Understanding the Role of Securitization in Revitalizing the Economy

Abstract

There is a role for securitization and the structured capital markets in the revitalization of the economy, although it is not clear how large that role might be in light of its featured prominence in the financial crisis that began in 2007. The capital markets, particularly the structured capital markets, have been replacing bank financing at such a pace and to such an extent that going back to a bank balance sheet constrained world would be difficult if not impossible. The industry is reconstructing the process of securitization such that it is more verifiable, transparent, and accountable endto-end, from the origination of an asset ultimately to the securities backed by that asset, regardless of how many intermediaries participated for all or a part of that asset’s journey. There is a flight to simplicity and transparency today, which must be embraced as the “new normal.”