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Author: Barry J. Eichengreen Publisher: ISBN: Category : Business cycles Languages : en Pages : 104
Book Description
A financial crisis is a disturbance to financial markets. associated typically with falling asset prices and insolvency among debtors and intermediaries, which spreads through the financial system, disrupting the market’s capacity to allocate capital. In this paper we analyze the generation and propagation of financial crises in an international setting. We provide a perspective on the danger of a serious disruption to the global financial system by comparing the last full-fledged financial crisis - that of the 1930s - with conditions prevailing today. Our definition of a financial crisis implies a distinction between generalized financial crises on the one hand and isolated bank failures, debt defaults and foreign-exchange market disturbances on the other. We represent this distinction in three sets of linkages: between debt defaults; and between exchange-market disturbances and bank failures. In both the 1930s and 1980s, the institutional environment was drastically altered by rapid change in foreign exchange markets, in international capital markets, and in the structure of domestic banking systems. Our comparative analysis underscores the critical role played by institutional arrangements in financial markets as a determinant of the system's vulnerability to destabilizing shocks.
Author: Neil Fligstein Publisher: Harvard University Press ISBN: 0674249356 Category : Business & Economics Languages : en Pages : 334
Book Description
A comprehensive account of the rise and fall of the mortgage-securitization industry, which explains the complex roots of the 2008 financial crisis. More than a decade after the 2008 financial crisis plunged the world economy into recession, we still lack an adequate explanation for why it happened. Existing accounts identify a number of culpritsÑfinancial instruments, traders, regulators, capital flowsÑyet fail to grasp how the various puzzle pieces came together. The key, Neil Fligstein argues, is the convergence of major US banks on an identical business model: extracting money from the securitization of mortgages. But how, and why, did this convergence come about? The Banks Did It carefully takes the reader through the development of a banking industry dependent on mortgage securitization. Fligstein documents how banks, with help from the government, created the market for mortgage securities. The largest banksÑCountrywide Financial, Bear Stearns, Citibank, and Washington MutualÑsoon came to participate in every aspect of this market. Each firm originated mortgages, issued mortgage-backed securities, sold those securities, and, in many cases, acted as their own best customers by purchasing the same securities. Entirely reliant on the throughput of mortgages, these firms were unable to alter course even when it became clear that the market had turned on them in the mid-2000s. With the structural features of the banking industry in view, the rest of the story falls into place. Fligstein explains how the crisis was produced, where it spread, why regulators missed the warning signs, and how banksÕ dependence on mortgage securitization resulted in predatory lending and securities fraud. An illuminating account of the transformation of the American financial system, The Banks Did It offers important lessons for anyone with a stake in avoiding the next crisis.
Author: M. Jarsulic Publisher: Springer ISBN: 0230106188 Category : Business & Economics Languages : en Pages : 198
Book Description
An indepth look at the origins and development of the current financial crisis, from an economist and Washington insider. Jarsulic explains how a wide array of financial institutions, including mortgage banks, commercial banks, and investment banks created a credit bubble that supported nonprime mortgage lending and helped to inflate house prices.
Author: Barry J. Eichengreen Publisher: ISBN: Category : Business cycles Languages : en Pages : 104
Book Description
A financial crisis is a disturbance to financial markets. associated typically with falling asset prices and insolvency among debtors and intermediaries, which spreads through the financial system, disrupting the market’s capacity to allocate capital. In this paper we analyze the generation and propagation of financial crises in an international setting. We provide a perspective on the danger of a serious disruption to the global financial system by comparing the last full-fledged financial crisis - that of the 1930s - with conditions prevailing today. Our definition of a financial crisis implies a distinction between generalized financial crises on the one hand and isolated bank failures, debt defaults and foreign-exchange market disturbances on the other. We represent this distinction in three sets of linkages: between debt defaults; and between exchange-market disturbances and bank failures. In both the 1930s and 1980s, the institutional environment was drastically altered by rapid change in foreign exchange markets, in international capital markets, and in the structure of domestic banking systems. Our comparative analysis underscores the critical role played by institutional arrangements in financial markets as a determinant of the system's vulnerability to destabilizing shocks.
