Financial Crisis Essays (Examples)

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Many laws have been successful in restricting such practices in order to avoid a similar situation in the future. Today, "when a mortgage borrower wins a rescission case in court, the bank loses the right to foreclose, and has to give up all profits from interest and fees on the loan" (Carter, 2012). However, just a few years after predatory lending caused so much damage, there are already movements to once again make it a possible scenario for contemporary lenders. The research posits that "under the Fed's new proposal, however, borrowers would be required to pay off the balance of the loan before the bank loses its right to foreclose -- that means borrowers could still lose their homes, even in cases where banks have broken the law" (Carter, 2012). Only time will tell whether or not law makers attempt at reining in financial predators will actually work. As….

" (2009) Yam states that over the past year the need existed to involve the government more deeply in the banking industry and especially in the area of deposit guarantees and in the supervision of the risk management of banks. Yam states that it is "…gratifying that so many of the tools that we have been able to rely on, including the apparatus and contingency arrangements for ensuring liquidity, have been developed in a pre-emptive rather than a reactive way. On the various emergency measures, I am quite sure that in the fullness of time, these will either be turned into standing arrangements or withdrawn, hopefully through smooth exit strategies. but, current sentiment is clearly demanding much closer regulation and supervision of banks over the longer term." (2009) the form that this will take is stated to be pending in the international forums however Yam states that the thinking thus….

Financial Crisis and Its Implications: Events Occurring Between 2007 and 2009
A Critical Literature Review

The Roots of the Crisis

Real Estate Valuation Bubble

Sub-Prime Mortgages

Low Interest Rates

Moral Hazard in Regard to Consumer Spending

Packaging Real Estate Loans as a Commodity (Derivatives)

Market Interrelatedness

Future Implications

The financial crisis, which seemed to be elevated to its greatest extent world-wide between the years 2007 and 2009, is difficult to unravel. The causes, interlink-ages, and effects are so intertwined that it is hard to separate them into a "first cause" or anything else that would resemble a succinct explanation. Although in retrospect, many individual underlying themes are attributed to the underpinnings of the crisis; in reality there are a plethora of variables that must be accounted for in trying to determine the crisis's root cause. Additionally, none of these factors can be considered in a vacuum. That is, none of the factors that are relevant acted independently. Instead, the variables….

These borrowers had -- knowingly or not -- been gambling on a real estate market they did not understand. Understanding the complexities of the real estate market and fiscal policy is complicated -- those who have grown up without access to the best education and who do not have experienced friends and family to help advise them in this process were the most vulnerable.
Squires, Hyra and Renner showed that subprime lenders were able to segment their market by geography. Combined with the ethnic segregation that exists in most American cities, the outcome was simple -- minorities were targeted for subprime loans. The poor and working class were targeted by predatory lenders. hen the crisis hit, it was these groups that suffered the most and foreclosure rates in these communities spiked.

Interest Rates & Bank Deregulation

To spur economic growth during the slowdown in 2000-02, the Federal Reserve lowered interest rates and….

Financial crisis that emerged in 2008 came about because of a number of different factors that all contributed something to the problem. Ostensibly, this was a credit crunch. A credit crunch occurs when lender either no longer have money to lend or they are prohibited or unwilling to do so.
Mussa (2008) notes a truth that Adam Smith recorded that while money is an essential part of an economy's capital stock, it was not directly useful but rather indirectly useful through consumption or production. So what we saw with the credit crunch was that lenders were not lending. This brought about conditions where firms did not have access to the capital that they needed in order to grow. Then, of course, this became a contagion. orries about the economy slowing down due to a lack of credit had otherwise healthy companies cancelling projects and money that otherwise could have been lent….

