Could we see more bank bailouts? My fears about `securitisation` – Financial Times

I’m worried about the banking industry.

In particular, I’m worried that we have not completely learned the lessons from the crisis and that if a bank failed tomorrow it might still call on taxpayers to bail it out.

I am also concerned about calls to boost the market for so-called securitisation. It raises some of the same fears and the same questions we saw before the 2008 financial crash.

In simple terms, securitisation is where you pool loans, chop the pools up into different tranches then configure into financial instruments, supposedly to reduce risk and to free up liquidity. However, in the lead up to the crisis, securitisation was blamed for disguising the fact that there was not sufficient money put aside to cover bad loans.

Yes, more liquidity could help the economy and it could create jobs, but what about the risks?

I recently welcomed Financial Times reporter, Maddison Marriage to my office in Brussels, where I explained some of my thinking behind this securtisation question.

As I`ve said before, we must encourage London’s incredible financial sector but we can’t just let it run out of control.

Not surprisingly, Maddison also asked me about the London Mayoral race and of course, the referendum.

You can find the article here

http://www.ft.com/cms/s/0/4df45fb0-cb5a-11e5-a8ef-ea66e967dd44.html#ixzz3zfUurl1N

(please note you need a subscribtion to read it in full)