Current structured finance disclosure practices are the equivalent of putting the underlying collateral into a brown paper bag. Then asking the investor when the contents have changed, but have not been reported, to guess the value of contents of the brown paper bag. The proposed solution was to put the collateral into the equivalent of a clear plastic bag by providing observable event based reporting. With observable event based reporting, all the changes, like payments or defaults, to the underlying collateral are reported on the day that the changes occur. Investors can see what they are buying and can value the structured finance security.
Has the sell-side and its lobbyists (including sell-side dominated industry trade associations and lawyers), which claim to want sensible regulatory reform, championed the Brown Paper Bag Challenge conclusion that observable event based reporting should be part of the revised structured finance disclosure requirements?