A bad taste has been left in the mouths of investors following a few of the largest blowups the asset-backed market has experienced, according to a pair of buysiders speaking at the American Securitization Forum's first annual meeting last week. The examples of National Century Financial Enterprises, NextCard and Spiegel's First Consumers National Bank were cited as appearances that turned out not to be reality, which have had a stinging impact on investor outlook going forward.

The fact that so many entities - numerous underwriters, rating agencies, trustees and surety providers - had the wool collectively pulled over their eyes does not inspire confidence from the investor community. Citing "no acceptance of responsibility," State Street's outspoken principal Dan Statchel said, "Until a principal accepts responsibility of scratching below the surface, we'll never solve the problem of fraud." TIAA-CREF Managing Director John Cerra added that those in the position to spot fraud "do the legally required minimum on behalf of all."

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