Subject: File No. S7-14-11
From: Alan Fishbein

May 4, 2011

I think there should be no asset-backed securities that are totally exempt from the retention of credit risk particularly "qualified residential mortgages." I am not averse to having a lower retention say 1% vs 5%.

The reason is simple. Over the last three decades packagers have been amply ingenious at gaming the packaging system (sometimes fraudulently) particularly for the housing-related government-sponsored (now-owned) enterprises. Thus they need to have skin in the game there too. And they should not be allowed to sell or hedge in any way such retentions (although they will be able to game that too.)

No doubt these retention rules might raise the costs of mortgages immaterially for these "exempt securities".

We should all be willing to live with these small costs.