The Basel Committee for Banking Supervision released its second consultative document to revise Basel III's securitization framework. Either because it was released a few days before Christmas or because most readers might find its dry language a cure for insomnia, this important document has not received the significant attention it deserves.
Given the securitization market is reviving with a strength not seen since Lazarus' resurrection, securitization rules eventually to come from this consultative document are extremely important for banks and anyone investing in securitized products. Because of the important role that securitized products such as mortgage-backed securities and asset-backed securities can play in injecting liquidity into an economy, European governments in particular are interested in increasing securitizations' issuance. Of course, the final rules will also be very important for bank supervisors and examiners responsible for monitoring the risk management, or lack thereof, around these products.