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Money and Banking

What factors led to the mortgage default crisis? How did mortgage defaults affect banks involved in mortgage lending and mortgage investing? Securitization? TARP? What do these mean? How did mortgage-backed securities spread losses during the mortgage default crisis? How does TARP illustrate the problem of moral hazard? What did the Federal Reserve do during the financial crisis of 2008 and 2009? How did the recent financial crisis affect the financial services industry? What are some of the major provisions of the Wall Street Reform and Consumer Protection Act?

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What factors led to the mortgage default crisis?
The factors were adjustable-rate mortgage resetting, borrowers overextending, predatory lending, and speculation.
How did mortgage defaults affect banks involved in mortgage lending and mortgage investing?
The banks had to write down its holding of subprime related assets. CEOs of the top banks resigned, and caused the investors to take money out of mortgage bonds.
Securitization?
The securitization was the pooling of debt like auto loans, residential mortgages, and credit card debt and selling the consolidated debts as bonds. This mix of debt does not allow the investors to monitor the debt and this debt can turn ...

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