The financial crisis has exposed the "weaknesses" in the securitization market, Federal Deposit Insurance Corp. Chair Sheila Bair said, and it needs to be reformed through a re-alignment of interests to improve the long-term performance of mortgage-backed securities.

"The regulatory system needs to make certain that the right people have skin in the game and get paid not for short-term gains, but for taking the long view," Bair said at an event sponsored by ASR sister publication American Banker. "Investors have lost faith" in the private-label MBS market, she said.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.