Nobody downloaded yet

Following the sub-prime crisis and the impact of 'Toxic' debt is there a future for the securitization of commercial property - Essay Example

Comments (0) Cite this document
Summary
These banks were themselves responsible for such packaging of complex credit derivatives. It was observed that majority of their asset base turned out to be poisonous…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER95.3% of users find it useful
Following the sub-prime crisis and the impact of Toxic debt is there a future for the securitization of commercial property
Read TextPreview

Extract of sample "Following the sub-prime crisis and the impact of 'Toxic' debt is there a future for the securitization of commercial property"

Download file to see previous pages But soon turbulence came with sudden loss of confidence within the securitization and financial engineering sector. The present statistical model for assessing & pricing credit risk can be blamed for the disastrous situation that engulfed the entire financial world. The most surprising fact about the crisis was that it originated in those countries which were believed to have the most efficient risk management technology. (Caprio, Demirgüç-Kunt & Kane, 2008, p. 2).
With the unfolding of the crisis, the financial world witnessed a series of unpredicted and unprecedented events which uncovered the fault of AAA credit rating system used in UK banks for more than 150 years. The crisis, also known as meltdown, even highlighted the default of US safety net for covering major insurance banks; investment banking and government sponsored housing finance companies. Downfall in the major economic drivers led to sharp plunge in world wide stock and capital markets.
This crisis soon migrated from US to other developed countries and economies like that of Australia, Ireland, and Germany. It can be estimated that the loss caused by this financial crisis lies in between the ranges of $1 trillion to $2 trillion (Caprio, Demirgüç-Kunt & Kane, 2008, p. 2).
The crisis that engulfed the financial market since august 2007 had its origin in the housing mortgage market of the United States. Housing markets in other countries like Australia, Canada, Spain, and United Kingdom were also facing high rise in prices along with the highly leveraged mergers and acquisition. But none of these countries faced financial crisis due to the housing bubble, so this makes the fact clear that there were certain distinguished features with in the US housing finance system that gave birth to such enourmous financial crisis. The prime factors can be segregated as below:
Housing construction peaked in the United ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Following the sub-prime crisis and the impact of 'Toxic' debt is there Essay”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1556974-following-the-sub-prime-crisis-and-the-impact-of-toxic-debt-is-there-a-future-for-the-securitization-of-commercial-property
(Following the Sub-Prime Crisis and the Impact of 'Toxic' Debt Is There Essay)
https://studentshare.org/miscellaneous/1556974-following-the-sub-prime-crisis-and-the-impact-of-toxic-debt-is-there-a-future-for-the-securitization-of-commercial-property.
“Following the Sub-Prime Crisis and the Impact of 'Toxic' Debt Is There Essay”, n.d. https://studentshare.org/miscellaneous/1556974-following-the-sub-prime-crisis-and-the-impact-of-toxic-debt-is-there-a-future-for-the-securitization-of-commercial-property.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Following the sub-prime crisis and the impact of 'Toxic' debt is there a future for the securitization of commercial property

Sub-prime Crisis: Collateralized Debt Obligations

...? Sub-prime Crisis: Collateralized Debt Obligations Synopsis This research examines the structure of collateralized debt obligations. The means by which they implemented subprime mortgages classified as safe investments is considered. The failures in risk management of the major investment banks are considered. The research argues that just as the financial fallout was spread throughout a chain of entities, the failure in risk management is additionally the fault of a number of internal organizational elements. The high levels of leverage and the environment of irrational exuberance are considered as the primary contributors to poor risk management....
4 Pages(1000 words)Essay

Commercial Property Law

...?Commercial Property Law I. Introduction Individuals are free to enter into agreements provided that the object or cause is not contrary to law, public policy and good morals. The conditions embodied in the agreement define the relationship of the parties, including their rights and obligations. In determining the limitations and extent of the contractual relations, all laws and regulations pertinent to the subject matter are deemed incorporated into the agreement notwithstanding that the parties neglected to explicitly include the relevant provisions in the agreement. Any conflict between the parties shall be resolved in consonance with the tenor of the contract, the spirit and letter of the relevant...
9 Pages(2250 words)Essay

Debt Crisis

... stop buying US treasury bills as it has realized the dangerous situation that the US economy is heading towards. A drop in the US treasury ratings and the US dollar will result in China diversifying away from the US government securities. China may also start investing in assets abroad in order to hedge against any losses due to the depreciating dollar. (Kitchen) So the US government is seen to have two choices, either to raise taxes by some hundred billion dollars to earn revenue to cover its obligations and reduce their spending or admit that they have reached their limit and will ultimately default on some of their debts. (CNBC) Works Cited CNBC. Current Debt Situation Is Like Sub-Prime Crisis. June 2011. 2 August 2011
4 Pages(1000 words)Essay

