Demystifying the Mortgage Meltdown: What It Means for Main Street, Wall Street and the U.S. Financial SystemGlenn Yago and James R. Barth
Watch the video here. (72 minutes)
Powerpoint slides (84 slides)
Back in March 2008, Treasury Secretary Henry Paulson told CNN, "I have great, great confidence in our capital markets and our financial institutions."
Just six months later, it was a different story. "The financial security of all Americans . . . depends on our ability to restore our financial institution to a sound footing," the secretary noted in a press release...
The story of the mortgage meltdown began when the Federal Reserve, in response to the recession of 2001, began slashing interest rates to historically low levels. The result was an era of easy credit that made homeownership more accessible. Soon new mortgage products were introduced, promising instant access to the American Dream.
Many subprime borrowers joined the party via adjustable-rate mortgages (ARMs), enjoying artificially low teaser rates and banking on the hope of refinancing down the road. The market encouraged this kind of wishful thinking...
read more here
No comments:
Post a Comment