Securitization Industry Still Locked Up

Until loans can be packaged up and sold as securities, lending will remain restricted around the world.

American Securitization Forum's conventions used to be in glitzy Las Vegas. Those were the days when mortgage loans could be easily sold as AAA bonds. After all, for a century, the mortgage business was the most reliable investment around.

That last until the politicians massively intervened in the mortgage market. It was unprecedented. There was no longer any way to actively predict the reliability of mortgage bonds because the people who were getting mortgages in the 21st century did not have to invest in big down-payments and often did not have to prove their income.

Today there's a fundamental lack of trust of mortgage-backed securities. There's a fundamental lack of trust in our financial system. Yep, capitalism is largely based on trust, that people and securities will live up to their billing.

More than 4,000 were expected to show up for this securities convention in Maryland.

The subprime mortgage collapse triggered the worst credit crisis in a lifetime and the focus at the convention is largely on survival.

The Los Angeles Times says:

Among the questions the first session was expected to address, according to the meeting program: "What needs to be done to restore activity in private-label mortgage securitization? When will it happen? Can the commercial mortgage-backed securities market come back to life? How large will the securitization market be in the future?"

Besides reflecting the sobering reality of the securitization market's bust, the convention's move from Las Vegas to Washington was simply the pragmatic thing to do: Nothing big will be happening in the securitization business, or any financial-service business, without federal regulators' involvement and approval.

"Our focus is on getting the market started again, and we need to be talking with policymakers," said Jon Teall, a spokesman for the forum.

It's another reminder that, in this economy, all roads lead to Washington.