The U.S. Subprime Mortgage Crisis : Issues Raised and Lessons Learned
The subprime mortgage crisis ranks among the most serious economic events affecting the United States since the great depression of the 1930s. This study analyzes key issues raised by the crisis at three levels: (i) issues directly and specifically...
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| Format: | Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2017
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| Online Access: | http://documents.worldbank.org/curated/en/612021468130801823/The-U-S-subprime-mortgage-crisis-issues-raised-and-lessons-learned http://hdl.handle.net/10986/28008 |
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okr-10986-28008 |
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oai_dc |
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Digital Repository |
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Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCOUNTING ARBITRAGE ASSET CLASS ASSET MANAGERS ASSET-BACKED SECURITIES ASYMMETRIC INFORMATION AUCTION AUTO LOANS BAILOUT BANK INVESTORS BANK LENDERS BANKING REGULATIONS BANKING SYSTEM BANKRUPTCY BENEFICIARIES BORROWER BROKERS CAPITAL MARKET CAPITAL MARKETS CAPITAL REQUIREMENTS CATASTROPHE BONDS COLLATERAL COMMERCIAL BANK COMMERCIAL BANKS COMMERCIAL MORTGAGE COMMERCIAL MORTGAGES COMMERCIAL PAPER COMMERCIAL PAPER MARKET COMPETITIVE MARKET CONSUMER BORROWERS CONSUMER LOANS CONSUMER PROTECTION CONSUMER PROTECTION LEGISLATION CONTRACT DESIGN CONTRACT DESIGNS COUPON COUPONS CREDIT CARD CREDIT DEFAULT CREDIT DEFAULT SWAPS CREDIT ENHANCEMENTS CREDIT QUALITY CREDIT RATING CREDIT RATING AGENCIES CREDIT RATINGS CREDITORS CREDITWORTHINESS CURRENCY DEBT DEBT INSTRUMENTS DEBT OBLIGATION DEBT OBLIGATIONS DEBT OUTSTANDING DEBT RATIOS DEBT SECURITIES DEBT SERVICE DEFAULT PROBABILITIES DEFAULT RATE DEFAULT RATES DEFAULT RISK DEFAULTS DEFICITS DEPOSIT DEPOSITORY INSTITUTIONS DEPOSITS DERIVATIVE DERIVATIVE INSTRUMENTS DERIVATIVE MARKET DERIVATIVE MARKETS DERIVATIVES DEVELOPING COUNTRIES DIVERSIFIED INVESTORS DIVERSIFIED PORTFOLIOS DUE DILIGENCE ECONOMIC GROWTH EMERGING ECONOMIES EMERGING ECONOMY EXCHANGE COMMISSION EXPENDITURES FEDERAL RESERVE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL INSTITUTIONS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL RISK FINANCIAL SERVICE PROVIDERS FINANCIAL SYSTEM FISCAL POLICIES FLOATING RATES FORECLOSURE FORECLOSURES FOREIGN CAPITAL FOREIGN EXCHANGE FRAUD FUTURES FUTURES MARKET GOVERNMENT GUARANTEE GOVERNMENT GUARANTEES GOVERNMENT REGULATION HEDGE FUND HEDGE FUNDS HOLDING HOME LOAN HOME MORTGAGE HOME