Will Wall St. walk away from MBS?

For the longest time, Wall St. was envious of Freddie Mac and Fannie Mae and wanted in on the action of the secondary mortgage market. Finally, they found a way around the GSEs -- subprime being a big part of their action. Then Wall Street over did it. My guess is WS firms will run from MBS like venture capitalists abandoned consumer Internet plays in 2001 after the dotcom crash. [Of course, they came back a few years later and are now making the same mistakes all over again as they fawn over social media].

The secondary mortgage market will be returned to the GSEs and we will see a re-emergence of old fashioned home loan tools like mortgage insurance.
Wall Street placed a bet on risky mortgages and made the wrong bet. After playing a blame game, they will quietly get out of the business. Wall Street and Home Street never mix too well.
Take an average banker and put him at dinner with an average Realtor and quite frankly they have very little to talk about. Though, every twenty years or so, they throw a big lavish party together, cause some trouble and sneak out the back door.

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