Subprime lending

Red Flags: 1) The significant unusual increase in long-term assets From 2003 to 2007, we can see that Bear Stearns’s long-term assets increased $170,836 (124.96%), while its current assets increased only 16.38%. This is a red flags because long-term assets are usually funded by long-term debts or stockholders’ equity. If a company put too many assets in its long-term categories, its financial flexibility will be impaired. 2) The significant increase in current and long-term liabilities From…

Analysts tend view the real estate and mortgage meltdown crisis around financial impact of the nation. Go to the Federal Reserve History page and look up “Subprime Mortgage Crisis”. An article by John V. Duca, from the Federal Reserve Bank of Dallas, gives a lengthy explanation of how and why the crisis occurred. At the end he even discusses steps to prevent the crisis in the future. (John V. Duca, 2013) However, it is centered on legislation, interest rates and direct financial impact. For the…

The advantages of Globalization of finance are the reduction of financial risk, improve the allocation of capitals, and reduce borrowing cost. Every business small or large has some form of a financial risk. The reduction of financial risk may require a business to plan for potential risk and existing risk. A company needs to plan ahead for future difficulties seen or unforeseen. Improving the allocation of capitals is one of the most important decisions associated with a company’s success and…

The necessary correction that occurred in the market opened the door for new investors to build wealth, and it opened the door for new families to own their own homes. The meltdown revealed poor lending practices and manipulation of investors by financial institutions, and it allowed for the correction of these problems. Government entities, financial institutions, investors, and consumers have all learned from the mistakes that led to the real estate…

Depression of the 1930s, two world wars, and the Russian debt default in 1998 (Investopedia, 2015). Their century long history of endurance started to erode during the U.S. housing market collapse of 2008 with Lehman’s extensive investment in the subprime mortgage market. With $619 billion in debt and $639 billion in assets, Lehman Brothers filed for bankruptcy on September 15, 2008, making it the largest in history (USLegal, 2010). The Lehman Brothers collapse contributed to the October 2008…

Bank failures and Mergers As they say, “The Bigger you are, the Harder you Fall” and you will damage your surroundings on the way down. Banks are getting bigger and bigger. With all the mergers and bank failures, the ones still standing is getting bigger and the competition is getting smaller. This is transforming into or already is a monopolistic competition. If one of them were to be a failure, it would create havoc in the economic system. This is exactly like what happen to the Lehman…

The most exceedingly bad Financial Crisis after the immense gloom in 1930 's has been the Global Financial Crisis of 2007-08 which activated from the Subprime Mortgage emergency and the burst of the housing bubble in the United states. It was mainly activated by an extensive decrease in home prices, prompting home loan misconducts and foreclosures and the devaluation of housing-related securities. Decreases in residential investments went before the retreat and were followed by diminishments in…

The unemployment rate during the Great Depression reached a high of 24.9%! How do you solve such an issue? Well, the answer was certainly not Franklin Delano Roosevelt’s New Deal. The Great Depression was a tragedy that started on October 29, 1929, and put millions of Americans out of work. Franklin Delano Roosevelt devised a plan to solve the problems of the Great Depression; this was called the New Deal. The New Deal provided American people with a series of social and economic programs that…

I. Article Summary Daniel Marans, "Brexit Is Already Causing the U.K. Economy to Shrink," wrote about the after effects of the economy of Britain making decision of leaving the European Union. He does this by providing different eligible sources that show Britain's economy on demand for goods and services. Marans also ends with talking about one of the reason for their actions and the effects if not complying to European Union agreements that are similar to other non-European union countries.…

5.1 Liquidated Damages: • Due to the contract being sucked away in the aftermaths of Hurricane Llewelyn, it is unknown whether the contract had a liquidated damage clause. (2-718) • If it did, we would be required to determine if the liquidated damage clause caused a penalty or not on the breacher 5.2 Expectation • The goal of the expectation damage would be to put MJC where they would have been had NSH performed. To do that you must take the difference of the market price at the time when the…