Is Securitization Evil? Dechert Attorney Takes On The Pope

A declaration from the papacy took aim at securitization and credit default swaps, characterizing them as a kind of predatory economic cannibalism, a form of “gambling on the failure of others,” and calling them morally unacceptable. A prominent real estate and capital markets attorney has taken umbrage, and in a spirited blog piece he provides his explanation and defense of what he argues “is just a technology that allows a broad investor universe to fund the users of capital without intermediation through the banks.” Securitization, he argues, has taken a bad rap, not only from the papacy but from various social critics and in popular culture, as in the movie “The Big Short.” Yes, he says, securitization is “leverage on leverage,” but (he argues) that “on balance, is kinda good.”