"Does that sound like something a greedy banker would devise, or a liberal politician?"
That's a clarifying question, if I ever heard one. Yes, it does sound like something put together by politicians. If banks hadn't had some way of getting out from under the bad loans they were forced to make, there would have been push-back which might have caused Problems for the politicians.
The solution is the same as for food: If you sell something, you must list the ingredients! Which exactly mortgages are part of this security, and what are their ratings? If there are bad ingredients undisclosed, void the transaction!