Effects of the Subprime Crisis on the U.S. American Financial Reporting System PDF Download
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Author: Miriam Janzen
Publisher: diplom.de
ISBN: 3836632012
Category : Business & Economics
Languages : en
Pages : 106
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Book Description
Inhaltsangabe:Introduction: The Subprime Crisis became noticeable first in the second half of 2006, when many subprime mortgage borrowers in the United States of America (U.S.) were no longer able to make their loan payments, and securities linked to those mortgages, that had been sold all over the world, turned out to be often worth quite less and in general substantially more risky than market participants had expected. The crisis caused several major financial institutions and mortgage lenders to face substantial liquidity problems or even to file for bankruptcy, and Governments to provide funding in order to limit further damage to the economy. As the market tried to figure out the problems underlying the crisis, financial reporting, especially regarding derecognition of financial assets, special purpose entities and fair value measurement, became a matter of public concern. Consequently, the purpose of this work is to discuss these concerns in order to estimate whether and to what extend financial reporting might have contributed to the crisis and to present and assess the usefulness of actions taken by the U.S. Financial Reporting System in response to the crisis. In order to meet this objective, the second main chapter provides a brief description of how the housing boom and the subsequent crisis evolved. The information provided therein shall contribute to the reader s understanding with respect to the following passages and especially judgements made by the author regarding the role of financial reporting in the crisis. The third main chapter will describe the U.S. Financial Reporting System, by providing basic information about U.S. institutions that authoritatively deal with the elements of the system, including their aims, basics about their work and how they interact. The fourth main section of the paper will examine the relevant reporting concepts and disclosure requirements, provide suggestions for improvements, and assess concerns voiced by market participants with respect to financial reporting. Subsequently, the thesis will analyze and judge actions taken by authoritative institutions of the U.S. Financial Reporting Sytems in response to the crisis. This thesis considered publications issued until December 10, 2008. Inhaltsverzeichnis:Table of Contents: Table of ContentsI List of Abbreviations.III List of SymbolsV 1.Introduction1 2.History of the Subprime Crisis2 2.1The Term Subprime in Context of the Crisis2 2.2Key Causes [...]
Author: Miriam Janzen
Publisher: diplom.de
ISBN: 3836632012
Category : Business & Economics
Languages : en
Pages : 106
Get Book
Book Description
Inhaltsangabe:Introduction: The Subprime Crisis became noticeable first in the second half of 2006, when many subprime mortgage borrowers in the United States of America (U.S.) were no longer able to make their loan payments, and securities linked to those mortgages, that had been sold all over the world, turned out to be often worth quite less and in general substantially more risky than market participants had expected. The crisis caused several major financial institutions and mortgage lenders to face substantial liquidity problems or even to file for bankruptcy, and Governments to provide funding in order to limit further damage to the economy. As the market tried to figure out the problems underlying the crisis, financial reporting, especially regarding derecognition of financial assets, special purpose entities and fair value measurement, became a matter of public concern. Consequently, the purpose of this work is to discuss these concerns in order to estimate whether and to what extend financial reporting might have contributed to the crisis and to present and assess the usefulness of actions taken by the U.S. Financial Reporting System in response to the crisis. In order to meet this objective, the second main chapter provides a brief description of how the housing boom and the subsequent crisis evolved. The information provided therein shall contribute to the reader s understanding with respect to the following passages and especially judgements made by the author regarding the role of financial reporting in the crisis. The third main chapter will describe the U.S. Financial Reporting System, by providing basic information about U.S. institutions that authoritatively deal with the elements of the system, including their aims, basics about their work and how they interact. The fourth main section of the paper will examine the relevant reporting concepts and disclosure requirements, provide suggestions for improvements, and assess concerns voiced by market participants with respect to financial reporting. Subsequently, the thesis will analyze and judge actions taken by authoritative institutions of the U.S. Financial Reporting Sytems in response to the crisis. This thesis considered publications issued until December 10, 2008. Inhaltsverzeichnis:Table of Contents: Table of ContentsI List of Abbreviations.III List of SymbolsV 1.Introduction1 2.History of the Subprime Crisis2 2.1The Term Subprime in Context of the Crisis2 2.2Key Causes [...]
