The rules under which servicers operate do not always provide them with clear guidance or the appropriate incentives to undertake economically sensible modifications. 9 The problem is exacerbated because some modifications may benefit some tranches of the securities more than others, raising the risk of investor lawsuits.
Financial Modernization and Bank Small Business Lending In the remainder of my remarks, I will touch on three additional concerns about the potential effects of financial modernization on the supply of bank credit to small business.