Tesco
Securitization
Report

Securitization

The Road Ahead

Miguel Segoviano, Bradley Jones, Peter Lindner and Johannes Blankenheim
IMF, 2015
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Editorial Rating

7

Qualities

  • Analytical
  • Innovative
  • Well Structured

Recommendation

Securitization is a double-edged sword: While pooling illiquid assets such as mortgages into tradable securities increases banks’ lending capacity, securitization can also pose numerous threats to financial systems. Miguel Segoviano, Bradley Jones, Peter Lindner and Johannes Blankenheim, economists at the International Monetary Fund, evaluate the risks of securitization as well as ways to address them in this expert report, though some lay readers may find its language difficult to sift through at times. getAbstract suggests it to bankers, traders and risk managers.

Take-Aways

  • While 2014 securitization issuance in the United States and Europe is at less than half its 2003 peak, risk may be rising as specific types of issues start to resuscitate.
  • Reforms in four components of the securitization cycle – “loan origination, securitization intermediaries, credit rating agencies” and “investors” – can help reduce risks in securitization markets.
  • Actions complementary to existing regulatory reforms include tightening up the appraisal process and improving collateral quality in loan origination.

About the Authors

Miguel Segoviano, Bradley Jones, Peter Lindner and Johannes Blankenheim are economists at the International Monetary Fund.

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