Conduits and structured investment vehicles didn't completely disappear with the financial crisis, but banks that sponsor them are now being cautious with the types of assets they fund.
In particular, they are shying away from assets with long-term maturities such as mortgages and instead sponsoring new conduits with short-term assets that match the maturities of the commercial paper that funds them.
"Bank sponsors of conduits are scaling back on long duration" assets, according to a source specializing in asset-backed commercial paper who attended the American Securitization Forum, which ends Wednesday. "The collateral should be of the duration of liabilities," he added, citing trade receivables as an example of assets with short maturity.
A mismatch of durations was one of the main problems that caused the ABCP market to implode in late 2007 and at the beginning of 2008 when conduit sponsors weren't able to find commercial paper investors to refinance.
Discipline and austerity seem to be the new themes in the world of securitization.
And such a mood is understandable considering how regulators continue to look out how to effectively police the industry .
As a sign that we have moved into times of less exuberance and more regulation, the American Securitization Forum, the annual gathering of U.S. professionals from the securitization industry, moved to Washington from Las Vegas this year.
And although the conference was "very well attended," and "everyone is being productive and not being hungover," the ABCP expert remarked, the conference also reflected today's struggling economy and poor job market.
"There's a lot of people either looking for jobs or not happy in their job."