Note this article from the Wall Street Journal, November 19th. It identifies what many in the financial community have ascertained. When the money is made on the origination and sale of a credit instrument, such as a loan, the looser the secondary market, the more flawed the process becomes. If the originator is required to keep the loan, the loan portfolios stay healthier.
In short, the wholesale syndication and fragmentation of corporate loans has rendered the process significantly more risky and resulted with the mess we have now in the financial market. Take a look at this article.
Original writing date: November 24, 2008
Article writing date: November 19, 2008