Author: Neil Fligstein Publisher: Harvard University Press ISBN: 0674259017 Category : Business & Economics Languages : en Pages : 334
Book Description
A comprehensive account of the rise and fall of the mortgage-securitization industry, which explains the complex roots of the 2008 financial crisis. More than a decade after the 2008 financial crisis plunged the world economy into recession, we still lack an adequate explanation for why it happened. Existing accounts identify a number of culprits—financial instruments, traders, regulators, capital flows—yet fail to grasp how the various puzzle pieces came together. The key, Neil Fligstein argues, is the convergence of major US banks on an identical business model: extracting money from the securitization of mortgages. But how, and why, did this convergence come about? The Banks Did It carefully takes the reader through the development of a banking industry dependent on mortgage securitization. Fligstein documents how banks, with help from the government, created the market for mortgage securities. The largest banks—Countrywide Financial, Bear Stearns, Citibank, and Washington Mutual—soon came to participate in every aspect of this market. Each firm originated mortgages, issued mortgage-backed securities, sold those securities, and, in many cases, acted as their own best customers by purchasing the same securities. Entirely reliant on the throughput of mortgages, these firms were unable to alter course even when it became clear that the market had turned on them in the mid-2000s. With the structural features of the banking industry in view, the rest of the story falls into place. Fligstein explains how the crisis was produced, where it spread, why regulators missed the warning signs, and how banks’ dependence on mortgage securitization resulted in predatory lending and securities fraud. An illuminating account of the transformation of the American financial system, The Banks Did It offers important lessons for anyone with a stake in avoiding the next crisis.
Author: Senate Subcommittee on Investigations Publisher: Cosimo, Inc. ISBN: 1616405457 Category : Business & Economics Languages : en Pages : 664
Book Description
After a two-year investigation by the Senate Permanent Subcommittee on Investigation, their report, Wall Street and the Financial Crisis: Anatomy of a Financial Collapse was released in April 2011. This is the most damning official report to date on Wall Street's role in the financial crisis. It describes the wheeling and dealing of bankers and others who benefited from the housing bubble while impoverishing the rest of America. It also offers four very clear causes of the financial crisis and, last but not least, it names culprits: - High risk mortgage loans by commercial banks were "the fuel that ignited the financial crisis" (describing the case study of Washington Mutual Bank, the sixth largest commercial bank at the time of its failure in September, 2008 ) - Failures by regulators "set the stage for mortgage loan losses that were a proximate cause of the financial crisis" (describing the case study of the Office of the Thrift Supervision, which was closed in 2010 and whose operations folded into the Office of the Comptroller of the Currency); - Inaccurate AAA credit ratings by the two largest credit rating agencies "constituted a key cause of the financial crisis" (describing Moody's and Standard & Poor's conflicts of interest while both had a quasi-monopoly position in the market for credit ratings); - Investment bank abuses: "The Investment banks that engineered, sold, traded, and profited from mortgage-related structured finance products were a major cause of the financial crisis" (describing case studies of Goldman Sachs and Deutsche Bank). This report and its detailed case studies are a must-read for policymakers, politicians, justice officials, bankers, journalists, academics and concerned citizens in order to understand what brought the economy to the brink of destruction. The U.S. SENATE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS (PSI) is a bi-partisan team of senators that deals with Homeland Security and Governmental Affairs, and is currently headed by Senator Carl Levin (D-MI) and Senator Tom Coburn (R-OK). Formerly known as the Committee on Government Operations, PSI is the oldest subcommittee of the Senate Homeland Security Committee.
