Securitization Increasing

Securitization, the process of pooling different types of debt into bonds that have payments backed by the debt, is on the rise. Mortgage backed securities (MBS) and collateralized debt obligations (CDO) were blamed in part for the 2008 financial meltdown. In 2013, about $800 million of securitized debt was issued worldwide (excluding residential mortgages). Although a dramatic increase from the $200 million or so issued in 2009 and 2010, the total is far short of the more than $2.5 trillion issued in 2005 and 2006. Although regulators often argued about the evils of securitized debt, it also allows the market to pump lending into the system, which could help increase economic growth.