RMBS

Greek bailout talks intensified once again this July, a repeat in many ways of last summer's discussions. But structured finance issuance is taking it much harder this year, as Nora Colomer examines in the cover story. In July two actively marketed European securitizations were abruptly pulled when the market got too volatile. Other issuers went the retained route rather than face the risks associated with bringing new-issue deals to market.

I recently completed the book Reckless Endangerment, a widely discussed and heavily promoted perspective on the mortgage and financial crisis. While the book is quite interesting and illuminating at times, it is a poorly written, incomplete and flawed analysis of recent events.

Most market participants believed that Congress was going to raise the debt ceiling before the Aug. 2 deadline. However, it was largely expected that the U.S. long-term debt rating was going to be downgraded from its 'AAA' status by at least one of the two big rating agencies.

Bank regulators expressed frustration July 27 over a little-noticed and initially uncontroversial provision of Dodd-Frank that forces them to eliminate references to credit ratings in most bank regulations.

The bust of Spain's construction boom has left some deep scars on the country's economy. To be sure, the crash has been a prime ingredient of the stubbornly high unemployment rate - currently at 21% - as well as of the mountain of troubled assets held by the country's savings banks, known as cajas.

Last month, Turkey's Sekerbank debuted the country's first covered bond, backed by SME loans as collateral. The TL230 million ($135 million), 8-year final deal was purchased by Dutch Development Bank the FMO, which took a €25-million equivalent tranche; the International Finance Corp. ($25 million) and sole arranger Unicredit (€50 million).

Some investors are wary about the $8.5 billion Bank of America agreed to pay in the MBS-related settlement it worked out with 22 large money managers, but if approved the bank will be giving up more than a one-time cash payout. The settlement imposes requirements on the servicer that appear likely to portend long-term and much broader benefits for investors.

The markets continued to grapple with the impasse in Washington regarding raising the debt ceiling as the clock steadily ticks down to the Aug. 2 deadline, and the prospects of a ratings downgrade increase.

The recent uproar over regulators' "qualified residential mortgage" (QRM) proposal has obscured the importance of another underwriting standard in the Dodd-Frank Act, the similarly titled "qualified mortgage" (QM).

Chief executives from the country's largest banks sent a letter to the White House and Congress Thursday urging them to reach an agreement the week of July 25 to raise the debt ceiling.