In Dr. Steve W. Price's book, Surviving The Perfect Recession, Price lists Securitization as one of the causes of the perfect recession. Price says, "since the founding of the New York Stock Exchange in 1887 under the buttonwood tree in lower Manhattan, tradable investments, called 'securities,' have come in two basic flavors---stocks, which enable investors to buy ownership in public companies; or bonds, which allow people to profit by loaning money to companies and/or the government."
He uses the example of Fannie Mae, Freddie Mac, and Ginnie Mae, the three giant government-sponsored housing guarantors that securitizes pools of mortgages into mortgage-backed securities and sell them to investors. And of course, because of that success, that led to applying to any asset class with a cashflow such as car loans, student loans, credit debt, and so on.Then, the bottom dropped out due to the financial crisis of asset-backed securities business, banks, insurance companies, pension funds, etc. and these companies were stuck with asset-based bonds that were losing value.
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