Page 606 - WhyAsInY

Why (as in yaverbaum)
(although securitization did become important to me later in my career), but I thought I’d mention the easy stuff first and then, charitably in a footnote, take the opportunity to describe the Frankenstein’s monster that the RTC helped to create, and that securitization became, all with- out my assistance.
The more interesting of the assets of the thrifts to which the RTC succeeded were the many billions of dollars of items that we referred to as “hard to sell” assets, those for which, you guessed it, I had legal responsibility.
In ascending order of difficulty to sell, the assets to be disposed of consisted primarily of “performing commercial” loans (loans that were secured by mortgages on income-producing properties that were not in default); nonperforming commercial loans; commercial properties that the failed S&Ls had already taken from borrowers who had defaulted (“REO,” meaning “real estate–owned”); and land, an asset that produces no income but, until it is developed, a fair amount of cost, which had also been taken by the S&Ls from defaulting borrowers. The RTC was charged by Congress to liquidate all of the S&L assets as quickly as pos- sible, with the highest possible returns and the least disruption of local markets—three fairly inconsistent goals, but, being my mother’s son, I was no stranger to inconsistent goals. It fell to me, as Assistant General Counsel–Real Estate, to be in charge of the legal aspects involved in the disposition of those hard-to-sell assets, all of which were real estate– related and most of which were disposed of in various bulk sales.
By the time that I reached D.C., the RTC had already commenced a practice of bundling mortgages that were secured by a particular type of asset (say, hotels) into a “portfolio” and effecting bulk sales through private negotiation with individual buyers. But, for obvious reasons (such as allegations of favoritism, lack of competition, and, therefore, less than the best possible price), private negotiation had drawn con- gressional fire. In response, when I arrived, the RTC was moving to more
many Wall Street institutions, banks, mortgage companies, and investors that were directly or indirectly holding or selling those securities failed as well.
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