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Last week I highlighted so-called 'CoCo bonds', and worried aloud that they are a sign of lessons lost from the financial crisis.

Well, apparently, things are a lot worse than I thought: mortgage-backed securities are rising from the dead.

I barf.

Securitization is not inherently bad, or systemically risky, and its financial utility can be quite large. But these particular instruments, the actual trigger of the financial crisis, are ticking timebombs that propagated the perverse incentives and speculation that boosted the housing bubble and sunk financial institutions around the globe. Their resurrection is an ominous sign that 'business as usual' is returning to the market, and the regulatory response thus far has failed to address the very issues that got us to this point.

And remember, banks never shed these assets, they instead sit as worthless weight on the balance sheets of the biggest recipients of taxpayer bailouts around the globe. When new mortgage-backed products enter the marketplace, and spur new lending within the housing market, the value of the old assets will rise, bringing with them a potentially massive windfall for banks and investors. This will be a tremendous boost to the market for these products, and reinforce the incentives to create them.

That's a problem.