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Reforming Securitization

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June 16, 2009 – Comments (0)

Yves has a post on securitization

To me securitization was simply a method to circumvent reserve requirements, pay insurance and off load risk, and look at the results...

The reason securitization became so widespread is that it is cheaper than on-balance-sheet bank lending. Traditional lending requires banks to recoup their cost of equity and FDIC insurance premiums

 Cheaper for who?  They sure have been expensive for tax payers and investors...  There is no free ride, someone pays.

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