SECURITIES
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ASSET-BACKED SECURITIES

Asset-backed securities (ABS) are bonds that represent pools of loans of similar types, duration and interest rates. By selling their loans to ABS packagers, the original lenders recover cash quickly, enabling them to make more loans. The asset-backed securities market has grown as different types of loans are securitized and sold in the investment markets. Asset-backed securities may be insured by bond insurers.
ASSET-BACKED SECURITIES OUTSTANDING, 2002

($ billions)


 

Amount outstanding

Percent of total
Credit card$397.9 25.8%
Home equity286.518.6
CBO/CDO (1)234.515.2
Automobile221.714.4
Other215.414.0
Student loan74.44.8
Equipment leases68.34.4
Manufactured housing44.52.9
Total1,543.2100.0

(1) Collateralized bond obligations/collateralized debt obligations.

Source: The Bond Market Association.

  • Home equity loans accounted for 18.6 percent of asset-backed securities outstanding in 2002, up from 10.5 percent in 1995.

ASSET-BACKED SECURITY SOURCES, 1998 AND 2002



(1) Securities of federal mortgage pools backing privately issued collateralized mortgage obligations (CMOs). In CMOs, mortgage principal and interest payments are separated into different payment streams to create bonds that repay capital over differing periods of time.

Source: Board of Governors of the Federal Reserve System.


ASSET-BACKED SECURITY SOURCES, 1985-2002

($ billions, end of year)


Year

Agency securities (1)

Mortgages

Consumer loans

Student loans

Business loans

Trade receivables

Total
1985$10.1 $24.7 $0.0 $0.0 $0.0 $2.4 $37.2
1990103.068.576.70.04.317.4269.9
1995132.9278.2211.61.029.655.7709.1
1996137.8326.3265.86.337.780.7854.6
1997142.3406.2313.114.162.1128.11,065.8
1998180.2563.0372.417.985.9165.91,385.4
1999220.4656.1435.119.482.6187.01,600.6
2000224.7739.8500.129.990.9220.01,805.4
2001267.0885.9580.330.7113.3245.92,123.2
2002336.81,024.1621.435.8110.8269.72,398.6

(1) Securities of federal mortgage pools backing privately issued collateralized mortgage obligations (CMOs). In CMOs, mortgage principal and interest payments are separated into different payment streams to create bonds that repay capital over differing periods of time.

Source: Board of Governors of the Federal Reserve System.