In other words, there are few controls in place to ensure responsible spending or, in the case of Greece, that the books are not cooked. The implication of this is that Greece makes errors and commits fraud, knowing that the eurozone will be forced to bail them out or risk grave instability. The other nations are then forced to bail Greece out, because they share a common currency and therefore a common economic fate, but also because the Germans benefited from the high current account balance in the first place.
There are a number of potential solutions. The eurozone could determine that addition by subtraction is a good strategy. Despite the short-term instability, it would allow the zone to be comprised of major exporting and otherwise fiscally responsible nations. Throwing the PIGS under the bus may be difficult politically and cause severe harm in the short-run, but could benefit the….

The partisan politics seen south of the border would be impossible, because the resulting inaction would be viewed unfavorably by Canadians.
The financial crisis has damaged Canada economically, but it has also highlighted the value of financial conservatism. Canada's handling of the crisis has improved its standing in the world. The Canadian banking system has been lauded for its conservative nature. Further esteem has been brought to the government for its role in building a strong, stable banking system. Many economic observers have taken notice of Canada's successes and prescribed some of Canada's regulations as a future path for their own banking systems.

Aside from banking, Canada is now showing some signs of economic weakness. The country's relatively strength, however, has caused the government to take relatively little action on the crisis. This has not enhanced Canada's international standing, but it has not hurt it either. Canada has not needed to….

Financial Crisis
Contemporary Social and Political Issue: The Financial Crisis

The current recession is considered among the worst in U.S. history. As it has been characterized by policy experts, public officials and members of private industries alike, the U.S. economy is experiencing a financial crisis which is surpassed at present only by the Great Depression which persisted across the 1930s. This qualifies as perhaps the most pressing political and social issue of our times. Indeed, there is not a profession or walk of American life that has not been impacted by the litany of collapsed banks, belly-up investment groups, embezzled pensions, budgetary deficits and housing/auto industry bubble bursts that have occurred across the last five years.

As public officials in Congress and the Obama Administration have enacted dramatic and controversial legislative packages in order to reverse an already cresting tide, it is clear that the very same Departments of the U.S. Government which….

In that regard, the regulatory changes that allowed banks and other mortgage lenders to sell off their obligations (and the development of complex investment techniques to do so) undermined the integrity of the U.S. housing market. Specifically, Wall Street investment firms and mortgage banks began purchasing, repackaging, and trading in all of the individual home mortgages simultaneous to the elimination of any natural incentive of lenders to ensure that their borrowers were safe risks (Bhide, 2009). The obvious solution to that problem would be to prosecute lenders, mortgage brokers, realtors, and certain borrowers who deliberately ignored their legal duties to conduct business in good faith (Bradley, 2008).
Fundamental Ethical Problems and Conflicts of Interests

Throughout the financial services and mortgage lending industry that developed after the most recent era of deregulation, the de facto elimination of any liability or risk on the part of lenders for bad loans generated fraudulent practices….

What one can determine from the current literature, however, was that today's recession was fueled, at least in part, by the misuse and misdistribution of credit. For this reason, the current culture shift is most likely a solution to the problem it itself. esponding to the recession, the American people have changed their attitude toward politics, spending, and the importance of finances in their daily lives. By spending less, relying on credit less, and saving more, the American people are bound to aid in ending the current financial crisis. Government, on the other hand, must step in to regulate what the people cannot in their own personal finances. By encouraging the Democratic plans of tax cuts and job creation, the American people can continue to advocate for the solution of the problem. Thus, finance and the economy are large contributors to a group's culture. The current recession is no….

The 2008 financial crisis is considered the worst economic disaster to ever affect the world since the occurrence of the Great Depression of 1929. The crisis led to the collapsing of the financial system in the U.S. and other countries in Europe. Millions of people lost their jobs on either side of the Atlantic because of the financial crisis. Different authorities responded differently to curb the crisis in their backyard. This paper looks at the similarities between the crisis in the U.S. and the one in the Euro Zone while also outlining the difference between the two regions. In the U.S., the financial crisis was mainly caused by deregulation in the financial industry. Banks were permitted to engage in hedge fund trading with derivatives. As a result, banks demanded more mortgages to support the business. Most of the financial institutions in the U.S. created interest-only loans that became affordable to borrowers….

