At the end of every three-month period, data providers crunch through a mountain of information about stock and bond deals, M&A activity, and all kinds of other financing to produce the much-scrutinized "league tables." And the final weeks of December were no exception, as Jody Drulard and his team at Dealogic LLC scrambled to put together a summary of Wall Street's dealmaking for the watershed year of 2009.

But instead of looking at what Wall Street firms had done in 2009 (notably, a big rebound in debt issuance that earned $18.2 billion in fees for investment banks and banks globally), Drulard found himself pondering what wasn't showing up on the league tables he was compiling. Specifically, that missing $3 trillion or so of capital that Wall Street had raised every year for most of the first decade of the 21st century.

"Really, what's happened is that about 25 percent of the capital markets fundraising activity has just evaporated," says Drulard, managing director of Dealogic. "The securitization market had $2 trillion of capital raised every year for six years or so; another $1 trillion once raised in the loan market is gone as well. If that's the 'new normal,' that's got to be worrying for Wall Street."

Folks like Reed Auerbach, head of the structured transactions group at the law firm Bingham McCutchen, are already feeling the impact. Back in 2006, at the peak of the market, partners and associates at McKee Nelson (the predecessor firm, of which Auerbach was co-CEO) were toiling away to put together three or four securitizations or more every working day. "It was like a machine," Auerbach says. Last year? Bingham McCutchen, which merged with McKee Nelson last year, is still No. 1 in terms of the number of securitization deals it helped put together. But it worked on only 114 transactions in 2008, down from 1,100 or so in 2006.

To some extent, the ebullient bond market masked some of the pain for financial institutions last year, as companies raced to take advantage of relatively low rates and rapidly recovering investor interest to issue a record $2.78 trillion. Even junk-bond issuance soared to $175.6 billion, triple 2008 levels and within 10 percent of the 2006 issuance record. And Drulard figures that underwriting new debt and stock issues will continue to keep Wall Street's bankers busy in 2010. "But securitization and lending have been very important products; for Wall Street to be healthy again, they need to come back."

It isn't just Wall Street that will suffer. Over the last decade or two, financial institutions have come to rely on the ability to securitize a chunk of the loans they make in order to manage their risk. And when banks were reluctant to lend, non-bank financial institutions did so, knowing that they could resell those loans to investors through Wall Street's securitization machine. As is now all-too-well known, that machine got carried away in the years leading up to the 2008 credit crunch and the near collapse of the financial system.

No one wants a return to those excesses, with reckless non-bank lenders making loans that were doomed to fail simply because they could make money selling them into the securitization market. On the other hand, nearly everyone, from President Barack Obama on down, is pleading for a revival of lending and praying for an economic recovery. In testimony to Congress last month, Treasury Secretary Timothy Geithner cited the troubled securitization market as one of the "significant headwinds" still hampering a full financial and economic recovery.

Can the missing $3 trillion be recovered? At the moment, the securitization market—the business of buying up receivables like credit-card balances, auto loans, home mortgages, student loans, and other assets and repackaging them into bonds for resale to investors—is existing on a kind of life support, courtesy of federal government agencies. The "healthy" part of the securitization market—the asset-backed (ABS) bonds that are structured based on everything except mortgages—seem to be faring well, but that's in large part because of the TALF, or Term Asset-Backed Securities Loan Facility.

That program, a Thanksgiving 2008 gift to the financial-services industry (and borrowers) from the Federal Reserve, stabilized the ABS market by offering up to $1 trillion in financing to investors buying these loans—creating a de facto "floor" bid for ABS assets, notes Auerbach. About half of the $164.5 billion of asset-backed deals done in 2009 were "TALF-eligible," Dealogic calculates. The program, says Jerry Marlatt, senior counsel to Morrison Foerster, a national law firm, "has helped restore confidence in this part of the securitization market. There have even been some recent deals done without TALF support."

But TALF is scheduled to wrap up in March, leaving the ABS market without that outside support. "We'll have to see how it fares on its own; until we try, we won't know," says one banker who is involved in the securitization market.

Bigger questions hover over the mortgage-backed securities market. The real estate market is still in turmoil. Virtually all the mortgages being underwritten and sold are those that meet the criteria of Fannie Mae and Freddie Mac, which, Marlatt says, have been buying those loans with a lot more taxpayer funds. "Another big question is what happens when the Treasury Department stops buying the securities issued by Fannie and Freddie," he says. "They'll have to step back at some point; the timing will be a big judgment call." Until that happens—which will require a stable real estate market—that portion of the securitization market is unlikely to revive. Even then, its recovery may prove sluggish, since the CDOs (aka, collateralized-debt obligations) that once purchased the mortgage-backed securities are likely to remain moribund.