Whatever They're Doing Isn't Working

$700 billion in TARP. Billions more in TALF. The federal government has stabilized the banking system.

So why can't you get a car loan?

Because nearly half of the lending in this country is based on banks' turning around and selling those loans through securitization, so the banks have more money to lend. Despite the best efforts of the government, the securitization market is nearly dead. One broker here told me, "You can't have new issuances until you trust the credit rating agencies."

This is a mess the industry realizes it brought upon itself. "We pushed it too far," says Tim Ryan, CEO of the Securities Industry and Financial Markets Association (SIFMA).

Now they're trying to simplify securitized instruments and make loan servicers give investors more information, and more often, about the underlying assets.

The seminars here over three days at the Venetian in Las Vegas have mind-numbing titles like "Covered Bonds Business and Regulatory Development" and "Vehicle Unwind and Workout Strategies." But people aren't fallng asleep from boredom. There's a tension in the air. Gone are the parties of previous conferences...and gone are a lot of the attendees. They're out of a job.

Without a solution, the industry says there will be a whopping $2 trillion less in lending over the next three years.

The industry would like to see the government buy bad assets in a "bad bank." This would at least put a price on assets whose value no seems to agree on. But they know nothing will move until investors in the private sector believe that what they're buying is what they're told it is. When will the market return to normal? "I'm not sure anyone knows what normal is," says Tom Deutsche of the American Securitization Forum.

Here's part of my interview with SIFMA's Tim Ryan.

Hear him explain how we got here, where we need to go, and his "list of 47 things."

      • Viva Lost Wages

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