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References (3)
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Gregory Elliehausen, M. Staten, J. Steinbuks (2008)
The effect of prepayment penalties on the pricing of subprime mortgagesJournal of Economics and Business, 60
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A. Jobst (2007)
A primer on structured financeJournal of Derivatives & Hedge Funds, 13
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E. Kane (1989)
The High Cost of Incompletely Funding the FSLIC Shortage of Explicit CapitalJournal of Economic Perspectives, 3
- Publisher
- World Scientific Publishing Company
- Copyright
- Copyright ©
- ISSN
- 0219-0915
- eISSN
- 1793-6705
- DOI
- 10.1142/S021909150800143X
- Publisher site
- See Article on Publisher Site
Abstract
The US financial system is undergoing a painful restructuring as credit losses originating in the mortgage finance sector of the economy grow ever larger. A combination of factors including general prosperity, demographic shifts in demand for housing, low interest rates, innovations in mortgage lending and securitization, and a breakdown in credit quality control systems all contributed to this problem. Public policymakers and industry leaders are struggling to find ways to stem the credit losses, restructure and recapitalize the financial industry, and set the economy on a path to recovery. This paper reviews the origins of this problem, explains the events that precipitated the crisis in 2007, and analyzes the pros and cons of the "fixes" that have been proposed to address these problems.
Journal
Review of Pacific Basin Financial Markets and Policies – World Scientific Publishing Company
Published: Sep 1, 2008
Keywords: Subprime mortgage securitization credit risk monetary policy