I take issue with the way he describes securitization as if it's some horrible evil. Securitization (and financialization in general) just takes big balls of intertwined risks and breaks them apart into little balls of (theoretically) consistent risk so that everyone can get the amount of risk they desire.
Imagine a company that has a single customer. There's a 50/50 chance that the customer will pay. If the customer pays then the company makes a ton of profit, if the customer doesn't pay then the company goes out of business.
For the company, this is probably more risk than they want to take. But there's probably hedge fund out there who has enough money to survive the customer not paying and is willing to take that risk for a fee. So the company can go to the hedge fund and say "if the customer pays us in the future we'll give you all the money. In exchange give us 40% of it right now".
And the company is happy because they have a 100% chance of staying in business. And the hedge fund is happy because (if the risk was priced correctly) they have a positive expected value in the trade.
That's true in that it's what securitization is meant to be but unfortunately as was seen in the mid-2000's it proved extremely difficult to accurately price the little balls of risk and the money being made in doing the selling and breaking apart those balls provided an incentive for people to keep the pipeline of loans going well past what was prudent.
In the UK we ended up with all sort of shenanigans like "self-certified mortgages" where the person taking out the loan was allowed to certify their ability to repay. with that kind of product it's very difficult to classify risk of non-repayment as you can't believe the evidence provided (necessarily).
Imagine a company that has a single customer. There's a 50/50 chance that the customer will pay. If the customer pays then the company makes a ton of profit, if the customer doesn't pay then the company goes out of business.
For the company, this is probably more risk than they want to take. But there's probably hedge fund out there who has enough money to survive the customer not paying and is willing to take that risk for a fee. So the company can go to the hedge fund and say "if the customer pays us in the future we'll give you all the money. In exchange give us 40% of it right now".
And the company is happy because they have a 100% chance of staying in business. And the hedge fund is happy because (if the risk was priced correctly) they have a positive expected value in the trade.
That's all securitization is.