The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu The leading online blog in the fields of corporate governance and financial regulation. Fri, 10 Jul 2026 15:34:39 +0000 en-US hourly 1 https://wordpress.org/?v=6.5.8 https://corpgov.law.harvard.edu/wp-content/uploads/2024/02/cropped-photography-4-e1706898544564-1-32x32.png Did Securitization Cause the Mortgage Crisis? – The Harvard Law School Forum on Corporate Governance https://corpgov.law.harvard.edu 32 32 Did Securitization Cause the Mortgage Crisis? https://corpgov.law.harvard.edu/2011/10/19/did-securitization-cause-the-mortgage-crisis/?utm_source=rss&utm_medium=rss&utm_campaign=did-securitization-cause-the-mortgage-crisis https://corpgov.law.harvard.edu/2011/10/19/did-securitization-cause-the-mortgage-crisis/#comments Wed, 19 Oct 2011 13:18:58 +0000 http://blogs.law.harvard.edu/corpgov/?p=22253?d=20150105142239EST Posted by Scott Hirst, co-editor, HLS Forum on Corporate Governance and Financial Regulation, on Wednesday, October 19, 2011
Editor's Note:

The following post comes to us from Ryan Bubb, Assistant Professor of Law at the New York University School of Law, and Alex Kaufman, economist at the Board of Governors of the Federal Reserve System. The opinions, analysis, and conclusions set forth are those of the authors and do not indicate concurrence by members of the Board of Governors of the Federal Reserve System or of the Federal Reserve Bank of Boston.

Did mortgage securitization cause the mortgage crisis? One popular story goes like this: Banks that originated mortgage loans and then sold them to securitizers didn’t care whether the loans would be repaid. After all, since they sold the loans, they weren’t on the hook for the defaults. Without any “skin in the game” those banks felt free to make worse and worse loans until… kaboom! The story is an appealing one, and since the beginning of the crisis it has gained popularity among academics, journalists, and policymakers. It has even influenced financial reform. The only problem? The story might be wrong.

In this post we report on the latest round in an ongoing academic debate over this issue. We recently released two papers, available here and here, in which we argue that the evidence against securitization that many have found most damning has in fact been misinterpreted. Rather than being a settled issue, we believe securitization’s role in the crisis remains an open and pressing question.

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