The crisis essentially has its roots in the combination of two forms of lending activity: the granting of low-quality mortgages to borrowers with little or no solvency for subsequent sale, and the abusive use of securitization to develop the Originate-to-Distribute (OTD) banking model. Both practices combined in an environment of excess liquidity, low real interest rates, investors’ pursuit of higher returns, and lax regulation, to originate the current crisis.
Knowing the ultimate roots of the crisis, several initial assertions can be made: the crisis was predictable and, in fact, was anticipated by both the Authorities and the banks involved; it is perfectly typical and even traditional in its fundamental aspects; and the crisis is alien and unrelated to the Spanish banking model and its way of doing business.
