1. what does REMI say? sm Modeling the Financial Crisis A few examples: New York City, Ohio, and California Presented by: Dr. Mark DAmato and Rod Motamedi

2. what does REMI say? sm Where the Crisis Began Speculation in housing market Creation of the Mortgage Backed Security and the Credit Default Swap Lack of government regulation in adjustable rate mortgages, and poor underwriting standards Allowed MBS and CDS to continue unfettered

3. what does REMI say? sm Creation of Mortgage Backed Securities

4. what does REMI say? sm Spreading Contagion Defaults in subprimes begin to increase, value of MBS decline Financial companies take huge losses, begin to shore up new capital Credit becomes scarce, lending slows, leveraged institutions unwind at a loss Fear of counterparty risk from holdings of Credit Default Swaps and increased risk of default Govt takes serious steps to prevent systemic failure as assets decline in value

5. what does REMI say? sm Regional Impact Drop in employment Decline in personal income Decline in consumption expenditures Decline in employment in industries that supply consumption goods

6. what does REMI say? sm Regional Impact Cont. Decline in population – Due to loss of employment opportunities economic migrants seek employment outside the region Decline of government spending

7. what does REMI say? sm Financial Sector Impact for NYC Scenario Taking out growth from 2004-2007 in the financial sector for New York City – Monetary Authorities 3,349 Jobs – Sec, Comm Contracts 10,146 Jobs – Ins Carriers, rel act2,255Jobs Total 15,750 Jobs

8. what does REMI say? sm Total Impact for NYC Job Loss 2009 43.40 thousand jobs lost 2013 44.96 thousand jobs lost Gross Regional Product Loss 2009 $9.311 billion 2013 $10.55 billion

9. what does REMI say? sm 2009 Financial Sector Impacts - NYC

10. what does REMI say? sm Motor Vehicle Manufacturing Sector Impacts for Ohio Scenario Taking out growth from 2004-2007 in the motor vehicle manufacturing sector of Ohio. – Over the four years there was a total of 3,013 jobs lost.

11. what does REMI say? sm Total Impact for Ohio Job Loss 2009 10.36 thousand jobs lost 2013 11.39 thousand jobs lost Gross Regional Product Loss 2009 $934 million 2013 $1.114 billion

12. what does REMI say? sm 2009 Motor Vehicle Manufacturing Impacts - Ohio

13. what does REMI say? sm Construction Sector Impacts in California Scenario Taking out growth from 2004-2007 in construction sector for California – The total job loss in construction for 2004-2007 is 14,043 jobs.

14. what does REMI say? sm Total Impact for California Job Loss 2009 30.36 thousand jobs lost 2013 32.85 thousand jobs lost Gross Regional Product Loss 2009 $2.015 billion 2013 $2.425 billion

15. what does REMI say? sm 2009 Construction Sector Impacts - California