In my continuing series on ideas to help resolve the crisis, here is an easy one: let Congress require that the servicer of every securitization disclose all of the parties that have an economic interest in the securitization trust.
Why would this be valuable? Suppose some investor or government agency felt that the underlyng loans were worth more than what the certificates were valued at in the secondary markets. The investor could then contact and bid for the certificates in an effort to gain the economic value of the assets in the trust cheaply.
This action would provide transparency in the markets, and would enable price discovery to take place. What could be simpler?
What’s that, you say? Many owners don’t want to be marked to market? Shame on them. Be big boys, and eat your spinach; after all, you want to survive this crisis, don’t you, that is, assuming that on a fair market basis, you are truly alive?