A relatively new fund-raising device used by banks and a few other financial intermediaries in recent years in which better quality loans are packaged into asset pools as collateral for bank security issues sold to investors is known as:

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Securitization refers to the process of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans, or credit card debt obligations and selling their related cash flows to third-party investors as securities, which may be described as bonds, pass-through securities, or collateralized mortgage obligations. This process enables banks and other financial intermediaries to convert illiquid assets into liquid securities, thereby improving their liquidity and reducing risk.

A Relatively New Fund-Raising Device Used by Banks and a Few