The risk of relying on reputational capital a case study of the 2007 failure of New Century Financial

In the early years of this decade, private securities firms transformed the loan origination process in the US mortgage market by issuing securities backed by pools of nonprime (that is, less than prime and subprime) mortgages. It is impossible to understand what transpired in the nonprime mortgage markets without examining the operation of the capital markets in the issuance of such mortgage-backed securities (MBS).