Legal Business

Coming off the naughty step

Baker & McKenzie’s Jonathan Walsh charts the quiet rehabilitation of asset-backed lending

Securitisation has taken a battering in recent years. A complex financing technique, little understood by the public, it was an easy scapegoat as a principal cause of the global financial crisis. For a while after the crisis it seemed as if various supervisory authorities would regulate it to the point of extinction.

Thankfully, that did not happen. But over the past six or seven years (depending on when you think the financial crisis actually hit) rules aimed at stifling the securitisation market have been pumped out on both sides of the Atlantic. We have had rules on bank capital, rating agencies, investors and more. The additional regulations are complex, in some cases contradictory, and affect all aspects of securitisation transactions and the parties involved in such transactions.