Securitisation: The Lessons from the Financial Crisis of 2007

Abstract

The financial crisis of 2007 sparked intensive debates on its origins. The Turner Review, published on 18 March 2009, firmly places securitisation at its heart. However, even the critics admit that this type of transaction is viewed as “socially desirable”. The paper explicitly shows how the financial technique is structured and used. Due to the volume and significance of mortgage lending the main attention is concentrated on residential mortgage-backed securities. the study focuses on investors’ legal protection, tax aspects, as well as the issues of greed and “moral bankruptcy”, agency problems and behavioral aspects of economics and finance.

Keywords: financial crisis, securitisation, financial law

JEL Classification: K22, G02, G01, G18, G33