Nicole Deese, a securities attorney at Fowler, White & Boggs, told CNBC’s “Power Lunch” that allowing bond holders to sue investment banks that sold high-yield bonds backing sub-prime loans will “inhibit, if not entirely stifle, the flow of money from capital markets to the mortgage sector.”
She said high-yield bonds routinely come with high risk and this is fully disclosed.
“We want to encourage our investment banks to be creative with products,” Deese said Thursday. “If the buyer doesn’t like the product, if the terms of the product don’t suit the buyer, don’t buy the product.”