In the immediate aftermath of the crisis, it’s possible that those who identified securitisation as a financing model, rather than loan origination practices, as a principal cause of the crisis were all too ready to charge ahead with a multiplicity of regulatory reforms designed to prevent future crises. They were unprepared to see the broader picture. But with the perspective that often comes with the passage of time, it has now become clear that individual measures that target specific concerns may interact in negative ways, and cause the patient more harm than good.
As a financing technique, securitisation permits banks and other financial institutions to recycle capital, and make credit available to consumers. In the US, where the real-estate finance system has not fully recovered, more than 90% of all new residential mortgage originations are government funded or guaranteed. Private funding alternatives are essential. But actual or proposed US and international regulations are making securitisation’s speedy recovery increasingly difficult.
Originally published in International Financial Law Review in the June 2013 issue.
Please see full alert below for more information.
Firefox recommends the PDF Plugin for Mac OS X for viewing PDF documents in your browser.
We can also show you Legal Updates using the Google Viewer; however, you will need to be logged into Google Docs to view them.
Please choose one of the above to proceed!
LOADING PDF: If there are any problems, click here to download the file.