Fed’s Sack Says Financial System Needs Leverage

Brian Sack, head of the markets group at New York Fed, said that leverage is essential for financial system to operate and he totally supports the securitization market as long as it is properly structured. He comments that although, subprime crisis led to almost 2 trillion dollars of writedowns, and is an important lesson to learn, US lawmakers, who are planning to make changes in regulation to prevent occurence of such a crisis, should understand that "securitization is a powerful tool that plays an important role in intermediation of credit in the economy."He says that it is size of too extensive securitized credits which caused the crisis, but is not the vechicle itself.