Banks and speculators are attempting to offload mortgage default risk onto unsuspecting taxpayers and pension funds amid fears of a looming property crash in London, ethical finance campaigners have warned.<\/p>\n
Earlier this week, it emerged that the Greater London Authority (GLA) is seeking to use residential backed mortgage securities (RMBS) to diversify its investments. At present, there is little direct investment in RMBS by council treasurers. However, the GLA\u2019s proposal looks set to change this trend.<\/p>\n
Speaking at an event in central London earlier this week, GLA chief investment officer Luke Webster said the body will adopt the financial instruments if London Mayor Boris Johnson gives them the go-ahead.<\/p>\n
\u201cThe GLA is certainly sold on the RMBS investment case. So, subject to the mayor\u2019s approval, we will be investing in this asset class,\u201d<\/em> he said.<\/p>\n RMBS would be run by external managers following a procurement process. Credit specialist 24AM, which currently manages over \u00a33 billion ($4.27bn) worth of asset backed securities, is one such contender.<\/p>\n Ethical finance researcher Joel Benjamin said residential mortgage backed securities played a significant role in the global financial crisis.<\/p>\n Amid growing concern over a looming crash in London\u2019s luxury property market, he\u00a0told RT that the timing of GLA\u2019s announcement is significant.<\/p>\n Benjamin accused banks and speculators of unloading mortgage default risk onto the backs of taxpayers and pension holders. He said the GLA\u2019s shady investment plans had been sparked by a desire to avoid financial turmoil in the face of a property crash.<\/p>\n Benjamin’s\u00a0views were echoed by Brussels-based watchdog Finance Watch, which predicted a property crash could result in tax hikes and eroded pensions across the UK.<\/p>\n \u201cPeople look desperately for yield and buy exotic assets at unsustainable risk premiums,\u201d<\/em> a spokesperson for the group said.<\/p>\n \u201cTomorrow their taxes increase, their pensions take a hit and they are accused of failing to predict the crash.\u201d<\/em><\/p>\n Director at Institutional Investment Advisors Chris Gaskarth played down fears surrounding the securities, however.<\/p>\n He said problems in the US stemmed from the American RMBS market, whereas the European market has proved to be robust since the global financial crisis.<\/p>\n<\/div>\n Via RT<\/a>.\u00a0This piece was reprinted by RINF Alternative News<\/a> with permission or license.<\/p>\n","protected":false},"excerpt":{"rendered":" Banks and speculators are attempting to offload mortgage default risk onto unsuspecting taxpayers and pension funds amid fears of a looming property crash in London, ethical finance campaigners have warned. Earlier this week, it emerged that the Greater London Authority (GLA) is seeking to use residential backed mortgage securities (RMBS) to diversify its investments. At […]<\/p>\n","protected":false},"author":1,"featured_media":229064,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[487,18],"tags":[],"class_list":{"0":"post-229421","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-breaking-news","8":"category-latest-news"},"_links":{"self":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/229421","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=229421"}],"version-history":[{"count":0,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/229421\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media\/229064"}],"wp:attachment":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=229421"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=229421"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=229421"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}