“In theory, securitization should serve to reduce credit risk by spreading it more widely,”58 Secretary of the Treasury Tim Geithner and Larry Summers, Obama’s top economic adviser, wrote in 2009 as they were making the case for new regulations. “But by breaking the direct link between borrowers and lenders, securitization led to an erosion of lending standards, resulting in a market failure that fed the housing boom and deepened the housing bust.”
