a query about the monetary crisis?

Query by Huge BOB J: a question about the economic crisis?
been trying to realize all this for a course i am doing, but sruggling in a single element. brokers secured mortgage offers, subprime, and received commission for this. lenders actually went by way of with the offers and lent homeowners cash for the mortgage. they then sold these mortgages on to investment banks who turned them into CDO and then sold them on to individual investors. is this proper so far? loads defaulted then on the payments, so homes repossessed by both lenders and by investment banks, depending on who owneed the mortgage each time. provide went up, economics forced rates to go down and then they have been left with worthless assets (identified as toxic or not?) they then had nobody to purchase these off them from then on and transfer the threat of their investment and the resp. also, they couldnt spend back federal reserve where a lot of borrowed million billions and had high leverage. once again, is this right?

if so, how do lehmans brothers match in, are they lenders, brokers, investemnt bankers/banks. is there a case study i can look at to much better understand even? an example of a lender, and an invesment banker?

also, did the banks just not recognise the risk or was it ignored?

cheers please answer all if you can

Ideal answer:

Answer by Caroline
Lehman Brothers (large bank) was run by a man who decided to lend 40 dollars for each and every dollar he owned. That was also high a leverage (other banks had leverage of like 20:1 which is also high but that is why Lehman Brothers was the 1st to fall)

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What is your solution for the financial crisis?

Query by Irascible Interlocutor: What is your solution for the monetary crisis?
Is the bailout the very best way to go?
Perhaps we should just let the banks fail?
Ought to the government get up toxic assets or banking stocks? Ought to Wall Street be bailed out or the homeowner who is facing foreclosure?

Sen. Chuck Schumer of N.Y. who is on the banking committee, and a single of the 1st officials to push for a bailout mentioned that New York ought to get their fair share of the bailout income the Government is disbursing.

I consider that New York financial center and Senator Schumer (NY) are responsible for the monetary crisis in the very first spot and that New York must Pay far more than it really is fair share, NOT receive its fair share.

Who do you feel need to pay?

The link is a really good write-up about Sen. Schumer and his involvement in the financial crisis.
http://iht.com/articles/2008/12/13/enterprise/14schumer.php
Musicman, I don’t understand your answer. You begin by saying the banks cannot fail, and finish by saying no bailout for banks.
???

Very best answer:

Answer by Musicman812
You can’t let the banks fail. Everyone’s screaming about the government carrying out everything for wall st. and absolutely nothing for primary st.. I beg to differ, if the banks fail, so do consumers’ accounts — whoops, did we all fail to make that connection?

Loans/savings/CD’s/MMA’s/and so on. etc….gone in a flash.

you said:
“I think that New York monetary center and Senator Schumer (NY) are accountable for the financial crisis in the very first place and that New York should Spend more than it’s fair share, NOT get its fair share.”

You are only partially right. Without government mandated policies which permitted for securitization of these toxic loans, it wouldn’t have considerably of a difficulty. You see, the government opened a market to the totally free-market place banks to take toxic loans off of their books in an effort to get them to make much more loans — The Community Reinvestment Act.

With out that market place to sell these loans, free-marketplace banks would’ve kept those loans on the books — and used a small much more discretion when creating loans.

Who’s to blame? (Crappy) Government policy — greed in the free-industry banking industry — greed in shoppers who wanted it but could not afford it. A lot to go around.

As for state’s obtaining Federal funds — if Obama had a spine he’s look them all in the eye and inform them to reduce spending…and use discretionary funds. If they can’t make it — as well f*cking undesirable…lessons discovered the difficult approaches are those that stick around.

No bailout, no bailout, no bailout.

