How does the securitization food chain lead to a lack of accountability among mortgage lenders and retail banks?

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Creating a CDO is part of the securitization process, which transforms assets, particularly mortgage debt into a financial product. In the securitization food chain, borrowers take mortgages from lenders, who sell them to investment banks to get finance for new mortgages. Banks create high-rated CDOs and sell them to investors for cash. Thus, mortgage lenders transferred responsibility to retail banks, and the latter sold them as investments not represented on the exchange. CDO was protected by mathematical calculations, such as Gaussian Copula, which turned out to be incorrect. Thus, when the CDO fell, there was also a lack of accountability among mortgage lenders and retail banks.

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Academic.Tips. (2022) 'How does the securitization food chain lead to a lack of accountability among mortgage lenders and retail banks'. 2 December.

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Academic.Tips. (2022, December 2). How does the securitization food chain lead to a lack of accountability among mortgage lenders and retail banks? https://academic.tips/question/how-does-the-securitization-food-chain-lead-to-a-lack-of-accountability-among-mortgage-lenders-and-retail-banks/

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Academic.Tips. 2022. "How does the securitization food chain lead to a lack of accountability among mortgage lenders and retail banks?" December 2, 2022. https://academic.tips/question/how-does-the-securitization-food-chain-lead-to-a-lack-of-accountability-among-mortgage-lenders-and-retail-banks/.

1. Academic.Tips. "How does the securitization food chain lead to a lack of accountability among mortgage lenders and retail banks?" December 2, 2022. https://academic.tips/question/how-does-the-securitization-food-chain-lead-to-a-lack-of-accountability-among-mortgage-lenders-and-retail-banks/.

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Academic.Tips. "How does the securitization food chain lead to a lack of accountability among mortgage lenders and retail banks?" December 2, 2022. https://academic.tips/question/how-does-the-securitization-food-chain-lead-to-a-lack-of-accountability-among-mortgage-lenders-and-retail-banks/.

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"How does the securitization food chain lead to a lack of accountability among mortgage lenders and retail banks?" Academic.Tips, 2 Dec. 2022, academic.tips/question/how-does-the-securitization-food-chain-lead-to-a-lack-of-accountability-among-mortgage-lenders-and-retail-banks/.

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