Will ABS market ever escape being tagged as driver of GFC?

Boasts low default rate

The ten-year anniversary of the collapse of Lehman Brothers in September brought with it another string of misinformed articles in the press about the role of asset-backed securities (ABS) in the Global Financial Crisis.

In recent weeks, we have variously read that collateralised loan obligations (CLOs) are a "ticking time bomb" and that securitisations of UK ‘subprime' mortgages are back to wreak havoc on a "brittle" financial sector, with other pieces saying familiar risks are emerging and questioning whether lessons have been learned.  One lesson clearly not learned is about the historical performance of the European ABS market, which seems unable to escape the tag of being the instrument that caused the Global Financial Crisis, despite boasting some of the lowest default rates across the fixed income...