No one can argue that the general public lost a great deal of trust in banks after the financial crisis. From predatory lending, to toxic mortgages to all things subprime, lenders gave people plenty of reasons not to trust them anymore.
But it turns out that everyday people weren’t the only ones whose trust was broken by the crisis. According to a new report from Bloomberg, mortgage bond investors aren’t buying right now because they’re scared, too.
From the Bloomberg report:
Alessandro Pagani, a money manager at Loomis Sayles & Co., says he knows why investors still aren’t ready to buy new mortgage securities without government backing.
"We need to address a fundamental loss of trust,” Pagani, whose firm manages $230 billion, said at a conference in Las Vegas this week. Investors must have confidence that their money won’t be treated as a “pot of gold” to be looted by banks, the government, loan servicers and even consumers, he said.
Pagani made the comments at ABS Vegas 2015, the Structured Finance Industry Group/IMN capital markets conference at the Aria Resort & Casino in Las Vegas.
Among the complaints of the other investors who joined Pagani on a panel at ABS Vegas is the lack of laws protecting bond investors from borrowers who take out home equity loans to later reduce their ownership stakes in properties, increasing default risks.