And all this played hand in hand with an over-reliance on credit ratings as well as difficulties regarding the valuation of complex financial instruments. Moreover, pipeline risks were not managed well, leading to large warehouse exposures for originators and packagers, inflating their balance sheets and using up their capital. The turbulence has resulted in a slowdown in credit repacking.
Business in structured products has decreased significantly. Banks had to take SIVs and conduits into their balance sheets. However, this does not mean that the originate-to-distribute model has become fully obsolete.