What's Broken?

The conventional explanation for the decline in the ABCP market is that structured finance is on the slide, perhaps for good. There is another reading, though. It could be that the structured finance isn't dead - after all Morgan Stanley got a CMBS deal done recently - it could be that maturity transformation is dead. Northern Crock didn't fail because of structured finance, it failed because of funding. Of course the reality is not so clear-cut, but if there is even a grain of truth in this musing, securitisations with little or no liquidity risk and well understood collateral will continue to be executed even as other parts of the structured finance market fail.