Poor and Moody The Credit Rating Agencies and the Subprime Mess.

Slides:

Advertisements

Similar presentations

Suspecting the Rating Agencies Dan diBartolomeo Northfield Information Services January 2012.

Advertisements

Money Markets Freeze: Causes and Developments since August 2007 Gerald P. Dwyer Federal Reserve Bank of Atlanta University of Carlos III, Madrid.

What Caused This Mess? Bad Laws Built Up Over Time 1930s—Law put risk of default on the government through Fannie Mae and Freddie Mac. Banks sold mortgages.

Fall 2008 Workshop & Lecture Series Law & Finance Tuesday, October 7, 2008 Corporate Governance Standards and Financial Crises Regulatory Failures & Policy.

The Economics of Solicited and Unsolicited Credit Ratings Paolo Fulghieri Gunter Strobl Han Xia discussion by Adlai Fisher Sauder School of Business University.

Introduction to Economics. The Field of Economics Given the fact of scarcity of resources, economic systems resolve 3 basic issues: What should be produced?

What, Who, Where and Why of the Subprime Crisis By: Ken Cyree, University of Mississippi Presented to Carroll University.

THE U.S HOUSING MARKET COLLAPSE: HOW IT TRANSPIRED AND WHO’S TO BLAME Presenter: Gavin Oliphant Discussants: Steven Evans & Frank Black.

I. Should want to know what is right. A. Few today hunger to know right. They think they know (Ezek. 13:2-7).They think they know (Ezek. 13:2-7). Or reject.

Erica Liu. Secondary Mortgage Market The market for the sale of securities or bonds collateralized by the value of mortgage loans Ensure liquidity in.

I.1 ii.2 iii.3 iv.4 1+1=. i.1 ii.2 iii.3 iv.4 1+1=

Wayne R. Gross Partner Snell & Wilmer LLP Accessing Capital and Funding Through Government Partnerships.

I.1 ii.2 iii.3 iv.4 1+1=. i.1 ii.2 iii.3 iv.4 1+1=

Rating Agencies and Financial Crisis

The Financial Crisis of and the Great Recession A Massive Failure of the Financial and Political Elites in the United States: The Crisis of 2008.

Measuring default risk from Market price  Credit risk can be inferred from the market price of debt, equity, and credit derivatives whose value are affected.

Economic Systems. Why Economic Systems? Nations use economic systems to determine how to use their limited resources effectively. Nations use economic.

US Housing Bubble And Financial Crisis. Prime and Subprime Mortgages Mortgage Brokers originate both Prime and Subprime Mortgages. And sell the mortgages.

亞太金融市場報告 Residential Loan in Taiwan (influence by “Subprime Mortgage”) 第十組 J 4970E014 黃承廣 4970E050 王建智.

Lunch at the Lab Book Review Chapter 11 – Credit Risk Greg Orosi March

FINANCIAL SERVICES RISK MANAGEMENT Implications of Subprime Mortgage Crisis for Basel II Risk Models and the Potential Impact on Securitizations Peter.

Governments, Moral Hazards, and Financial Crises Franklin Allen Wharton School University of Pennsylvania Norges Bank Conference September 1-2, 2010.

Ch 25 Saving, Investment and the Financial System.

Trial Balance. The information for ledgers comes from balance sheets. -This means it is already in balance. As you make changes to the Ledger, it is possible.

Tara Stanley Emily Kenyon. CMOs Overview What is a CMO? History Associated Risk Advantages of CMOs Types of CMOs Role in Current Economy.

Creating the secondary mortgage market: history and players Qingxing Rao.

1 Section 2B Financial Crisis of Overview Key events of the economic crisis The four causes of the economic crisis 3 lessons we should learn from.

1. It is the administrators of the system, not capitalism that is guilty (I) 1. It is the administrators of the system, not capitalism that is guilty.

MBF-705 LEGAL AND REGULATORY ASPECTS OF BANKING SUPERVISION OSMAN BIN SAIF Session: Three 1.

MASTERS THESIS DEFENSE BY OLADEJI A BELLO SUPERVISOR: IEVGENIIA DIADKO EUROPEAN ECONOMIC CRISIS AND ITS CONTRIBUTING FACTORS.

1 Mortgage Defaults and Foreclosures: Recent Trends and Associated Economic and Market Developments Randy Fasnacht U.S. Government Accountability Office.

The Public Policy Consequences of Political Polarization The Financial Crisis and the Great Recession.

Chapter 3 Finance Theory and Real Estate. Chapter 3 Learning Objectives Understand how basic finance principles can be applied to real estate Understand.

