[Verse 1]
Banks collect mortgages stacking high
Individual loans that customers buy
Houses and cars, credit card debt
Bundled together in one safety net
Transform these loans into something new
Securities markets can trade right through
[Chorus]
Pool and package, slice and dice
Turn single loans into market-priced
Securities flowing, risk redistributed
Securitization gets credit distributed
From bank balance sheets to investor hands
Liquidity spreads across the lands
[Verse 2]
Special purpose vehicles hold the pool
Separate entities follow this rule
Credit enhancement protects the buyers
Ratings agencies grade these flyers
Tranches created with different risk
Senior, mezzanine - investors pick
[Chorus]
Pool and package, slice and dice
Turn single loans into market-priced
Securities flowing, risk redistributed
Securitization gets credit distributed
From bank balance sheets to investor hands
Liquidity spreads across the lands
[Bridge]
Why does this process even exist
Three reasons banks cannot resist
Capital relief frees up their space
Liquidity gives them breathing grace
Risk transfer spreads what they can't hold
More lending power, profits bold
[Verse 3]
Mortgage-backed securities lead the way
Asset-backed follow in their display
Auto loans, student debt, credit cards
Pooled together, complexity guards
Investors buy what fits their need
Securitization plants the seed
[Chorus]
Pool and package, slice and dice
Turn single loans into market-priced
Securities flowing, risk redistributed
Securitization gets credit distributed
From bank balance sheets to investor hands
Liquidity spreads across the lands
[Outro]
From individual loans to market trade
Securitization pathways made
Understanding how the system works
Knowledge where financial power lurks