Statement of Cameron L. Cowan
Orrick, Herrington, and Sutcliffe, LLP
On behalf of the American Securitization Forum
Subcommittee on Housing and Community Opportunity
Subcommittee on Financial Institutions and Consumer Credit
United States House of Representatives
Hearing on Protecting Homeowners: Preventing Abusive Lending While
Preserving Access to Credit
November 5, 2003
Thank you Chairman Ney and Chairman Bachus for holding this hearing and the
opportunity to testify today on the role and importance of securitization in the mortgage
industry. My name is Cameron Cowan.
I am a partner at the law firm of Orrick,
Herrington, and Sutcliffe. Within Orrick, I serve as the managing director of financial
practice and as a member of the firm’s executive committee.
I am also a member of the
American Securitization Forum’s (ASF) executive committee and I chair the ASF’s
Legislative and Judicial Subcommittee.
The ASF, an affiliate of The Bond Market
Association, is a broadly-based professional forum of participants in the U.S.
Among other roles, the ASF members act as investors, issuers,
underwriters, dealers, rating agencies, insurers, trustees, servicers and professional
advisors working on transactions involving securitizations.
For the last 16 years, my law practice has focused on structured finance—also known as
securitization. My knowledge of subprime and predatory lending generally comes from
the perspective of the secondary market. In my testimony today, I will focus on the
securitization process, the growth of the industry and the many benefits securitization
brings to consumers (including subprime borrowers), investors and issuers.
History and Overview of Securitization
Securitization is the creation and issuance of debt securities, or bonds, whose payments
of principal and interest derive from cash flows generated by separate pools of assets.
has grown from a non-existent industry in 1970 to $6.6 trillion as of the second quarter of
2003. Financial institutions and businesses of all kinds use securitization to immediately
realize the value of a cash-producing asset. These are typically financial assets such as
loans, but can also be trade receivables or leases.
In most cases, the originator of the
asset anticipates a regular stream of payments.
By pooling the assets together, the
payment streams can be used to support interest and principal payments on debt
360 MADISON AVENUE
NEW YORK, NY 10017-7111
Fax 646.637.9126 americansecuritization.com
1399 NEW YORK AVENUE, NW WASHINGTON, DC
20005-4711 Telephone 202.434.8400 Fax 202.434.8456