Banks and Loan Sales Marketing Nonmarketable Assets Special Purpose Vehicles and Securitization推荐.pdfVIP

16 Banks and Loan Sales Marketing Nonmarketable Assets G A RY B. G O RTO N * AN D G E O RG E G . P E N N A C C H I 16.1. INTRODUCTION Historically, financial intermediaries have created loans that were not later sold. A reason for the illiquidity of loans is illustrated by the example of Penn Square, the bank that failed in 1982. According to the former director and chairman of the FDIC Irvine Sprague (1986, pp. 11–12): Penn Square was plunging other banks’ money into the risky oil and gas business. Its mode of operation was to make large, high-priced but chancy loans to drillers and then to sell the loans, in whole or in part, to other banks while pocketing a fee for the service. Such loans are called ‘participations’ and are a common practice in banking. Penn Square, however, transformed the practice into a species of wheeling and dealing . . . The large participating banks were exposed, embarrassed, and threatened. Buying loan participations in enormous amounts were some of the country’s leading and, supposedly, most sophisticated institutions . . . Their transactions with Penn Square violated all tenets of sound banking . . . They were content to rely on someone else’s faulty and * The data used in this paper were provided by a large bank which wishes to remain anonymous. We would like to thank the bank for the data and, particularly, the loan sales desk employees for their assistance with this study. Also, we are grateful for suggestions by seminar participants at the Federal Reserve Board, the Federal Reserve Banks of San Francisco and Cleveland, and Dartmouth College. We would also like to thank Mark Flannery, Stuart Greenbaum, Jonathan Karpoff, Deborah Lucas, Rabie Rafia, René Stulz, and an anonymous referee for providing helpful comments,