Thursday, February 7, 2008

FINRA Conducts CMO Sweeps

What might be another case of too little, too late, FINRA has finally gotten around to conducting examinations in the mortgage backed securities area.

While these products have been around for years, and have always been confusing and almost mystical to the average investor, some firms have been using them for years without incident. Of course, in our current situation, these investments are now a problem, and FINRA is conducting sweeps.

According to press reports, FINRA is focusing on three particular types of CMOs: principal-only, interest-only and inverse floaters.

It remains to be seen whether this is a reaction to the subprime mess, or part of FINRA's senior citizen initiative. Either way, the focus comes after the start of the subprime collapse, not before.

But FINRA isn't the only one who is late to the game. In its tradition of closing the barn doors after the horses have escaped, the SEC announced 12 separate investigations after the subprime mess hit the press last summer.
Post a Comment