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Risk USA: Simpler structured products needed

Speaking at the annual Risk USA conference in New York, Joseph Mason, an associate professor of finance at Philadelphia's Drexel University, pushed banks to originate simpler products to increase transparency and information flow between buyers and sellers.

Mason pointed to the auto and credit card sectors as examples. In these industries, the most complex securitised deals have four waterfall tranches, as opposed to 25 tranches, commonly in collateralised debt obligations (CDO) referencing subprime mortgage-backed securities.

“The auto and credit card sectors decided a long time ago, because of similar distressed situations, that they are in the

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