Author: United States. Financial Crisis Inquiry Commission
Publisher: Public Affairs
ISBN: 1610390415
Category : Business & Economics
Languages : en
Pages : 578
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Book Description
Examines the causes of the financial crisis that began in 2008 and reveals the weaknesses found in financial regulation, excessive borrowing, and breaches in accountability.
Author: Raymond T. Ovanhouser
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 156
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Book Description
There is no precise definition of "financial crisis," but a common view is that disruptions in financial markets rise to the level of a crisis when the flow of credit to households and businesses is constrained and the real economy of goods and services is adversely affected. Since mid-2007, central bankers -- including the Federal Reserve -- have laboured to keep the downturn in U.S. subprime housing from developing into such a crisis. While subprime problems were widely anticipated, the subsequent spread of turmoil into many seemingly unrelated parts of the global financial system was not. Many losses occurring in diverse firms and markets -- often quite severe -- have features in common: the use of complex, hard-to-value financial instruments; large speculative positions underwritten by borrowed funds, or leverage; and the use of off-the-books entities to remove risky trading activities from the balance sheets of major financial institutions. It is not yet clear whether financial market problems will significantly slow the economy: many believe that the current episode is simply the downside of a normal credit cycle, that is, a natural corrective to several years of unusually easy credit conditions. On the other hand, some analysts identify market dynamics that may amplify the effects of financial shocks and have the potential to generate self-reinforcing, downward financial and economic spirals. The Federal Reserve has used its traditional tools to avert such an outcome: it has lowered short-term interest rates dramatically and injected billions of dollars into the banking system to support market liquidity and keep credit flowing. In addition, the Fed has expanded its sphere by making funds available to securities firms, which it does not regulate, and has provided funding to underwrite the rescue-through-acquisition of Bear Stearns, a leading investment bank. The duration of the current instability is in marked contrast to financial shocks of recent decades -- stock market crashes, bond market disruptions, the 9/11 attacks -- when the central bank was able to contain market problems quickly with little or no interruption of U.S. economic growth. Depending on how soon normal market conditions are restored, and at what cost, policy makers may consider whether regulators have access to adequate information about market conditions, and whether currently unregulated market participants should be subjected to disclosure and reporting requirements. In addition, the social costs of failed financial speculation may be judged great enough to warrant new restrictions designed to lower the incidence of losses that have system-wide impacts or to put the markets and the economy in a better position to weather such shocks.
Author: Adam B. Ashcraft
Publisher: DIANE Publishing
ISBN: 1437925146
Category :
Languages : en
Pages : 76
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Book Description
Provides an overview of the subprime mortgage securitization process and the seven key informational frictions that arise. Discusses the ways that market participants work to minimize these frictions and speculate on how this process broke down. Continues with a complete picture of the subprime borrower and the subprime loan, discussing both predatory borrowing and predatory lending. Presents the key structural features of a typical subprime securitization, documents how rating agencies assign credit ratings to mortgage-backed securities, and outlines how these agencies monitor the performance of mortgage pools over time. The authors draw upon the example of a mortgage pool securitized by New Century Financial during 2006. Illustrations.
Author: United States. Department of Housing and Urban Development
Publisher:
ISBN:
Category : Government publications
Languages : en
Pages : 120
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Book Description
Author: Dick K. Nanto
Publisher: DIANE Publishing
ISBN: 1437919847
Category : Business & Economics
Languages : en
Pages : 127
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Book Description
Contents: (1) Recent Developments and Analysis; (2) The Global Financial Crisis and U.S. Interests: Policy; Four Phases of the Global Financial Crisis; (3) New Challenges and Policy in Managing Financial Risk; (4) Origins, Contagion, and Risk; (5) Effects on Emerging Markets: Latin America; Russia and the Financial Crisis; (6) Effects on Europe and The European Response: The ¿European Framework for Action¿; The British Rescue Plan; Collapse of Iceland¿s Banking Sector; (7) Impact on Asia and the Asian Response: Asian Reserves and Their Impact; National Responses; (8) International Policy Issues: Bretton Woods II; G-20 Meetings; The International Monetary Fund; Changes in U.S. Reg¿s. and Regulatory Structure; (9) Legislation.
