Congress wanted to create a large category of high-quality residential mortgages that would be exempt from risk retention and easily securitized – but banking regulators have taken the opposite approach, according to Sen. Johnny Isakson, R-Ga.

In a proposed rule issued in May, federal regulators floated the idea of a narrow 'qualified residential mortgage' exemption with a 20% downpayment requirement. Isakson believes the downpayment requirement should be 5%.

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