The few, the proud . . . the securitizers

Author: | Published: 1 Feb 2005

Of the six largest classes of asset-backed securities by dollar volume, only one - residential mortgage-backed securities - existed when I graduated from law school in 1981. The other fields have all been created in the interim, by teams of creative lawyers and businessmen, adapting existing models or creating entirely new structures, like the master trust, to permit securitization methods to be extended to new asset classes. While one might be tempted, like the government officials who voted to close the Patent Office, to believe that all the real innovation has already occurred, newer products like intellectual property securitizations and collateralized fund obligations show that it has not.

The closeness to legal and economic fundamentals

Unlike more settled areas of the capital markets practice, the rapid rate at which new financial products develop in securitization, and the pattern of creation of a new entity with each transaction, means that securitization lawyers are more often forced to...