Mortgage Securitization Only Works At The Expense Of Taxpayers And Banks

So says Arnold Kling for The American, here, who provides a useful summary of crony capitalist rent-seeking since World War II:

At this point, all signs point to victory by two of the biggest culprits in the mortgage crisis — the mortgage bankers (firms that originate loans to distribute, not to hold) and the Wall Street investment banks. Both depend on securitization if they are to participate in the mortgage lending process. However, securitization has only been able to compete with traditional bank lending when securities are backed by guarantees from the taxpayers and when bank capital requirements punish banks that hold their own loans.

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Arnold Kling is otherwise famous for his firm grasp of the obvious: "Most home owners are not libertarians."