Summary of A Primer on Securitization

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A Primer on Securitization book summary
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Rating

7 Overall

6 Applicability

6 Innovation

9 Style


Recommendation

Editors Leon T. Kendall and Michael J. Fishman adapted these first-hand accounts of the early years of the securitization industry from a lecture series at the Kellogg School of Management. The contributions from financial service pioneers are the book’s greatest strength. They elucidate the economic and regulatory forces that made securitization a powerful, versatile financial tool. Each chapter stands alone, but the book does not follow a linear narrative. Caveat lector: these lectures were given in 1994, so the sections on current trends and future expectations are out-of-date. Hence, this primer doesn’t cover massive changes in financial regulation, an explosion in the types of asset-backed securities (ABSs), the popularity of derivatives or off-balance-sheet accounting to hide fraud. getAbstract.com suggests this book for those entering the financial services industry or for those who need background history. This does not tell you how today’s capital markets work, but it is an illuminating eyewitness account of yesterday’s.

In this summary, you will learn

  • The meaning of "securitization," and some of the main types of securitized products;
  • How the process works and who the key participants are when asset-backed securities are issued; and
  • How regulatory and economic challenges shaped the securitization industry between the late 1970s and the early 1990s.
 

About the Authors

Leon T. Kendall, professor emeritus of finance and real estate at Northwestern University’s J. L. Kellogg Graduate School of Management, is an economist with 30 years of experience at the Federal Reserve and the New York Stock Exchange. Michael J. Fishman is chair of the Finance Department and an editor at The Review of Financial Studies.

 

Summary

How Assets are Securitized
Securitization is the three-step process of packaging pools of non-tradable assets, issuing securities backed by those assets and selling the issue to third-party investors. First, investors purchase liquid assets with guaranteed cash flows. Then, issuers use...

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