So called "securitization structures” have made it easier to transfer traditional on-books risks of banks to off-books accounts, therefore freeing up capital which allowed banks to lend more. “Structured products” have also allowed the enhancing of yield on traditional investment instruments. With these financial innovations, the objectives of the investors and the users of funds were therefore seemingly “happily married”.
But alas, the party has abruptly ended and the music has stopped playing. In the flurry of these financial innovations, the value of transparency seemed to have been understated or even casually brushed aside. And as the market in the US was largely deregulated, the market grew larger and larger.