Mortgage

by brokers selling collateralised debt obligations (CDO’s) with high ratings, given to them by the rating agencies (Standard and Poor, Moody’s etc.). But the CDO’s were actually filled with sub-prime mortgages and when investors eventually saw that AAA rated CDO’s were defaulting on their mortgages it was too late. Financial institutions were flooded with credit default swops that were taken out as insurance from a possible loss arising from…

Identifying Systemically Important Banks 1. Definition of systemic risk and the importance of monitoring it 1.1 Definition of systemic risk According to Oxford dictionary, systemic risk means a risk of a failure in a whole system, the collapse of certain big banks or financial institutions will cause a systemic risk to the financial system as a whole (Law, 2014). Systemic risk related to bank failure. In detail, it has three perspectives. First refer to a chain of events, like domino…

and government entities all had agendas that served their needs, but may have even been working against each other to try and get the housing market or the economy to do what they felt they needed or wanted it to do. Then you throw in Wall Street, mortgage lenders, and banks both trying to comply with the regulations and trying to profit from the ensuing…

I was born in the town, Fayetteville in North Carolina. Fayetteville is a small town that had a Wall-Mart, The Waffle House, Bojangles, and a Ruby Tuesday. If, you were to drive by and blink, you would have missed it. I went to church every Sunday like a good Catholic and I also went to a Catholic private school. Church and school constantly repeated the same message “follow the Ten Commandments.” I grew up in a very a religious environment that ultimately sheltered me from the “real” world. I…

Introduction The key tenant of choosing a specific firm for analysis, is one having the history of outsourcing their Information Technology (IT), to a third party, only to regret the decision, and return, or back source, the IT service. An excellent example being the current largest bank in the United States; JP Morgan Chase. In 2004 JP Morgan Chase cancelled the remainder of a seven year, $5 billion IT contract with IBM. When the outsourcing deal was done in 2001, it was heralded as the…

The Dodd-Frank Wall Street Reform and Consumer Protection Act was formed after the catastrophic collapse of the financial system during 2008 to 2009. The act re-established the financial system's credibility by improving its accountability and transparency ending the concept of bailouts. It serves as a safeguard put in place by the government to prevent a future collapse. As always in politics parties take opposite sides on issues and with this act the same can be said. Due to the opposition…

longer able to afford to purchase homes, which meant that homebuilders were forced to abandon construction projects; this also impacted other people in the long run (pg.147). A lot of homes that were bought before this time period lost its values. The mortgage crisis inevitably spread to financial institutions, causing reputable Wall Street firms such as Lehman Brothers to collapse overnight (pg.147). There was also a shift in global power because of the global financial crisis. Most of the…

Development of Ghost Cities To increase GDP growth several cities in China have been constructed, which are now home to very few inhabitants and are therefore called Ghost Cities. After having constructed the city it turned out that only a few people were willing to live in the new city others stayed away or couldn’t afford an apartment. Often prices are too high for the Chinese citizens willing to live there. This inefficiency is a serious problem. A substantial part of the lower class…

recession varies by which economist is asked. Some economist contribute the recession to the rise in oil prices and the weak dollar. The common theory to the 2007-08 financial crisis is the collapse of the housing market bubble and the related subprime mortgage crisis. Consequently, the results of these two problems contributed to the decline of both consumer and corporate credit. During this period, financial institutions were filing for bankruptcy or they were being bought out, small and…

In 2008, an enormous global financial crash occurred impacting millions of people. The financial crash was the worst financial crash after the Great Depression of 1930. Many people lost their source of livelihood and jobs, therefore could not support their families. Interestingly, the main causes for both depressions was people’s lack of financial knowledge and understanding of how finance affects everybody. Becoming financially literate can allow people to steer away from such crisis.…