A Research On The Legal Regulation Of Assert Securitization Of Local Financing Platform

In the end of2008, the government carried out a4trillion economic stimulus plan. Then, the local government built its local financing platform to catch up demands of construction. Under thus background, a huge of platforms was built, and at the same time, it is a difficulty to analyze risks and solve them.This article is based on asset securitization research. In our analysis, asset securitizations have functions of dispersing and transferring risks that can help activate remnant assets; if looking into the definition and features of securitization carefully, analyzing relationship of securitization and the Subprime Crisis, we can’t say that the Subprime Crisis in2008was due to securitization.Assert securitization of local financing platform set project benefits as its assert pool or basis. The single financial channels, concentration of credit risks, possibility of financial risk and high demands of capital of urban construction, all of these can explain necessity of assert securitization. In addition, it illustrates the feasibility like complete capital market, high quality of asserts and so on.Another case is Income Support Special Plan for Sewage Disposal in Nanjing Urban Construction. In this project, they chose asset management to implement securitization. The experts of Economic Law point out that such a plan and its management kind of trust legal relationship, which we can take advantages from.To China, the problems exposed from Subprime Crisis mean an alarm or warning for domestic financing platforms. In order to avoid risks, united statute to regulate asset securitization is necessary. Here is a piece of advice; government may try to use a mode combining internal and external credit right. Besides, united regulations of credit rating system and disclosure refactoring are also helpful.