Reflections on Securitization and the Subprime Mortgage Crisis in the US from a Legal Perspective

The effective operation of securitization as a pattern of structured finance relies on the improvement of its risk isolation mechanism. However,the problems revealed from the subprime mortgage securitization show that risk isolation mechanism of securitization cannot prevent the eruption,expansion and global spread of the subprime mortgage crisis. A detailed analysis of this crisis yields the conclusion that the eruption and spread of the US subprime mortgage crisis resulted from the internal mechanism consisting of interactions between such complicated factors as inadequate legislation,improper application of policies,and the greed of financial institutions,whereas securitization can be described as adding fuel to the fire and helping the crisis to spread all over the world.