Most people would agree that securitization offers tremendous economic benefits, even though there have been some recent abuses. The concept is sound; it's the specific products that have been controversial.

The FDIC has set some new standard and would like to require more loan-level disclosure, allowing investors to make better decisions apart from credit ratings. The FDIC also adopted a new rule on securitizations that offers safe-harbor status in return for tweaking incentives. Servicing agreements must give the servicers the authority to mitigate losses and modify loans to address expected defaults.

And then there's the new risk-retention rule under Dodd-Frank. The law requires issuers of securitized bonds to retain 5 percent of the ownership, thus sharing in any losses. BlackRock may have found a way around this. It's will soon buy up mortgage loans--not packaged MBS--and bundle them itself.

The risk retention 5 percent rule apparently does not apply to buyers of loans, only buyers of bonds. But will it retain some of the risk anyway? It might a be a good move when it comes to marketing the bonds to investors. All in all, we're seeing some positive trends.

For more:
- here's a look at BlackRock's new effort

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