links for 2009-09-17: Do I have to post this every time someone notices what a clueless d--- John Cochrane is?
Most of all, caveat emptor -- these are a matters for buyers and sellers, not regulators. Nobody else gets hurt if you buy a lousy mortgage pool. The government does not need to write a new rule every time someone buys a rotten tomato. Investors will demand the right transparency, complexity, and risk-sharing or monitoring of mortgage pools. That is, unless they get bailed out and learn to count on that instead! The history of the mortgage market is a grand story of bringing credit to people who need it, upon the removal of layer after layer well-intended but counterproductive "protective" regulation. -- John Cochrane, 2007
The remarkable thing, of course, is that we do not rely on tort law remedies to deal with rotten tomatoes--we have a Food and Drug Administration.
I think the answer, ogmb, is "Yes, you do."