Cease throwing part of my cash at the wall!!
+++++++++++++++++++++++++++++++++++++++++++
Edit: No bailout — “stimulus” package. Obama is advertising and marketing it as the only way we’ll accelerate growth in the economy. He’s going to bailout the U.S. citizen by taking care of the economy. The issue is not plugging the hole any longer…money or not, individuals are going to save — they won’t commit. The problem we need to address is providing citizens the self-confidence to devote again. With no that, we’ll prolong the problem…because the “stimulus” only performs until the income runs out. After the 1 trillion is gone, if you do not have buyers to step up to the plate to devote, we’ll spiral proper back into a ten+% unemployment price. A waste of money if you ask me.

And banks as big as BofA and Citi can’t fail…their financing ripples all through the economy (not to mention the citizenry) — but the government can surely bail them out w/ far more efficiency. Watching BofA acquire Merrill Lynch w/ taxpayer funds only to deepen their debt and ask for far more taxpayer money (and get it!) doesn’t sit properly with me. Very good operate Frank/Dodd/Paulson! Bang up job.

Sorry for the confusion. )

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Why do not banks restructure loans to quit foreclosure crisis?

Question by frickadella: Why never banks restructure loans to cease foreclosure crisis?
Properly, I hear a lot about how unamerican it is and uncapitalist as effectively – and by the way, its the home owners fault for purchasing a residence they could not afford. Place aside that OLD worn out notion of fiduciary duty, bah, that the bank may have had when giving out loans in the 1st spot and assist me recognize this: Who wins when so numerous are foreclosing? The banks lose money, the owner loses the house, and the investors that fund the mortgage marketplace are losing too correct… and the communites, the countys and on and on? I wouldn’t anticipate the bank or investors to restructure solely for the advantage of homeowners, but can not they just defer partially the payments or locate some answer that allows the owner to hold the property and nevertheless honor their obligation, just perhaps further out?

So I guess my query is, what is stopping banks from performing something when it appears everyone is losing out?

Ideal answer:

Answer by Rex
Absolutely everyone is not loosing it. Much less then 1% of homes are facing foreclosure, the media just talks about it a lot.

You look to be missing the truth that these men and women had been provided large sums of cash, which they spent and it needs to be paid back.

No 1 need to get a free ride, especially not based on them being greedy in the first location.

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Q&A: International economic crisis?

Query by Boots B: Worldwide financial crisis?
I have a reseach about the causes of the global financial crisis so i want assist locating trustworthy websites that can give me the info? Can any1 assist offer some hyperlinks?
Thank u!!
BTW im in 10th grade!!
Thnx!

Ideal answer:

Answer by Randolf
youtube! study the comments there.. There’s a lot acting so known as genius there.

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what are the causes of the international economic crisis in 2009?

Query by Stardust Ash: what are the causes of the international financial crisis in 2009?
elements that led to the 2009 international economic crisis.

thanks!!

Best answer:

Answer by Simone
The list of causes of the crisis is fairly lengthy because there have been systemic failures and contributing aspects but the primary causes could be summarized with:

*A housing bubble – that eventually burst
*Poor underwriting/sub-prime lending at financial institutions
*Securitization of mortgages/creation of atypical investment autos
*Aggressive threat management
*Poor contingency arranging

I think what produced the crisis shift from the US to the rest of the globe is that truth that we reside in a very connected, international economy. So, a crisis that originates in one nation has the possible to debilitate another – producing a ripple effect.

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How was the United Kingdom affected by the Credit Crisis in 2008?

Question by Jay: How was the United Kingdom affected by the Credit Crisis in 2008?
I am currently working on a term paper regarding the credit crisis impact on the UK. I understand prior to the credit crisis, the UK banking system derived there cash flows from securtization and the financial markets. Most of there operations were not derived from deposits. I am trying to find out if this market securitization that the UK was involved in came from the US sub-primed mortgages or other debt’s. If any one can explain this and how the ties between the UK and US were related. Also, I relized that the UK, besides the US, had a smaller decrease in there Stock Market when compared to other countries like China, India, Canada and others for the year ending of 2008. The UK and the US fell around the same amount which was approximatly 31%. Any help on this is greatly appreciated!!

