The regulatory reform bill that cleared the Senate is supposed to impose risk retention requirements on MBS issued by Fannie Mae and Freddie Mac, but some legislative experts say the language adopted may have missed the mark.

S. 3127 passed by the Senate imposes a 5% risk retention requirement on issuers of MBS through a change in the securities laws, according to an analysis prepared by Anne Canfield & Associates. The Washington consulting firm points out that under current securities law the GSEs are exempt from registering their MBS with the Securities and Exchange Commission.

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