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The Rise and Fall of the US Mortgage and Credit Markets


The Rise and Fall of the US Mortgage and Credit Markets

A Comprehensive Analysis of the Market Meltdown
1. Aufl.

von: James Barth

38,99 €

Verlag: Wiley
Format: PDF
Veröffentl.: 29.04.2009
ISBN/EAN: 9780470493861
Sprache: englisch
Anzahl Seiten: 562

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Beschreibungen

<p>The mortgage meltdown: what went wrong and how do we fix it?</p> <p>Owning a home can bestow a sense of security and independence. But today, in a cruel twist, many Americans now regard their homes as a source of worry and dashed expectations. How did everything go haywire? And what can we do about it now?</p> <p>In <i>The Rise and Fall of the U.S. Mortgage and Credit Markets,</i> renowned finance expert James Barth offers a comprehensive examination of the mortgage meltdown. Together with a team of economists at the Milken Institute, he explores the shock waves that have rippled through the entire financial sector and the real economy. Deploying an incredibly detailed and extensive set of data, the book offers in-depth analysis of the mortgage meltdown and the resulting worldwide financial crisis. This authoritative volume explores what went wrong in every critical area, including securitization, loan origination practices, regulation and supervision, Fannie Mae and Freddie Mac, leverage and accounting practices, and of course, the rating agencies. The authors explain the steps the government has taken to address the crisis thus far, arguing that we have yet to address the larger issues.</p> <ul> <li>Offers a comprehensive examination of the mortgage market meltdown and its reverberations throughout the financial sector and the real economy</li> <li>Explores several important issues that policymakers must address in any future reshaping of financial market regulations</li> <li>Addresses how we can begin to move forward and prevent similar crises from shaking the foundations of our financial system</li> </ul> <p><i>The Rise and Fall of the U.S. Mortgage and Credit Markets</i> analyzes the factors that should drive reform and explores the issues that policymakers must confront in any future reshaping of financial market regulations.</p>
<p>List of Illustrations xi</p> <p>List of Tables xxv</p> <p>Acknowledgments xxxiii</p> <p><b>Chapter 1 Overleveraged, from Main Street to Wall Street 1</b></p> <p><b>Chapter 2 Overview of the Housing and Mortgage Markets 9</b></p> <p>Housing Units, Mortgage Debt, and Household Wealth 9</p> <p>Types of Home Mortgages 15</p> <p>Two Housing Finance Models: Originate-to-Hold vs. Originate-to-Distribute 22</p> <p>Low Interest Rates Contribute to Credit Boom and Record Homeownership Rates 29</p> <p>Mortgage Originations, Home Prices, and Sales Skyrocket 36</p> <p><b>Chapter 3 Buildup and Meltdown of the Mortgage and Credit Markets 41</b></p> <p>What Is a Subprime Mortgage and Who Is a Subprime Borrower? 42</p> <p>Subprime Lending Grows Rapidly and New Products Gain Acceptance 46</p> <p>Subprime Mortgages Enable More Widespread Homeownership 56</p> <p>Securitization Facilitates the Funding of Subprime Mortgages 61</p> <p>The Housing Bubble Reaches the Breaking Point 65</p> <p>The Collapse Begins 74</p> <p><b>Chapter 4 When Will the Crisis End? 101</b></p> <p>What Is the Damage Scorecard to Date? 102</p> <p>The Pain Spreads throughout the Financial Sector and Beyond 112</p> <p>When Will We Hit Bottom? 135</p> <p><b>Chapter 5 What Went Wrong <i>. . . </i>? 143</b></p> <p><i>. . . </i>with Origination Practices and New Financial Products? 145</p> <p><i>. . . </i>with Securitization and Rating Agencies? 153</p> <p><i>. . . </i>with Leverage and Accounting Practices? 160</p> <p><i>. . . </i>with Fannie Mae and Freddie Mac? 172</p> <p><i>. . . </i>with Tax Benefits for Homeownership? 182</p> <p><i>. . . </i>with Regulation and Supervision? 184</p> <p><i>. . . </i>with the Greed Factor? 