In all likelihood, most of the ABS community either read or heard about last Wednesday's front page Wall Street Journal story, which implied that the securitization industry's continual pressure on regulators and accounting bodies throughout the 1990s kept the loopholes open through which Enron Corp. pitched its dirty laundry.
Truthful or not, the story failed to distinguish the lender's use of securitization from Enron's pseudo risk-transfers/balance-sheet acts, commented one market participant. "As with many media articles in the aftermath of Enron, the WSJ item broadly equates Enron with securitization, on the basis that both use SPEs and off-balance sheet accounting. In fact, there are many important distinctions... Unfortunately, none of these were noted in the WSJ article," said George Miller, deputy general counsel to the Bond Market Association.