Author: Tho Bishop Publisher: Ludwig von Mises Institute ISBN: 1610167236 Category : Business & Economics Languages : en Pages : 165
Book Description
The Great Crash of 2020 was not caused by a virus. It was precipitated by the virus, and made worse by the crazed decision of governments around the world to shut down business and travel. But it was caused by economic fragility. The purpose of this collection is to highlight the important work of contemporary Austrian economists on the modern financial system. Although the mainstream financial press has been crediting American, European, and Chinese policymakers with upholding the global economy in the aftermath of 2008, Austrians have long been warning that these very same actions have only set the world up for a larger disaster. Promises in 2008 of the ease of normalizing monetary policy—such as by reducing balance sheets and phasing out market intervention—have been proven to be lies, just as Austrians warned. Authors Include: Ryan McMaken, Daniel Lacalle, Brendan Brown, Thorsten Polleit, Alasdair Macleod, Philipp Bagus, Ronald-Peter Stöferle, Mark J. Valek, Arkadiusz Sieroń, Ronald-Peter Stöferle, Jeff Deist, Joseph T. Salerno, and Claudio Grass.
Author: Robert Pasley Publisher: Routledge ISBN: 1351531794 Category : Business & Economics Languages : en Pages : 368
Book Description
In the early 1990s, the First National Bank of Keystone in West Virginia began buying and securitizing subprime mortgages from all over the country, and quickly grew from a tiny bank with just $100 million in assets to over $1.1 billion. For three years, it was listed as the most profitable large community bank in the country. It was all a fraud. All of the securitization deals the bank entered into lost money. To hide that fact, bank insiders started cooking the books, and concealing that they were also embezzling millions of dollars from the bank. This was all hidden from the bank's attorneys and auditors, federal bank examiners, and even the board of directors of the bank. To keep the examiners at bay, the bank insiders did everything possible to avoid giving them access to documents they were entitled to see, documents they knew would sink their scheme. The head of the bank even went so far as to bury four large truckloads of documents in a ditch on her ranch. Robert S. Pasley explores the failure of the First National Bank of Keystone, the intrigue involved, and the lessons that could have been learned and still can be learned about how banks operate, how federal banking regulators supervise financial institutions, how agencies interact with one another, and how such failures can be avoided in the future.
Author: Jeffrey Friedman Publisher: University of Pennsylvania Press ISBN: 081220493X Category : Business & Economics Languages : en Pages : 372
Book Description
The deflation of the subprime mortgage bubble in 2006-7 is widely agreed to have been the immediate cause of the collapse of the financial sector in 2008. Consequently, one might think that uncovering the origins of subprime lending would make the root causes of the crisis obvious. That is essentially where public debate about the causes of the crisis began—and ended—in the month following the bankruptcy of Lehman Brothers and the 502-point fall in the Dow Jones Industrial Average in mid-September 2008. However, the subprime housing bubble is just one piece of the puzzle. Asset bubbles inflate and burst frequently, but severe worldwide recessions are rare. What was different this time? In What Caused the Financial Crisis leading economists and scholars delve into the major causes of the worst financial collapse since the Great Depression and, together, present a comprehensive picture of the factors that led to it. One essay examines the role of government regulation in expanding home ownership through mortgage subsidies for impoverished borrowers, encouraging the subprime housing bubble. Another explores how banks were able to securitize mortgages by manipulating criteria used for bond ratings. How this led to inaccurate risk assessments that could not be covered by sufficient capital reserves mandated under the Basel accords is made clear in a third essay. Other essays identify monetary policy in the United States and Europe, corporate pay structures, credit-default swaps, banks' leverage, and financial deregulation as possible causes of the crisis. With contributions from Richard A. Posner, Vernon L. Smith, Joseph E. Stiglitz, and John B. Taylor, among others, What Caused the Financial Crisis provides a cogent, comprehensive, and credible explanation of why the crisis happened. It will be an essential resource for scholars and students of finance, economics, history, law, political science, and sociology, as well as others interested in the financial crisis and the nature of modern capitalism and regulation.
Author: Barry J. Eichengreen
Author: Neil Fligstein
Author: M. Jarsulic
Author: Barry J. Eichengreen
Author: Neil Fligstein
Author: Senate Subcommittee on Investigations
Author: Frederic Mishkin
Author: Tho Bishop
Author: 
Author: Robert Pasley
Author: Jeffrey Friedman