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The news that Lynn Tilton, founder and CEO of Patriarch partners, was charged with fraud by the US Securities and Exchange Commission on Monday has provided the market with plenty of tabloid-friendly fodder.
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Getting assets out of the public sector has an obvious appeal. But it’s not always a great trade.
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It’s easy to make short term arguments that standardising CLO documentation and improving execution transparency hurts managers, or investors, or banks. But it doesn’t have to.
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The US business model for servicing delinquent loans is fundamentally flawed and incentivises a system of cutting corners at the expense of borrowers and investors.
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European authorities want banks to provide credit to small and medium sized enterprises through SME backed covered bonds. But they don’t need the funding; they need capital. They need securitization.
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Financial innovation deserves scepticism, especially unregulated investments offering retail investors supposed juicy returns. But while P2P lending merits scrutiny, it is both less useful, and less dangerous, than banking.
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There was muted celebration in the European ABS market this week as yet another rule making body began to row back from the punitive regulatory treatment imposed on the industry in the wake of the financial crisis.
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The omerta code works fine for a weekend in Sin City, but not for one of the US’s most important funding products. The securitization market must adapt to the spirit, not just the letter, of new transparency requirements — it is quickly running out of excuses not to do so. -
The US’s Federal Housing Finance Agency and the Federal Housing Administration are locked in yet another round of fisticuffs, with market share as the prize. If the private label RMBS market is to return, the government needs to stop hitting itself.