Author: Mr.Luc Laeven
Publisher: International Monetary Fund
ISBN: 1451873549
Category : Business & Economics
Languages : en
Pages : 43
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Book Description
This paper shows that banks use accounting discretion to overstate the value of distressed assets. Banks' balance sheets overvalue real estate-related assets compared to the market value of these assets, especially during the U.S. mortgage crisis. Share prices of banks with large exposure to mortgage-backed securities also react favorably to recent changes in accounting rules that relax fair-value accounting, and these banks provision less for bad loans. Furthermore, distressed banks use discretion in the classification of mortgage-backed securities to inflate their books. Our results indicate that banks' balance sheets offer a distorted view of the financial health of the banks.
Author: International Monetary Fund. Monetary and Capital Markets Department
Publisher: International Monetary Fund
ISBN: 1498324029
Category : Business & Economics
Languages : en
Pages : 109
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Book Description
The October 2019 Global Financial Stability Report (GFSR) identifies the current key vulnerabilities in the global financial system as the rise in corporate debt burdens, increasing holdings of riskier and more illiquid assets by institutional investors, and growing reliance on external borrowing by emerging and frontier market economies. The report proposes that policymakers mitigate these risks through stricter supervisory and macroprudential oversight of firms, strengthened oversight and disclosure for institutional investors, and the implementation of prudent sovereign debt management practices and frameworks for emerging and frontier market economies.
Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1513569678
Category : Business & Economics
Languages : en
Pages : 92
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Book Description
Extraordinary policy measures have eased financial conditions and supported the economy, helping to contain financial stability risks. Chapter 1 warns that there is a pressing need to act to avoid a legacy of vulnerabilities while avoiding a broad tightening of financial conditions. Actions taken during the pandemic may have unintended consequences such as stretched valuations and rising financial vulnerabilities. The recovery is also expected to be asynchronous and divergent between advanced and emerging market economies. Given large external financing needs, several emerging markets face challenges, especially if a persistent rise in US rates brings about a repricing of risk and tighter financial conditions. The corporate sector in many countries is emerging from the pandemic overindebted, with notable differences depending on firm size and sector. Concerns about the credit quality of hard-hit borrowers and profitability are likely to weigh on the risk appetite of banks. Chapter 2 studies leverage in the nonfinancial private sector before and during the COVID-19 crisis, pointing out that policymakers face a trade-off between boosting growth in the short term by facilitating an easing of financial conditions and containing future downside risks. This trade-off may be amplified by the existing high and rapidly building leverage, increasing downside risks to future growth. The appropriate timing for deployment of macroprudential tools should be country-specific, depending on the pace of recovery, vulnerabilities, and policy tools available. Chapter 3 turns to the impact of the COVID-19 crisis on the commercial real estate sector. While there is little evidence of large price misalignments at the onset of the pandemic, signs of overvaluation have now emerged in some economies. Misalignments in commercial real estate prices, especially if they interact with other vulnerabilities, increase downside risks to future growth due to the possibility of sharp price corrections.
Author: Adam Tooze
Publisher: Penguin
ISBN: 0143110357
Category : Business & Economics
Languages : en
Pages : 722
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Book Description
WINNER OF THE LIONEL GELBER PRIZE A NEW YORK TIMES NOTABLE BOOK OF 2018 ONE OF THE ECONOMIST'S BOOKS OF THE YEAR A NEW YORK TIMES CRITICS' TOP BOOK "An intelligent explanation of the mechanisms that produced the crisis and the response to it...One of the great strengths of Tooze's book is to demonstrate the deeply intertwined nature of the European and American financial systems."--The New York Times Book Review From the prizewinning economic historian and author of Shutdown and The Deluge, an eye-opening reinterpretation of the 2008 economic crisis (and its ten-year aftermath) as a global event that directly led to the shockwaves being felt around the world today. We live in a world where dramatic shifts in the domestic and global economy command the headlines, from rollbacks in US banking regulations to tariffs that may ignite international trade wars. But current events have deep roots, and the key to navigating today’s roiling policies lies in the events that started it all—the 2008 economic crisis and its aftermath. Despite initial attempts to downplay the crisis as a local incident, what happened on Wall Street beginning in 2008 was, in fact, a dramatic caesura of global significance that spiraled around the world, from the financial markets of the UK and Europe to the factories and dockyards of Asia, the Middle East, and Latin America, forcing a rearrangement of global governance. With a historian’s eye for detail, connection, and consequence, Adam Tooze brings the story right up to today’s negotiations, actions, and threats—a much-needed perspective on a global catastrophe and its long-term consequences.
