What elements of reform will help corporate treasurers manage counterparty risk?
Making sure their counterparties take less risk should help them, but they’ll have to do more of their own due diligence and rely less on rating agencies. The root of the problem was bad credit quality. When you can securitize and sell off 100% of the loans you make, you don’t worry enough about credit quality. There is a risk retention requirement in the legislation that will make the lenders keep some skin in the game.
