Recriminations about what caused the greatest mortgage meltdown in U.S. history continue to play out in various ways, from courthouses to press accounts of how mortgage lenders went wild during the housing boom. 

It may be less exciting than some of the stories but the Consumer Financial Protection Bureau and Federal Housing Finance Agency have recently announced plans to tackle a lesser known but equally important element of the disaster. It's the failure of regulators to have in place a system to identify looming problems in the mortgage market prior to the crisis.

The announcement by these two agencies last week that they will jointly establish a National Mortgage Database has been preceded by previous regulatory attempts to gain a comprehensive picture of the fragmented loan-manufacturing process.

Regulators' challenge of overseeing the industry was made significantly more difficult by the way securitization severed the historical linkages between lenders and borrowers. No question, securitizing mortgages has brought many benefits to the market, but it has also helped facilitate a systemic, decades-long underinvestment in data management that ultimately contributed to the calamity a half-decade ago...

For the full BankThink piece see "National Mortgage Database Faces Challenges in Becoming Go-To Risk Tool"