Talk:Structured finance

Equity link

The link to equity is to something that has nothing to do with fundraising, as far as I can see. Unfortunately, the page at equity (economics) doesn't look right either. Something is missing here, any experts who can look into it? (IANAE) Vintermann 07:38, 3 April 2006 (UTC)

I've linked it to an article titled 'ownership equity', which, while not perfect, seemed to most closely match the concept as it is used in this structured finance article. afekz - 21:44, 12 August 2006 (UTC+2)

Mid-August changes

User:59.154.41.66 recently made sweeping changes to this article, completely altering the topic of the article. What gives? --Rob Kennedy 07:46, 22 August 2006 (UTC)

The third sentence in the lead paragraph needs to be struck as it posits a single and unestablished cause and effect relationship similair to a statement one might make in natural science using controlled experiements. This is biased or just uninformed. Only the word "arguably" attempts to provide some balance but that is easy to miss and still does not provide balance. TeeKay1980 (talk) 15:40, 12 June 2012 (UTC) TomKay

Moving foward with this article

To bring this article to where it should be, we need to expand the history section but more importantly a section that has a diagram and clearly explains the hierarchy of where structured finance lies and what it encompases. --DrewWiki 22:31, 24 January 2007 (UTC)

Working Definition

From an insider at the ground level of structured finance, there are two major types of structured finance, asset backed and mortgage backed. Regardless of which, the goal of both is to secure an entire bundle of loans together into a massive pool (valued in the low billions/upper hundreds of millions of dollars). The pool is created in such a way and with a certain amount and type of loans so as to make the risk of CONSEQUENTIAL amounts of default of the ENTIRE POOL virtually nonexistent (think mixing low risk with high risk but more complex try searching "scratch and dent" and securitization). For instance, an example of risk sheltering is done by the originator of the loan. The originator (bank, financial institution etc) will bundle the loans and sell off 85-95% of the entire bundle, reserving 5-15% as a default cusion (much like putting 20% down on a home). The bank would therefore suffer the first 5-15% loss on the pool, if any.

Investors then purchase shares in the almost guaranteed income from interest and thereby return the money that was loaned out by the banks, back to the banks. In the end, this process enables banks/financial institutions to make more loans, repeat the process and pick up a few hundred million or so a month.

Since it is essentially making thousands of 50-250k loans or making several large loans and breaking them up, selling most of the rights to the interest payments thereto, and in the end recovering 90% of the money that you initially had to loan out. This process takes approximately 6 months from the day the loan is first contemplated. Jan 1 contemplation, Jan 30 arrives at lawyers, March 30 Closing, June loan is sold.

That was put as the working defintion, I like the concept but lets wikify the text --DrewWiki 15:40, 29 January 2007 (UTC)

Untitled comment

The opening lines seem biased... — Preceding unsigned comment added by 67.172.88.254 (talk) 06:42, 11 February 2012