One of the big ideas being batted around in Washington to stimulate small-business lending is securitization.

The assumption is that banks are reluctant to lend, as reflected in low loan-to-deposit ratios, and that one way to resolve this is to securitize the loans. Proponents seem to think that the risk attendant to small-business lending is what makes banks reluctant, and that getting the loans off the books would rectify the situation.

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