agenda to set up a separate market niche for so-called Simple, Transparent and Standardized (STS) securitizations [see here and here for descriptions and criticisms]. Part of the attractiveness is that they would come with lower capital requirements. US banks now fear that US securitizations will be priced out of the market, while European banks worry that they won’t be able to sell STS securitizations to the American market.

Read on: Miscellaneous: Let the race to the bottom begin – and may the odds be ever in your favour

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