MORTGAGES HOMEOWNERSHIP ILLIQUID MARKETS ILLIQUIDITY INDIVIDUAL INVESTORS INDIVIDUAL LOAN INFLATION INSTITUTIONAL INVESTORS INSTRUMENT INSURANCE INTEREST RATE INTEREST RATE RISK INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL SETTLEMENTS INVENTORY INVESTMENT ACTIVITIES INVESTMENT BANK INVESTMENT BANKS INVESTMENT DECISIONS INVESTMENT FUNDS INVESTMENT POLICY INVESTMENT PORTFOLIOS INVESTMENT STRATEGIES INVESTMENT STRATEGY INVESTMENT VEHICLES INVESTOR LOSSES LEGAL PROHIBITIONS LEGAL SYSTEM LENDER LENDERS LIABILITY LIEN LINE OF CREDIT LIQUIDATION LIQUIDITY CRISES LOAN LOAN APPLICATION LOAN APPLICATIONS LOAN DEFAULT LOAN DEFAULTS LOAN DEMANDS LOAN MARKETS LOAN OFFICERS LOAN PERFORMANCE LOAN TERMS LOAN VOLUMES LOANABLE FUNDS LOCAL BANK LONG TERM CAPITAL LONG-TERM CAPITAL LONG-TERM DEBT MARK TO MARKET MARK TO MARKET ACCOUNTING MARKET DEVELOPMENTS MARKET DISCIPLINE MARKET ECONOMY MARKET FAILURES MARKET LIQUIDITY MARKET PARTICIPANTS MARKET PRICES MARKET STABILITY MARKET TRADING MARKET VALUE MATURITY MATURITY MISMATCH MATURITY MISMATCHES MONETARY AUTHORITY MONETARY POLICIES MONETARY POLICY MORAL HAZARD MORTGAGE MORTGAGE BONDS MORTGAGE FINANCE MORTGAGE LOAN MORTGAGE LOANS MORTGAGE MARKET MORTGAGE MARKETS MORTGAGE-BACKED SECURITIES MORTGAGES NATURAL DISASTER NATURAL DISASTERS OUTSTANDING AMOUNT OUTSTANDING LOANS PENSION PORTFOLIO PORTFOLIOS PRINCIPAL PAYMENTS PROBABILITY OF DEFAULT PROPERTY RIGHTS PRUDENTIAL REGULATION REAL ESTATE COLLATERAL REAL ESTATE LOANS REGULATORY FRAMEWORK REGULATORY STRUCTURE RETURN RETURNS RISK ASSESSMENTS RISK MANAGEMENT RISK OF DEFAULT RISKY LOAN RISKY LOANS RISKY SECURITIES SECURITIES SECURITIES INDUSTRY SETTLEMENT SETTLEMENT SYSTEMS SHORT-TERM BORROWINGS STOCK BROKERS STOCK MARKET TAX TRADING TRANCHE TRANCHES TRANSACTION TRANSACTION COSTS TRANSITION ECONOMIES TREASURY TREASURY BONDS UNDERLYING MORTGAGES UNDERWRITERS VARIABLE RATE |
| spellingShingle |
ACCOUNTING ARBITRAGE ASSET CLASS ASSET MANAGERS ASSET-BACKED SECURITIES ASYMMETRIC INFORMATION AUCTION AUTO LOANS BAILOUT BANK INVESTORS BANK LENDERS BANKING REGULATIONS BANKING SYSTEM BANKRUPTCY BENEFICIARIES BORROWER BROKERS CAPITAL MARKET CAPITAL MARKETS CAPITAL REQUIREMENTS CATASTROPHE BONDS COLLATERAL COMMERCIAL BANK COMMERCIAL BANKS COMMERCIAL MORTGAGE COMMERCIAL MORTGAGES COMMERCIAL PAPER COMMERCIAL PAPER MARKET COMPETITIVE MARKET CONSUMER BORROWERS CONSUMER LOANS CONSUMER PROTECTION CONSUMER PROTECTION LEGISLATION CONTRACT DESIGN CONTRACT DESIGNS COUPON COUPONS CREDIT CARD CREDIT DEFAULT CREDIT DEFAULT SWAPS CREDIT ENHANCEMENTS CREDIT QUALITY CREDIT RATING CREDIT RATING AGENCIES CREDIT RATINGS CREDITORS CREDITWORTHINESS