Media Field Group
Asset Securitization: Revolution, Evolution, Devolution. The Rise and fall of the Most Important Financial Instrument in Banking
In May 2008, Mr. Nechemia announced that he saw a systemic financial crisis brewing and warned that in the months to come the United States was likely to face a once-in-a-lifetime financial crisis, an oil shock, sharply declining consumer confidence and, ultimately, a deep recession. In that article he also foretold of homeowners defaulting on mortgages, trillions of dollars of mortgage-backed securities unraveling worldwide and the global financial system shuddering to a halt. Many were pessimistic as well as dismissive of his analysis. Six months later, his forecasts proved accurate.
As a response for UNCTAD call for paper, Mr. Nechemia has authored the following article on Asset Securitization. It describes the history of the creation and evolution of the-then revolutionary Asset Securitization product and the various permutations the product morphed into since first being introduced into the United States banking and credit system in the 1970s. It enabled the unprecedented growth of markets in both the U.S. and abroad, set new benchmark standards of innovation and productivity, credit enhancement and risk analysis, but in the end, left unchecked and to open market devices, is what he suggests, contributed greatly to the U.S. financial collapse. Today, many measures are required to repair what has become a badly damaged international financial system and proven dysfunctional financial architecture; readers will find this article, as others Mr. Nechemia has authored exclusively for our publication, interesting, fascinating, provocative and even useful to those who call investment banking their profession.