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Securitization: More than Just a Regulatory Artifact

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Competitive and regulatory pressures have prompted banks and other financial intermediaries to participate in credit markets in ways that are not directly reflected on their balance sheets. This poses a problem for regulators, who must assess the risks of these off-balance-sheet lending activities. One such activity is the packaging of loans into marketable securities, which is known as asset-backed lending or securitization.

Competitive and regulatory pressures have prompted banks and other financial intermediaries to participate in credit markets in ways that are not directly reflected on their balance sheets. This poses a problem for regulators, who must assess the risks of these off-balance-sheet lending activities. One such activity is the packaging of loans into marketable securities, which is known as asset-backed lending or securitization.


Suggested citation: Carlstrom, Charles T., and Katherine A. Samolyk, 1992. "Securitization: More than Just a Regulatory Artifact," Federal Reserve Bank of Cleveland, Economic Commentary, 05.01.1992.

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