Securitization

Lawmakers Hear Warning on Credit Loss Risk 

The Federal Reserve and Treasury Department’s responses to the liquidity crisis in the asset-backed security market and the lending system in general largely avoided a systemic catastrophe, but came with their own consequences. They also failed to address the real risk posed by US credit market instruments, according to Mark Zandi, chief economist at Moody’s Economy.com. The worst may be yet to come with total losses on housing bubble-related lending estimated at $2.6trn, despite the Fed’s and Treasury’s efforts to calm financial markets.