Topic: An Insider’s View of the History of Securitisation from the 1980s to Now, Including Its Role in the Financial Crisis
17 April 2014
About the talk:
Karl presented a thorough and informative history of the development of securitisation from the 1980s, when it began as a technique to package and transfer individual residential mortgage loans from originating banks to insurance companies and pension funds, which were the more logical holders of such long-dated, fixed rate loans to the later periods when the methodology was adapted to encompass all loan types, including those backed by commercial real estate, autos, credit cards and corporate obligations. By the late 1990s and early 2000s, it had spread globally and been modified for use in corporate takeovers via an approach called “whole business” securitisation. Subsequently, the technique was used to package and sell globally US “sub-prime” mortgages, and riskier off-shoots, which were instrumental in fomenting the Financial Crisis of 2008-9. The presentation also analysed the deviations from the basic principles of the technique that led to the financial crisis and whether the right lessons have been learned.
About the speaker: Karl Essig graduated from the Yale School of Management in 1980 and joined Morgan Stanley where he worked for over 25 years, advising on and arranging financial transactions for major companies and governments from offices in London, New York and Tokyo. Beginning in 1986, he sequentially founded Morgan Stanley’s securitisation businesses in the U.S., Europe and Asia and from 1998 to 2002 served as co-head of the Firm’s Securitised Product Group, with responsibility for the origination, execution, trading and principal financing activity associated with this global business. In 2002 he was named one of the top 100 Euro-market personalities and one of the top 10 Structured Finance personalities in the previous 15 years by Euroweek magazine. Karl is currently a partner at AgFe, a London-based advisory and asset management firm focused on the debt and loan collateral which underlie securitisation transactions. (http://www.agfe.com