In absence of transparency, banks and insurers wary of Freddie Mac risk sharing deal

Reuters reported that banks and insurers are wary of Freddie Mac's inaugural risk sharing deal.

Banks and insurers had good reason to be wary of this deal because it provides the same level of transparency that opaque, toxic sub-prime RMBS deals offer:  none.

This lack of transparency means that investors in the deal are blindly betting on the contents of a brown paper bag.

This lack of transparency is ironic because under the guidance of the FHFA Freddie Mac and Fannie Mae are constructing a securitization platform.  The purpose of the securitization platform is to provide disclosure to market participants.

So in theory, Freddie Mac is aware that it needs to provide observable event based disclosure under which any activity like a payment or delinquency involving the underlying collateral is reported to market participants before the next business day.

Perhaps Freddie Mac chose to not provide transparency because doing so would have highlighted the fact that there is already an existing securitization platform, the EU Data Warehouse, that is fully capable of doing everything the Freddie Mac/Fannie Mae joint venture would do.

Since a securitization platform that is endorsed by the ECB already exists, why is the joint venture building another one at taxpayer expense?

Why is the FHFA not requiring that Freddie Mac and Fannie Mae use the EU Data Warehouse and bring disclosure to the US RMBS market sooner rather than allowing them to delay and build their own?  After all, the FHFA could regulate the EU Data Warehouse's activities in the US as easily as regulate the joint venture's securitization platform.

Perhaps Freddie Mac chose to not provide transparency because doing so would have also highlighted the fact that the EU Data Warehouse has set the global price for any securitization platform providing this type of service.  The EU Data Warehouse set its price at a break-even level.

If the EU Data Warehouse is willing to operate at effectively a break-even level, where are the earnings to repay the US taxpayer for building the securitization platform?

Perhaps Freddie Mac chose to not provide transparency because doing so would have also highlighted the fact that a securitization platform can be a stand-alone business.  There is no reason it needs to be owned by Freddie Mac and Fannie Mae.

Perhaps Freddie Mac chose to not provide transparency because doing so would have highlighted to Congress, where there is bi-partisian support for a securitization platform as shown in the House and Senate bills, that given the existence of the EU Data Warehouse there is no real justification for building another securitization platform.