Best answer:

Answer by Dating-Expert
UK was seriously affected by Credit Crisis
Many financial institutions collapsed, many retailers closed their businesses such as woolworth etc
Hundreds of thousands of people lost their jobs
employees in public sector got their salary increment frozen
in short it affected almost every single person in one way or another

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Do we need another FDR to save the Banks?Its official the worst banking crisis since the great depression?

Question by james T: Do we need another FDR to save the Banks?Its official the worst banking crisis since the great depression?
A fews month before FDR was president, every bank in the nation failed.Its unanimous he Reversed the 1933 Banking Crisis.Hes the reason we have the Federal Deposit Insurance Corporation. He openeded Federal reserve banks in 12 cities, created the security exchange commision. The reason we are having problems today is because of Securitization in structured finance he actually created reforms in this but Truman deleted this component of reform.I like Truman, but he wasn’t as savvy about Banks as FDR was.FDR is the greatest president ever not because of war because he saved our banking system with reforms…..

Do we need a new FDR?

Best answer:

Answer by labowu
Are you’re asking do we need a President with intergrity, courage, foresight, and wisdom? Of course we do. They’re just hard to come by.

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Q&A: Do you agree this is what caused the economic crisis?

Question by what?: Do you agree this is what caused the economic crisis?
I found this on fact check

The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.

Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.

Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.

Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.

The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.

Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.

Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.

Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.

The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.

An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.

Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.

http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html

Best answer:

Answer by new mom
uh, yep that about sums it up

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Q&A: has Obama repealed the Community Reinvestment Act yet, since it is what caused the crisis?

Question by Iceman: has Obama repealed the Community Reinvestment Act yet, since it is what caused the crisis?

It is the biggest thing. The subprime mortgage crisis was the foundation for this mess.
future fate – obviously you know nothing about the Community Reinvestment Act. Several economic experts point to this forcing banks to give out bad loans.

Best answer:

Answer by Believe in Possibilities
I wish it were that simple, but it is not what caused the crisis. That is right-wing propaganda.

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Q&A: Why is Obama blaming Wall Street executives for the economic crisis ?

Question by Jim R: Why is Obama blaming Wall Street executives for the economic crisis ?
For the most part, Wall Street was playing by the rules which were set and/or mandated by Congress. Why are Barney Frank, Chris Dodd, the Carter/Clinton Community Reinvestment Act, etc held blameless by this President-Elect? Moreover, why should we trust/allow these same politicians who helped to create the crisis to be tasked with solving the issue?

Best answer:

Answer by The Breeze
uh, maybe because they caused it and now they are flying to Washington DC on their private Lear jets, begging for handouts? Duh…

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Explain securitization and how it relates to the global financial crisis?

Question by Adam G: Explain securitization and how it relates to the global financial crisis?

Best answer:

Answer by gorilla
When an organisation lends money it makes a legal charge on an asset ie the house for a mortgage. This is of value as the house could be sold and the bank receives interest payments relating to the debt. Over a period of time there could be thousands of such debts and the organisation may decide to sell a “parcel” of these to raise capital for other things or to improve the liquidity in its balance sheet. This is called securitization.

The global problems arose when some US companies lent money for houses to people without the ability to continue mortgage payments (it was called trailerpark lending) on the promise that the mortgage could be renewed at favourable interest rates (less than rent) and falsely inflated the values of the properties thus increasing the debt of the customer. They then securitized the lending but the value was much less than they claimed and when the property values fell, people defaulted as the debt was more than the value of their property and the banks who had purchased the parcels in good faith found that they were sat on useless paper( assets were much less than the expected value). This reduced the value of their balance sheets and also reduced their liquidity which led to distrust in the financial community as no-one knew which bank was sat on reduced value assets. The lending lines between banks were based on good faith but these were cancelled as no bank wanted to be pulled under due to the failure of another. This created a situation where credit disappeared from the system so the banks could not lend to their own customers.

It gets a bit more involved but I hope that answers your question.

