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Wednesday, Oct 9
IMF calls for stricter oversight of mREITs
- The IMF finds another corner of the universe into which to insert its expertise, now opining that mortgage REITs (REM) pose systemic risk and calling for boosted regulation of the sector.
- The agency worries (as have others) about a cycle of rising rates forcing repo market disruptions, forcing MBS sales, forcing even higher rates, and crunching the recovering housing market. The IMF wants tighter oversight of not just the REITs, but of their financiers in the repo market.
- Regulators might even consider designating the largest of the mREITs as systemically important and thus subject to even more oversight, says the IMF, sending a shiver through the sector giants Annaly (NLY) and American Capital (AGNC).
- Related ETFs: MORT, MORL.