Document Type

Article

Comments

Presented at the 4th Inter-University Graduate Student Conference at Cornell Law School, March 2008.

Abstract

The recent US liquidity crisis, triggered by the failure of mortgage-related securities, produced long-lasting ramifications inside and outside of the US. International financial indicators and the housing markets demonstrate that the mortgage-related liquidity problems keep reverberating throughout the US and the global economy. In the US, even such giants as Freddie Mac and Fannie Mae, which were expected to inject market liquidity, have declared considerable losses from subprime MBS. The ongoing crisis provided a fertile ground for a number of publications and research. However, a range of fundamental issues regarding legislative responses to the US MBS crisis and its international corollaries remain ambiguous. This research aspires to shed light on the momentous lessons of the crisis in a way assisting foreign lawmakers who seek to commence securitization in their jurisdictions.

First, the paper is premised on the argument that securitization is a profitable evolving phenomenon despite the present crisis and criticism in the scholarship of recent years. Secondly, the author discusses the consequences and possible methods of increasing the incentives of the parties, such as, inter alia, lenders and rating agencies, to ensure more responsible pricing of the underlying mortgages and collateralized securities. It is furthermore important to scrutinize the agenda of the US regulators and financial industries as their approaches are oftentimes transplanted abroad in some way. The third point in question is the impact of the US, as a model securitization jurisdiction, on other countries. The specific focus of this analysis is the example of transplanting the US model to the Russian Federation.

Date of Authorship for this Version

June 2008

Keywords

Mortgage-backed securities