Although recent public opinion has focused on what went wrong with securitization, it is important to recognize the many benefits associated with sound securitization.
Tuesday, September 22, 2009
Global Financial Stability Report (GFSR), October 2009 - Chapter 2
Key points:
Sound securitization provides important benefits—to allocate credit more efficiently, transfer credit risk away from banking sector to more diversified investors, and more finely tailor risks and returns to potential end investors.
Failure to restart securitization would come at the cost of prolonged bank funding pressures and a diminution of credit, and a continuing need for central banks and governments to take up the slack.
The new model of sound securitization should leave behind the “high octane” markets of the past and establish markets that reliably fulfill lender funding needs without increasing product complexity and ramped up leverage.
The variety of proposals to restart sustainable securitization—increased capital requirements, tighter accounting standards for off-balance sheet entities, retention requirements, and enhanced disclosure requirements—all move in the right direction.
However, if all are implemented in combination, the interaction of these proposals could make restarting securitization too costly. Impact studies should be conducted before such proposals go into effect to ensure that, in combination, they foster—not suffocate—sound
securitization.
In order to face the crisis generated by the covid-19 outbreak, Costa Rica extended until December 31, 2021 the measure that allows clients of financial institutions to benefit from extensions, refinancing and readjustments without the need to carry out debtor stress analysis.
According to Conassif, additionally, banks were asked to reapply their internal policies for measuring the payment capacity of each client as of April 1, 2021.
Direct access to trading platforms and the rise from 5% to 8% of the tax on mutual funds are some of the changes proposed by the bill.
The draft of the new bill, proposed by the National Council for Market Development, will be subject to public consultation with the stock market and financial sector from now until January 31, 2014.
A proposal has been made that the municipalities seek financing by securitizing their income, requiring information on their financial capacity.
From a press release issued by the Legislative Assembly of El Salvador:
The Finance Commission today launched the consultation phase for a draft amendment to the Law on Securitization of Assets, to hear the views and comments of the leaders of the Superintendency of the Financial System (SSF), the Central Reserve Bank (BCR), the Stock Exchange of El Salvador (BVES), and institutions specializing in asset securitization HENCORP Valores, S.A. and RICORP Titularizadora S. A.
Four economists conclude that the market must fix itself in order to solve the financial crisis in the United States.
In the round table organized by the Academy of Central America, the economists Juan Muñoz, Eduardo Lizano, Isaac Castro, and Jorge Guardia shared their assessment of the causes and possible solutions for the crisis that began with the fall of property prices in the United States.
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