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Q&A: What is securitization of sovereign debt in context of euro crisis ?

Question by sid: What is securitization of sovereign debt in context of euro crisis ?
Please explain in lehmann s language 🙂

Best answer:

Answer by Calliso
Means they don’t have enough money and are trying to blind side normal people with slang, then they call it a educated, learn diferent terms so no one else knows what the —-your talking about so massive cover up operations can be initiated in tronsdental alighnment with the human race!!!! ok did you get that.

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What caused the Subprime Mortgage Crisis that Caused 2008 Financial Disaster?

Question by Rocky: What caused the Subprime Mortgage Crisis that Caused 2008 Financial Disaster?
New Study Finds Democrats Fully to Blame for Subprime Mortgage Crisis that Caused 2008 Financial Disaster
Posted by Jim Hoft on Saturday, December 22, 2012, 9:48 AM

In his early activist days, Barack Obama the community organizer sued banks to ease lending practices.

State Sen. Barack Obama and Fr. Michael Pfleger led a protest against the payday loan industry demanding the State of Illinois to regulate loan businesses in January 2000. During his time as a community organizer Barack Obama led several protests against banks to make loans to high risk individuals. (NBC 5 Week of January 3, 2000)

Here’s something that won’t get any play in the liberal media…
A new study by the respected National Bureau of Economic Research found that Democrats are to blame for the subprime mortgage crisis.
Investor’s Business Daily reported:

Democrats and the media insist the Community Reinvestment Act, the anti-redlining law beefed up by President Clinton, had nothing to do with the subprime mortgage crisis and recession.

But a new study by the respected National Bureau of Economic Research finds, “Yes, it did. We find that adherence to that act led to riskier lending by banks.”

Added NBER: “There is a clear pattern of increased defaults for loans made by these banks in quarters around the (CRA) exam. Moreover, the effects are larger for loans made within CRA tracts,” or predominantly low-income and minority areas.

To satisfy CRA examiners, “flexible” lending by large banks rose an average 5% and those loans defaulted about 15% more often, the 43-page study found.

The strongest link between CRA lending and defaults took place in the runup to the crisis — 2004 to 2006 — when banks rapidly sold CRA mortgages for securitization by Fannie Mae and Freddie Mac and Wall Street.

CRA regulations are at the core of Fannie’s and Freddie’s so-called affordable housing mission. In the early 1990s, a Democrat Congress gave HUD the authority to set and enforce (through fines) CRA-grade loan quotas at Fannie and Freddie.

It passed a law requiring the government-backed agencies to “assist insured depository institutions to meet their obligations under the (CRA).” The goal was to help banks meet lending quotas by buying their CRA loans.

But they had to loosen underwriting standards to do it. And that’s what they did.

Republicans warned Democrats of the impending doom in 2004.
video
Fannie Mae/Freddie Mac Hearings 2004

But Democrats wouldn’t budge.

http://www.thegatewaypundit.com/2012/12/new-study-finds-democrats-fully-to-blame-for-subprime-mortgage-crisis-that-caused-financial-collapse/

http://news.investors.com/ibd-editorials-perspective/122012-637924-faults-community-reinvestment-act-cra-mortgage-defaults.htm?p=full

Best answer:

Answer by Darla
The Gramm(R) Bliley(R) Act of 1999.

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How does the bailout address the more esoteric causes of the crisis?

Question by DeFreeze: How does the bailout address the more esoteric causes of the crisis?
For example, the creation of “exotic” financial instruments, securitization of mortgage debt, etc? Any ideas? I’m learning here folks, so if this question seems overly simple or even stupid, keep your silly comments to yourself.
And isn’t what Wall Street, et. al. did with these bad mortgages similar to what Andrew Fastow went to jail for at Enron?

Best answer:

Answer by Dave
I am wondering the same thing myself. The bail out helps the people that created the mess. The bail out will destroy out currency. This is not a good idea.

What do you think? Answer below!