Reflection Paper: Mortgage CrisisThe mortgage crisis came about because starting in the 1990s under the Clinton Administration, a push for greater home ownership was facilitated by a lowering of lending standards for home buyer borrowers. This created artificial demand in the housing market, and prices of homes soared. Over the course of the next decade, lending standards rapidly deteriorated, and home mortgages were being bundled and sold to investors as collateralized debt obligations, and derivatives were added to the mix so that an enormous financial industry focused on mortgage-backed securities had grown into a behemoth (Lewis, 2010). The Federal Reserve had kept interest rates low in response to the Dot Com bubble bursting at the turn of the 21st century, and this in turn had caused yield-starved investors to seek out financial instruments like collateralized debt obligations. Starting in 2004, the Fed Funds Rate rose from 1% to more than….

The Subprime Crisis There were a number of factors that led to the subprime crisis: Fannie Mae, Countrywide Financial, the Federal Reserve, Moody’s, Merrill Lynch, Bear Stearns, Goldman Sachs, AIG, Michael Burry, who shorted the mortgage backed securities being sold to investors that were full of subprime—and guys like him (the ones depicted in Michael Lewis’s The Big Short)—they all had a role to play in the subprime crisis of 2007-2008 (McLean, Nocera). But, truth be told, the lead-up to the crisis started well before the actual collapse of the market. It started with housing in the 1990s. But one could even go back further to the 1970s when Lewis Ranieri of Salomon Brothers invented the mortgage backed security (MBS)—a bond made up of thousands of home mortgages that were bundled together, sliced up and sold to investors who would collect the interest (Lewis). It was a way for the original….

Goldman Sachs & Co. and Fabrice Tourre were charged by the SEC in 2010 with “Fraud In Connection With the Structuring and Marketing of a Synthetic CDO” from the 2007 subprime mortgage scandal at the heart of the financial crisis of 2007-2008 (SEC, 2010). The specific charge was that the bank and Tourre made material misstatements and omissions in connection with a synthetic collateralized debt obligation that the bank had structured, marketed and sold to investors. The synthetic CDOs were linked to the performance of the subprime housing mortgage market—i.e., the subprime mortgage-backed securities identified by Lewis (2010) as triggering the wave of financial distress that led to central banking intervention (unconventional monetary policy—also known as quantitative easing) and the inflation of asset bubbles currently seen today (Huston & Spencer, 2018). Goldman Sachs settled with the SEC and agreed to pay $550 million on the condition that the bank not….

financial crisis a "crisis of capitalism?
Compare and contrast the theories of Susan Strange, Karl Polanyi and Giovanni Arrighi. Explain how three of them accessed issues of Financial crisis and its relationship with capitalism

Starting from 2008 onwards, we are currently experiencing an unremitting state of economic recession. Each of the three theorists stated in this essay have different perspectives of whether or not the recession indicates crises of capitalism. Whilst Susan Strange and Karl Polanyi have a more optimist perspective on the subject and indicate that rather than crisis, the recession may, in effect, be, in the first case, a misplaced paradigm (or different, tortured perspective) and in the second case, only a slight wrench that necessitates government intervention for amending a temporary situation, Arrighiri sees the situation as indeed manifesting something that is intrinsically, irremediably, and inherently wrong in the structure of capitalism itself. Each of these views will….

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6 Pages
Term Paper

Economics

Financial Crisis and Predatory Lending

Words: 1854
Length: 6 Pages
Type: Term Paper

Many laws have been successful in restricting such practices in order to avoid a similar situation in the future. Today, "when a mortgage borrower wins a rescission case…

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15 Pages
Dissertation

Economics

Financial Crisis Threat or Opportunity

Words: 4019
Length: 15 Pages
Type: Dissertation

" (2009) Yam states that over the past year the need existed to involve the government more deeply in the banking industry and especially in the area of deposit…

