Securitization as a Technique, Not a Product

Abstract

Traditionally, securitization has been viewed as a product although it could more properly be described as a financing technique. This article looks at the history and background of securitization since its inception in the early 1980s and discusses why labels can be misleading and, in some instances, dangerous. It addresses the development from “true sale” to “whole business securitization,” including differences between the U.S. Bankruptcy Code and the U.K. Insolvency Act. It concludes with a brief examination and commentary on the E.U. Capital Requirements Directive and some of the dangers that arise when regulators stretch a concept too far.