Not one for the purists

The credit crunch made securitisation a dirty word. But that doesn’t mean the UK government is necessarily wrong to be giving the market for mortgage-backed securities a helping hand. Slicing and dicing huge quantities of duff mortgages into securities and selling them to investors who were oblivious to their poor quality undermined the financial system. This co-called “originate and distribute” model partly displaced conventional lending, whereby banks made loans to customers directly. It is es...