I have a bit of an idea of what it includes and some of its features, but if someone asked me what it meant I’d have no answer for them.
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Much appreciated guys. This was very helpful!
In: Economics
Securitization is turning assets into tradable financial instruments. Take a mortgage for example. One bank owns it, and they can sell it. Someone else can buy a bunch of mortgages and bundle them together into a financial instrument and stick a price on it.
This was very popular in the early 2000s and was a major player in the 2008 crash. But that doesn’t mean all securitization is bad.
The lawyers get involved because they have to draw up the contracts that describe the security, enumerate everyone’s duties and rights, and ensure the instrument they have created complies with securities trading laws wherever they are operating.
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