This can’t be a good idea. Remember when bankers bundling home loans and selling them to investors nearly wrecked the global economy in 2008? Well, Credit Suisse, Western Asset Management, Wells Fargo and U.S. Bank want to try doing it again. Except this time, they’ll be using blockchain technology to create a more transparent process and standardize the data. (Bloomberg)
The key facts
In theory, this is actually a smart use of blockchain technology. Blockchain’s distributed ledger technology can be used to simplify the process.
“Structuring securities is complex, involving many different parties, manual processes, duplicated documents and data in different formats,” David Rutter, chief executive officer of blockchain startup R3, which is organizing the consortium. (Bloomberg)
But the real debate isn’t whether blockchain can make this process better. The real debate is whether banks should be back in this business again at all.
The smart take: It’s interesting to note that the powers that be have no problem getting up in arms about the value of bitcoin or the potential for money laundering, yet have no problem with blockchain if banks are using it in potentially ruinous ways — like tracking mortgages to bundle them. It’s more proof that the fight isn’t about the technology, it’s about the people adopting it.