Certified Forensic Loan Auditors, LLC

  Upcoming Classes

Search CFLA's Article Archive:

Asset Securitization Expanded

ecns.cn | September 4, 2013

China will include more high-quality credit assets in its pilot program for securitizing credit assets, a move that could support the development of the real economy and meanwhile prevent systematic risks from financial innovation, the central bank said Thursday.

Expanding the pilot program will be helpful for adjusting the credit structure, stimulating the real economy by providing easier access to financing, reducing commercial banks' excessive dependence on the expansion of the business scale, and providing more choices for investors, the People's Bank of China (PBC). the country's central bank, elaborated in a statement on its website.

China started allowing credit asset securitization on an experimental basis in 2005. A total of 11 domestic financial institutions issued asset-backed securities (ABS) products worth 66.78 billion yuan ($11 billion) between 2005 and 2008.

However, the trial program was suspended in 2009 following the US subprime mortgage crisis and the global financial crisis, and was resumed in 2011, according to the PBC.

The central bank noted that China's development of asset securitization is still in the primary stage, and the pilot program should be pushed forward steadily.

"High-risk assets will not be included in the trial program, and re-securitization is not allowed," the statement said.

The central bank will also guide commercial banks to allocate more credit resources generated from the pilot program to small and micro-sized enterprises, agriculture industry, renovation of shanty areas and infrastructure construction.

The statement came after the State Council decided Wednesday to expand the pilot program. But both the State Council and the PBC did not elaborate on what specific kinds of assets will be included in the program.

Low-risk credit assets that can generate sustainable cash flows can be treated as high-quality assets, Teng Tai, an economist at Beijing-based West Brothers Asset Management Co, told the Global Times Thursday.

Teng said the expansion of the pilot program will also benefit commercial banks and securities companies.

"Banks' assets can be activated, and securities firms can increase their sources of income amid the sluggish domestic stock market," he said.

Experts said the pilot program does not carry the risk of a systematic financial crisis like the US subprime mortgage crisis.

"The prevention of re-securitization shows the Chinese authorities are taking a cautious approach to financial innovation," Feng Pengcheng, a finance professor at the Beijing-based University of International Business and Economics, told the Global Times Thursday.

"The scale of China's asset securitization is so small compared with developed economies that it will not pose a threat to the domestic financial system," he said.

In the US, the issuance of ABS products rebounded to $2.2 trillion in 2012 from $1.5 trillion in 2008. In Europe, the issuance of ABS products also reached 230.85 billion euros ($306 billion) last year, according to data provided by China's central bank.

The room for credit asset securitization in China is about 3 trillion yuan, said Chen Ruiming, an analyst at Haitong Securities.


Back to September 2013 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

SEE BELOW- http://www.certifiedforensicloanauditors.com

Call us toll free at 888-758-2352

Bookmark and Share
Facebook Like us on Facebook
Twitter Follow us on Twitter
YouTube View our YouTube Videos
LinkedIn Connect to us on Linkedin
BBB Logo


Contact us or view our Sample Documents & Audits by completing the form below.

International Bloomberg Securitization Audits


DVD Sets Only $99


FREE Mortgage Fraud Analysis


Order Cutting-Edge Services Now


Quiet Title Packages from Licensed Attorneys


Affiliate Services


CFLA Sponsored Attorney Links


Take-Home Education Package