I see that John Redwood, an arch-Thatcherite from the right of the Tory party, is proposing that the party adopts a programme of business deregulation as part of its platform for the next election. One of his proposals is to abolish most regulation of the mortgage market, on the grounds that it's the lender who is bearing the risk.
I suppose it's too much to expect a Tory dinosaur to be up to speed on the derivatives market, but perhaps someone should take the time to explain the current crisis in the US sub-prime mortgage market to Mr Redwood. The problems there have been caused not just by irresponsible (and unregulated) lending, but also by the practice of packaging the mortgages up into CLOs and selling them on to all manner of end investors. As a result, nobody can really be sure who is bearing the risk -- not even John Redwood.
No comments:
Post a Comment