lOn October 9, the European Commission opened a consultation aimed at relaunching securitization, this financial technique that was at the center of the 2007-2008 financial crisis but which it now considers necessary. to the proper functioning of the credit market. Although the Commission is not at its first attempt, it can now rely on the conclusions of the Draghi report (presented on September 9), which also considers it an essential element in achieving the capital market union, which will supposedly allow Europe to finance itself. the investments necessary for its reindustrialization and decarbonization. From prescription to prescription, coming from both regulators and lobbyists, securitization could well experience the desired resurgence. At the risk of repeating the past instead of financing the future. We must say no to the return of securitization in Europe!
Because let’s not make a mistake. As the Brussels NGO Finance Watch points out (a healthy counterweight to the financial lobby) In a publication dated October 25, securitization is not a financing instrument for the real economy. It is a technique that allows banks to offload risky credit packages to intermediaries who transform them into profitable marketable securities. Investors will find something to appease their never-satisfied appetite for returns.
They all paid the price during the 2007-2008 financial crisis. The regulators had then sworn to their great gods that they would not be caught again. It was necessary, they said, to strictly regulate this practice because it had spread risks throughout the financial system, such as those of subprime loans, to the point that we no longer knew who bore them. They recognized that securitization had changed the behavior of banks towards risk, making them necessarily more inclined to assume it since they could get rid of it. And it had extended the chain of intermediation by inserting, between the banks and their clients, “shade” the banks, these financial entities that, in the shadow of the banks, assume their risks for them without obeying their regulatory limitations.
As an important cleansing bath, a small regulatory cleanup was carried out, first starting with the 2010 Basel Accords, which required banks to retain 5% of their securitized assets. and that they convey more information about these operations, then with a framework, which came into force in Europe in 2019, which establishes the principles of what securitization should be: ” simple “, ” standard “ AND “transparent”. Without guaranteeing that this is the case.
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