Sub-Prime Mortgage Crisis and the East Asia

...had several liquidity risks compared with that of the exchange traded products. According to Justin and Boris (2011), commercial banks finance in the East Asia asks for the mortgages without considering the credit evaluation of the borrowers. Thus, the paper will evaluate the financial crisis issues that were triggered from the U.S sub-prime mortgage crisis, and affected the East Asian economy. The sub-prime mortgage crisis The sub-prime mortgage crisis was a result of the speculative issues in the housing market that commenced in the United State in...
9 Pages(2250 words)Research Paper

Sub-Prime Mortgage Crisis

.... Causes of Sub-Prime Mortgage Crisis It has been recognized that the important cause that led towards the crisis of sub-prime mortgage has been the breaking out of housing “bubble” particularly in United States that commenced in the year 2001. The concept of housing bubble can be fundamentally explained as the speedy rise in the valuation of the business market properties along with rapid decline in the home costs that ultimately increased the mortgage debt which is quite greater than the property value. In this similar context, according to various economists, the main factor for the...
3 Pages(750 words)Essay

The sub-prime mortgage crisis

...and continued until 2005, resulting in increased homeownership recording 64.1 % in 1993 and 68.9% in 2005(Carpenter,2008). The expansion of sub-prime market improved the access of credit and resulted in the boom in the real estate market. This also led to the expansion of credit to those borrowers whose credit was blemished. This period was also backed by strong overall housing market with increasing value of the home prices. Though this trend did not continue and in 2006 the housing market began to slow down, which resulted in rising late mortgage payments, foreclosures and defaults. This resulted in the collapse of the US sub-prime mortgage market. The...
8 Pages(2000 words)Essay

Sub Prime Lending

...Finance and Economics, November 2003, 27(3), pp. 279-301. 26. Pennington-Cross, Anthony. "The Value of Foreclosed Property." Journal of Real Estate Research (forthcoming). 27. Reinhart, Carmen M., and Kenneth Rogoff (2008) "Is the 2007 U.S. Sub-Prime Financial Crisis So Different An International Historical Comparison," Harvard University working paper. 28. The future of sub prime lending (2008) retrieved from www.euristix.com on 20th August 2009. 29. Tracy, Joseph; Schneider, Henry and Chan, Sewin. "Are Stocks Over-Taking Real Estate in Household Portfolios" Current Issues in Economics and Finance, Federal Reserve Bank...
4 Pages(1000 words)Essay

The sub‐prime crisis

...in the interest rates in the market. Another method of repacking the mortgages is to issue to the floaters and inverse floaters. These kinds of securities also suit a particular class of investors and provide a good hedge against the interest rate risks as these bonds vary according to the changes in the interest rates. Securitisation is generally a good thing, as it enables consumers to have to pay a cheaper price and furthermore provides liquidity essential for home-financing in any capacity. However, the future of securitisation of mortgage-debt is dreadfully in disbelief now. Sub-Prime Lending & Its Impacts on Various Market...
14 Pages(3500 words)Essay

Securitization

... title of assets underlying securities. The originator of assets is able to sells the assets (existing or future) to the SPV (issuer). With the help of an investment banker, SPV (issuer) issues securities. The SPV (issuer) pays the originator for the assets with the proceeds from the sale of securities. Securitization works in manner that seller provides goods or services to its valued customer in manner that payment is to be received in later days so he/she creates an asset then this pool of asset is sold to SPV (issuer) in order to acquire the particular asset and issuing a debt instrument to investor. Now this debt instrument is traded in secondary market in order to attract different rating agencies (Comptroller, 1997, p 06... DEFINITION...
3 Pages(750 words)Assignment

Sub-Prime Crisis and its Major Causes and Consequences

Banks thought that the global economy was stable and renewable so that they can give loans to anybody who is in need. Securitization was also a major reason for the current subprime problems as the banks had no control, whatsoever over the money they granted as loans. Instead of utilizing the money in the productive sector, people burned the borrowed money in the non-productive sector which resulted in the recent subprime crisis. Even though the terms financial crisis, economic crisis and recession are quite familiar to the ordinary people, the term subprime crisis is not so to the layman. The current financial crisis is often referred to as a subprime crisis. The term subprime means, giving loans to consumers who are in the risk...
10 Pages(2500 words)Book Report/Review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Following the sub-prime crisis and the impact of 'Toxic' debt is there a future for the securitization of commercial property for FREE!

Contact Us