April 17, 2014 THE NEW REGULATORY LANDSCAPE: LEADERSHIP—THE KEY TO SUCCESS SAMUEL P. GOLDEN MANAGING DIRECTOR AND CO-CEO ALVAREZ & MARSAL FINANCIAL INDUSTRY.

GRAVITAS Capital Advisors, Inc. 1 The Advantage of Innovative Thinking.

1 Public Policy and Secondary Mortgage Markets By Robert Van Order Freddie Mac March 2003.

Title: Timeline of the Financial Crisis, According to All The Devils Are Here, by Bethany McLean and Joe Nocera Subject: The 2008 Financial Crisis Instructional.

David Penn Associate Professor of Economics GSES AND THE MORTGAGE MARKET.

 Great Recession. History  Great Depression  Further Regulation  No Speculating.

Y376 International Political Economy March 10, 2011.

Starting a Business. I) Line of Credit A) Similar to a loan B) Get them through times of low sales.

How did the US financial sector get to this point? 1987 – Jan – Feb – May 1998 – Sept – Dec – 1999 – Mar – May 2000 –

Lessons Learned From The Credit Crisis For Financial Institutions Eddie M. Chen, CFA, FRM Entie Commeical Bank 11 Dec

Which operation should be done first? x 2.

基督再來（一）. 經文： 1 你們心裡不要憂愁；你們信神，也當信我。 2 在我父的家裡有許多住處；若是沒有，我就早已告訴你們了。我去原是為你們預備地去。 3 我若去為你們預備了地方，就必再來接你們到我那裡去，我在那裡，叫你們也在那裡， ] ( 約 14 ： 1-3)

Problems at Freddie Mac and Fannie Mae Secondary Mortgage Market Implicit guarantee Strategies Problems Preemptive Actions.

SOURCE: Minnesota Housing analysis of data from: Federal Housing Finance Agency, Data on Risk Characteristics and Performance of Single Family Mortgages.

“There are two superpowers in the world today in my opinion. There's the United States and there's Moody's Bond Rating Service.” Thomas Friedman (NYT),

Securitization: Credit Risk Management

Yonsei GSIS Bae, Deuk Han

Exciting time to buy a home!

Economic Analysis of Financial Regulation

Here are the facts… Homeownership in America is at a 50 year low

دليل الطالب المتميز في أساسيات علم السياسة

ФОНД ЗА РАЗВОЈ РЕПУБЛИКЕ СРБИЈЕ

The Housing Renaisassce 2016

التعامل مع ضغوطات العمل إعداد وتقديم إقبال المطيري

Слайд-дәріс Қарағанды мемлекеттік техникалық университеті

.. -"""--..J '. / /I/I =---=-- -, _ --, _ = :;:.

II //II // \ Others Q.

'III \-\- I ', I ,, - -

I1I1 a 1·1,.,.,,I.,,I · I 1··n I J,-·

. '. '. I;.,, - - "!' - -·-·,Ii '.....,,......, -,

U.S. Structured Finance Issuance Volume Notes: Agency includes MBS issued or guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac and excludes CMOs. Private-label.

Agency vs. Agency vs. Non-Agency MBS Issuance SharesNotes: Agency includes MBS issued or guaranteed by Ginnie Mae, Fannie Mae, or Freddie Mac and excludes.

Presentation transcript:

Poor and Moody The Credit Rating Agencies and the Subprime Mess

The CRA: Mystical n The rating agencies are somewhat of a mystically anointed monopoly, not unlike our good friends Fannie and Freddie, but with even less accountability. (Baker 2005) Mark Carl Rom

The CRA: Omniscient n Everyone assumed the credit agencies knew what they were doing. (Mason 2008) Mark Carl Rom

The CRA: Powerful n You could almost say that we live again in a two-superpower world. There is the U.S. and there is Moody's. The U.S. can destroy a country by leveling it with bombs; Moody's can destroy a country by downgrading its bonds. (Friedman 1995)

US Mortgage Markets Mark Carl Rom

Two Main Questions n What was the role of the CRA in the subprime mess? n What should be done? Mark Carl Rom

Today n The basics n The mess n The mistakes n The reforms Mark Carl Rom

What do the CRA do? Mark Carl Rom

How do the CRA do it? Mark Carl Rom

The CRA and the Mortgage Markets Mark Carl Rom

The Mess Mark Carl Rom

The Mess Mark Carl Rom

The Mistakes, I $ Mark Carl Rom

Incentives Mark Carl Rom

The Mistakes, II ? Mark Carl Rom

Ignorance Mark Carl Rom

The Mistakes, III Mark Carl Rom

Stress Mark Carl Rom

Stress Mark Carl Rom

The Remedies n Incentives >Manage, not eliminate n Ignorance >Clarify, not prevent n Stress >Report…but moot Mark Carl Rom