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At a glance

A large number of legacy non-performing loan exposures (NPLs) continue to subsist on the balance sheets of banks. Portfolios of NPLs tie up huge amounts of regulatory capital which, in turn, limits the amount of capital that banks have available to lend to the real economy. The economic

For some time now I have struggled to give an abbreviated version of what I do.  When “I’m a lawyer” elicits the question, “What sort of law do you practice?” I find that there is no short, layman’s-terms explanation of structured finance that doesn’t put people to sleep.  Recently I have resorted to saying, “I do the sort of stuff that caused the credit crunch,” but some people, on hearing that, start backing away in horror as though I myself am as toxic as the assets in some of the transactions.  At that point, I usually mumble something about trying to be funny and move on to another subject.

All that changed last month.  As Fabrice Tourre went on trial for selling risky investments in complex financial products, the judge urged the banning of certain terms from the courtroom, including “CDO,” “asset-backed,” “securitisation,” “short and long investors,” and “credit default swap.”  “Have a heart,” she urged, “Keep the mumbo-jumbo to a minimum.”

So now I have a new, succinct description of what I do:  “mumbo-jumbo.”

To try to make sense of the mumbo-jumbo, I think in terms of an analogy: