Monday, Jul 06, 2009
Sounds familiar
FT: Securitisation reinvented to cut costs
Investment banks, including Goldman Sachs and Barclays Capital, are inventing schemes to reduce the capital cost of risky assets on banks’ balance sheets, in the latest sign that financial market innovation is far from dead.
BarCap’s structures involve the pooling of assets from several clients into a secured financial product that can be sold on to other investors and rated by a credit rating agency, potentially reducing the capital allocated against the assets by between 10 per cent and 50 per cent.
These new mechanisms are in some respects similar to the discredited structured products, which were widely blamed for fuelling the financial crisis.
Posted by devo @ 08:09 AM (697 views) Add Comment
8 Comments
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1. Theemperorhasnoclothes said...
A rose by any other name ... still has thorns.
2. icarus said...
H L Mencken said that a judge is a law student who marks his own exam papers. Financial services do the same thing.
3. refusetobuy said...
Apparently these are more transparent. Still a dodge to get around capital requirements.
The failure of CDO (from the banks perspective) was that they never really got rid of the risk. When the lending market closed the banks were obliged to supply credit to their own CDOs. Wonder if that has been corrected.
4. symo said...
Even after all the errors highlighted in the past they have learned nothing.
5. mander said...
How to lend money without taking on the risk: Ideal banking. Now that development has got to an end and much capital is no longer required some banks to be profitable will need another bubble.
6. 51ck-6-51x said...
No real surprise here is there?
Regulation in an attempt to control a percieved evil effect breeds legitimate arbitrages to counter distortions, which may lead to a greater evil ( usually a less transparent one at least! ).
Abusus non tollit usum, however I do not deny that it could still be a case of < a title="Anyone can err, but only the fool persists in his fault [ Cicero ]">Cuiusvis hominis est errare, nullius nisi insipientis in errore perseverare.
In this case not only caveat emptor, or caveat venditor, but caveat utilitor!
7. 51ck-6-51x said...
( Repost above without bad tag )
No real surprise here is there?
Regulation in an attempt to control a percieved evil effect breeds legitimate arbitrages to counter distortions, which may lead to a greater evil ( usually a less transparent one at least! ).
Abusus non tollit usum, however I do not deny that it could still be a case of Cuiusvis hominis est errare, nullius nisi insipientis in errore perseverare.
In this case not only caveat emptor, or caveat venditor, but caveat utilitor!
8. paranoia blue said...
Clicky-click......
The more linguistic, the more articulate, the more sophisticated, the more esoteric, and actually the more “kickin’ ass,” that you get…. the more I love you – platonically!
Take care :)