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8 Pages
Essay

Economics

Financial Crisis of 2007-2009

Words: 2251
Length: 8 Pages
Type: Essay

Financial Crisis and Its Implications: Events Occurring Between 2007 and 2009 A Critical Literature Review The Roots of the Crisis Real Estate Valuation Bubble Sub-Prime Mortgages Low Interest Rates Moral Hazard in Regard to Consumer…

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5 Pages
Thesis

Economics

Financial Crisis There Are Signs

Words: 1489
Length: 5 Pages
Type: Thesis

These borrowers had -- knowingly or not -- been gambling on a real estate market they did not understand. Understanding the complexities of the real estate market and…

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2 Pages
Essay

Economics

Financial Crisis That Emerged in 2008 Came

Words: 670
Length: 2 Pages
Type: Essay

Financial crisis that emerged in 2008 came about because of a number of different factors that all contributed something to the problem. Ostensibly, this was a credit crunch. A…

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4 Pages
Term Paper

Economics

Financial Crisis in Peripheral Europe

Words: 1312
Length: 4 Pages
Type: Term Paper

In other words, there are few controls in place to ensure responsible spending or, in the case of Greece, that the books are not cooked. The implication of…

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15 Pages
Thesis

Economics

Financial Crisis in Canada Is

Words: 4978
Length: 15 Pages
Type: Thesis

The partisan politics seen south of the border would be impossible, because the resulting inaction would be viewed unfavorably by Canadians. The financial crisis has damaged Canada economically, but…

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2 Pages
Essay

Economics

Financial Crisis Contemporary Social and Political Issue

Words: 745
Length: 2 Pages
Type: Essay

Financial Crisis Contemporary Social and Political Issue: The Financial Crisis The current recession is considered among the worst in U.S. history. As it has been characterized by policy experts, public officials…

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2 Pages
Research Paper

Economics

Financial Crisis -- Critical Issues

Words: 567
Length: 2 Pages
Type: Research Paper

In that regard, the regulatory changes that allowed banks and other mortgage lenders to sell off their obligations (and the development of complex investment techniques to do so)…

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5 Pages
Thesis

Economics

Financial Crisis the Current Financial

Words: 1633
Length: 5 Pages
Type: Thesis

What one can determine from the current literature, however, was that today's recession was fueled, at least in part, by the misuse and misdistribution of credit. For this…

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5 Pages
Essay

Economics - Inflation

American and European Financial Crisis of 2008

Words: 1530
Length: 5 Pages
Type: Essay

The 2008 financial crisis is considered the worst economic disaster to ever affect the world since the occurrence of the Great Depression of 1929. The crisis led to the…

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3 Pages
Essay

Finance

The Great Financial Crisis and the FASB

Words: 958
Length: 3 Pages
Type: Essay

Reflection Paper: Mortgage CrisisThe mortgage crisis came about because starting in the 1990s under the Clinton Administration, a push for greater home ownership was facilitated by a lowering of…

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11 Pages
Research Paper

Economics - Banking

Subprime Mortgage Crisis of 2007 2008

Words: 3267
Length: 11 Pages
Type: Research Paper

The Subprime Crisis There were a number of factors that led to the subprime crisis: Fannie Mae, Countrywide Financial, the Federal Reserve, Moody’s, Merrill Lynch, Bear Stearns, Goldman Sachs, AIG,…

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4 Pages
Research Paper

Finance

SEC Enforcement of Goldman Sachs and AIG

Words: 1074
Length: 4 Pages
Type: Research Paper

Goldman Sachs & Co. and Fabrice Tourre were charged by the SEC in 2010 with “Fraud In Connection With the Structuring and Marketing of a Synthetic CDO” from the…

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8 Pages
Essay

Economics

Financial Crisis a Crisis of Capitalism Compare

Words: 3172
Length: 8 Pages
Type: Essay

financial crisis a "crisis of capitalism? Compare and contrast the theories of Susan Strange, Karl Polanyi and Giovanni Arrighi. Explain how three of them accessed issues of Financial crisis…

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