It didn't take long. We now know by an interview with Maria Bartiromo today that these Wall Street innovators want to package up rental income and sell it as securities to unsuspecting investors. I didn't have a clear view regarding the purpose of the 1 percent buying real estate to rent when I wrote that the 1 percent were buying up all the low end real estate.
But leave it to the 1 percent to figure out a way to pawn off risk to everyone else so that they can try to manufacture a housing bubble on the backs of renters! The same risks that occurred when we had securitization of mortgage backed securities will likely accompany these securities, including lack of transparency, ratings companies rating these securities, and the SEC and more inept government agencies policing these securities.
But the danger goes beyond the actual risk of the securities themselves. That was not covered by the best looking CNBC shill for the banks, Mrs Bartiromo. The danger is that the money generated by these securities will be plugged into even more purchasing of homes. And the fervent heat by which these buyers in the 1 percent will buy could cause another housing bubble if the scale is big enough. (more)