204</p> <p>Assessing the Role of Various Factors to Explain Foreclosures 207</p> <p><b>Chapter 6 So Far, Only Piecemeal Fixes 219</b></p> <p>The Landscape Shifts for Lenders 220</p> <p>The Federal Reserve Intervenes to Provide Liquidity and Higher-Quality Collateral 231</p> <p>Congress and the White House Take Steps to Contain the Damage 249</p> <p>The FDIC Takes Steps to Instill Greater Confidence in Depository Institutions 269</p> <p>The Government’s Actions Drive up the Deficit 274</p> <p><b>Chapter 7 Where Should We Go from Here? 287</b></p> <p>Key Factors That Should Drive Reform 289</p> <p>Issues for Policymakers 293</p> <p>Concluding Thoughts 319</p> <p>Appendix 321</p> <p>Endnotes 445</p> <p>Glossary 451</p> <p>References 479</p> <p>About the Milken Institute and General Disclaimer 507</p> <p>About the Authors 509</p> <p>Index 513</p>
<p><b>JAMES R. BARTH</b> is a Senior Fellow at the Milken Institute and the Lowder Eminent Scholar in Finance at Auburn University. His research focuses on financial institutions and capital markets, both domestic and global, with special emphasis on regulatory issues. Barth was an appointee of Presidents Ronald Reagan and George H.W. Bush as chief economist of the Federal Home Loan Bank Board and later of the Office of Thrift Supervision. He has authored more than 200 articles in professional journals and has written and edited several books, including <i>The Great Savings and Loan Debacle</i>, <i>The Reform of Federal Deposit Insurance</i>, and <i>Rethinking Bank Regulation: Till Angels Govern</i>. Barth has been quoted in publications ranging from the <i>New York Times</i> to the <i>Wall Street Journal</i> and has appeared on broadcast programs including <i>The McNeil/Lehrer NewsHour</i>, <i>Good Morning America</i>, <i>Moneyline</i>, and CNBC's <i>Closing Bell</i>.
<p>For decades, the home mortgage market successfully extended credit to more and more families, enabling millions of Americans to own their own homes. In recent years, however, it became ever more apparent that credit was expanding too rapidly and too many market participants were becoming dangerously leveraged. What began as healthy growth in mortgage originations and housing starts swiftly became a home price bubble. When home prices did come plunging back to earth, the damage quickly spread far beyond the scope of the actual mortgage defaults and foreclosures. Even solid companies with no connection to the real estate and finance sectors were affected as credit markets seized up. How did this happen—and what can we do about it now? <p>In <i>The Rise and Fall of the U.S. Mortgage and Credit Markets,</i> James Barth, with the assistance of his colleagues at the Milken Institute, analyzes in detail the mortgage meltdown and the resulting worldwide financial crisis. He explains how Main Street and Wall Street alike took on too much risk and too much debt in their quest for gains, setting the crisis in motion. <p>In straightforward terms, he tells what subprime mortgages are, who subprime borrowers are, and how securitization—packaging loans into complex securities and selling them in the secondary market—expanded the mortgage market, but also opened the door to a shifting of risk. Barth also assesses what went wrong in every other critical area, including loan origination practices, regulation and supervision, Fannie Mae and Freddie Mac, leverage and accounting practices, and, of course, the rating agencies. <p>The author explains the steps the government has taken thus far and suggests that those actions have been piecemeal—and largely reactive, rather than proactive. He argues that we have yet to address the bigger and more long-term issue of how to reform the structure of regulation and supervision to prevent a similar crisis from happening again. Barth also offers his own thoughts on the factors that should drive reform and explores several important issues that policymakers must address in any future reshaping of financial market regulations.

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