Securitization and Post-Crisis Financial Regulation

Abstract

There are few types of securities as internationally traded as those issued in securitization (also spelled securitisation) transactions. The post-financial crisis regulatory responses to securitization in the United States and Europe are, at least in part, political and ad hoc. To achieve a more systematic regulatory framework, this Essay examines how existing regulation should be supplemented by identifying the market failures that apply distinctively to securitization and analyzing how those market failures could be corrected. Among other things, the Essay argues that Europe’s regulatory framework for simple, transparent, and standardised (“STS”) securitizations goes a long way towards addressing complexity as a market failure, and that the United States should consider a similar regulatory approach.