The last thing anyone wants to do is throw the proverbial baby out with the bathwater. The industry's baby in this case is securitization, which ranks as perhaps the most profound financial movement of the past half-century (financial data security news).

You would be hard-pressed to find someone who will convincingly argue that the tool has not created a seemingly unlimited reservoir of liquidity, most of which redounded to the good of society and the economy. We certainly saw some excesses, but those excesses had less to do with securitized products themselves than with the derivatives infrastructure built on top of them. So it wasn't the real estate mortgage-backed security that was prime culprit--it was the many credit default swaps on the collateral debt obligations that invested in these bonds.

Right now, we could use more securitization rather than less. A revival of ABS and RBS oriented securitization--sans the derivatives play--would help the economy. We're seeing a revival, thanks in part to the government's TALF (TALF news), as of now. And that's good news. 

For more:
- here's a look at the current state of affairs from TheDeal.com 

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