SECURITIZATION: A LOW-COST SWEETENER FOR LEMONS

Since the launching of the mortgage backed market in the early 1970s, securitization has experienced extraordinary growth and spread to a remarkable variety of receivables. But financial economists in the tradition of Miller and Modigliani have been hard pressed to explain such growth. When viewed within the context of an M & M world of "perfect markets," securitization appears to be simply another way-and a highly complex and costly one, at that-for a company to carve up its operating cash flows and repackage them for investors. 1997 Morgan Stanley.