Re: Defining Securitization (original) (raw)
This Article fills a gap in commercial finance law. Despite the fact that “securitization” has become enormously important to capital markets — and is sometimes blamed for the credit crisis — we have no agreed understanding of the term. Various regulators and commentators have generated a wide range of definitions, but many are vague or omit crucial elements. Perhaps most surprising, the Dodd-Frank financial services reform — the most aggressive attempt yet to regulate securitization — does not define it at all. How can we regulate something without a shared conception of what it is?This Article assesses data on the performance and function of securitizations to develop a normative definition of the term based on its essential elements (its inputs, structure, and outputs) and its legitimate social and economic functions, namely providing a more effective means of connecting buyers and sellers of capital than traditional methods of financing, such as bank lending or issuing shares of...
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