Securitization, Transparency Form

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securitization has revolutionized the banking industry and that's because banks historically were almost entirely reliant on deposits to raise funds but now they can securitize mortgages they can securitize car loans credit card receivables and this provides an alternative source of funding other than deposits for banks to raise capital so what is securitization securitization is the process of bundling illiquid financial assets and creating securities that are then backed by the cash flows from that pool of assets so you can bundle mortgages you can bundle credit card receivables equipment loans and so forth okay when you bundle mortgages it's called a mortgage-backed security because the cash flows for that security come from this pool of mortgages so you could have thousands of mortgages in that mortgage-backed security okay and then investors they invest in that mortgage-backed security and the cash flows that they're ultimately receiving come from those mortgages now the bank that