Federal Financial Analytics, Inc. here assesses the future of credit risk transfer (CRT), the process of moving credit risk from one entity to another by way of insurance –usually mortgage or financial-guarantee insurance or through credit derivatives. Loan originators, asset securitizes and debt issuers cannot live without CRT –it is fundamental to the mortgage, small-business, municipal and sovereign markets –to name just a few. However, the CRT industry is in crisis, meaning that absent development of new, robust CRT structures that remain viable under emerging regulatory standards –credit and securitization markets will shrink with costly sectoral and macroeconomic consequences. In this paper we assess the prospects for each of these forms of credit risk transfer, analyzing the capital, rating-agency, securitization-reform and “shadow-banking” challenges that confront private mortgage insurance and financial guarantee insurance, challenges that create strong opportunities for credit derivatives offered by banks to replace these products. Direct bank entry into these sectors and/or offerings within banks of look-alike products is also, we conclude, a major strategic challenge for traditional credit-risk insurance providers, with this paper detailing the regulatory and market drivers promoting rapid bank entry. However, traditional credit-risk insurers have significant advantages to offer both customers and regulators. As regulated, capitalized providers, mortgage and financial-guarantee insurance is structured to absorb even catastrophic risk without the vagaries of traded products or the conflicts of interest that can result when an institution is both originator and credit-risk mitigator. These advantages have, however, been sorely tested by failures in the current crisis that have devastated both private mortgage and municipal bond insurance in the United States.