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
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...