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Capital Markets Law Journal Advance Access originally published online on August 28, 2009
Capital Markets Law Journal 2009 4(4):462-476; doi:10.1093/cmlj/kmp035
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© The Author (2009). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

If securitization is dead, why do so many government schemes use it?

Kevin Ingram*
* Partner, Clifford Chance LLP, with assistance from Johanna Sheppard.

The first 150 words of the full text of this article appear below.


Key points

  • When the credit crisis started in 2007, the British press identified securitization as one of the main causes of banks’ woes and the financial crisis itself.
  • Notwithstanding the criticism, securitization and securitization techniques are still widely used.
  • Governments across the globe have recognized securitization and securitization techniques as necessary tools to be used in the short to medium term to stabilize the financial system and restart consumer and commercial lending.
  • As a result, many of the government schemes put in place utilize securitization and securitization techniques.
  • In conclusion, the article discusses the future role of securitization in the new post-credit crisis world.

 


   1. Introduction
 
When Northern Rock plc was nationalized the British press identified securitization as one of the main causes of the bank's woes and the financial crisis itself. However, two years on from the start of the crisis many of the techniques employed in securitizations continue to be . . . [Full Text of this Article]


   2. Securitization—what it is and why it is blamed
 
What is securitization?
Why is securitization blamed?

   3. Why is securitization relevant and needed?
 

   4. Government and central bank schemes
 
The Bank of England's special liquidity scheme
The ECB money market operations
The US Treasury Department's term ABSs loan facility
The ABS Guarantee Scheme
The UK Government's asset protection scheme

   5. Pointers to the future role of securitization
 
Securitization is not a thing, it is a set of skills
Bank focus on the credit fundamentals of lending will require structured solutions not plain vanilla debt
A changing world for commercial banks
Greater regulation will require assimilation, structuring and action
Functioning consumer credit markets are a political imperative
Public works projects will generate a strong workflow in utility and infrastructure finance
Banks will seek to reduce the need for capital (and therefore reduce excess capital) in the medium term
Financial market players will continue to seek ways to exploit asset value and funding differentials

   6. Conclusion
 

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