Sen. Machado said continued threats to liquidity make matters much more complicated for legislators who want to improve the climate for borrowers but are reluctant to do anything that could put more lenders out of business. "I think it is a very delicate situation," he said. "I am not trying to cast aspersion on anybody ... , but Countrywide is no different right now than New Century."
Raphael Bostic, a professor of real estate at the University of Southern California, said that legislators face a major challenge to identify where the system broke down before determining a specific course of action. "Securitizations are another piece, since that's where a large portion of the capital is coming from," he said in an interview. "What would help is more transparency ... and getting more accountability into the system."