CURRENCY DEBT DEBT INSTRUMENTS DEBT OBLIGATION DEBT OBLIGATIONS DEBT OUTSTANDING DEBT RATIOS DEBT SECURITIES DEBT SERVICE DEFAULT PROBABILITIES DEFAULT RATE DEFAULT RATES DEFAULT RISK DEFAULTS DEFICITS DEPOSIT DEPOSITORY INSTITUTIONS DEPOSITS DERIVATIVE DERIVATIVE INSTRUMENTS DERIVATIVE MARKET DERIVATIVE MARKETS DERIVATIVES DEVELOPING COUNTRIES DIVERSIFIED INVESTORS DIVERSIFIED PORTFOLIOS DUE DILIGENCE ECONOMIC GROWTH EMERGING ECONOMIES EMERGING ECONOMY EXCHANGE COMMISSION EXPENDITURES FEDERAL RESERVE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL INSTITUTIONS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL RISK FINANCIAL SERVICE PROVIDERS FINANCIAL SYSTEM FISCAL POLICIES FLOATING RATES FORECLOSURE FORECLOSURES FOREIGN CAPITAL FOREIGN EXCHANGE FRAUD FUTURES FUTURES MARKET GOVERNMENT GUARANTEE GOVERNMENT GUARANTEES GOVERNMENT REGULATION HEDGE FUND HEDGE FUNDS HOLDING HOME LOAN HOME MORTGAGE HOME MORTGAGES HOMEOWNERSHIP ILLIQUID MARKETS ILLIQUIDITY INDIVIDUAL INVESTORS INDIVIDUAL LOAN INFLATION INSTITUTIONAL INVESTORS INSTRUMENT INSURANCE INTEREST RATE INTEREST RATE RISK INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL SETTLEMENTS INVENTORY INVESTMENT ACTIVITIES INVESTMENT BANK INVESTMENT BANKS INVESTMENT DECISIONS INVESTMENT FUNDS INVESTMENT POLICY INVESTMENT PORTFOLIOS INVESTMENT STRATEGIES INVESTMENT STRATEGY INVESTMENT VEHICLES INVESTOR LOSSES LEGAL PROHIBITIONS LEGAL SYSTEM LENDER LENDERS LIABILITY LIEN LINE OF CREDIT LIQUIDATION LIQUIDITY CRISES LOAN LOAN APPLICATION LOAN APPLICATIONS LOAN DEFAULT LOAN DEFAULTS LOAN DEMANDS LOAN MARKETS LOAN OFFICERS LOAN PERFORMANCE LOAN TERMS LOAN VOLUMES LOANABLE FUNDS LOCAL BANK LONG TERM CAPITAL LONG-TERM CAPITAL LONG-TERM DEBT MARK TO MARKET MARK TO MARKET ACCOUNTING MARKET DEVELOPMENTS MARKET DISCIPLINE MARKET ECONOMY MARKET FAILURES MARKET LIQUIDITY MARKET PARTICIPANTS MARKET PRICES MARKET STABILITY MARKET TRADING MARKET VALUE MATURITY MATURITY MISMATCH MATURITY MISMATCHES MONETARY AUTHORITY MONETARY POLICIES MONETARY POLICY MORAL HAZARD MORTGAGE MORTGAGE BONDS MORTGAGE FINANCE MORTGAGE LOAN MORTGAGE LOANS MORTGAGE MARKET MORTGAGE MARKETS MORTGAGE-BACKED SECURITIES MORTGAGES NATURAL DISASTER NATURAL DISASTERS OUTSTANDING AMOUNT OUTSTANDING LOANS PENSION PORTFOLIO PORTFOLIOS PRINCIPAL PAYMENTS PROBABILITY OF DEFAULT PROPERTY RIGHTS PRUDENTIAL REGULATION REAL ESTATE COLLATERAL REAL ESTATE LOANS REGULATORY FRAMEWORK REGULATORY STRUCTURE RETURN RETURNS RISK ASSESSMENTS RISK MANAGEMENT RISK OF DEFAULT RISKY LOAN RISKY LOANS RISKY SECURITIES SECURITIES SECURITIES INDUSTRY SETTLEMENT SETTLEMENT SYSTEMS SHORT-TERM BORROWINGS STOCK BROKERS STOCK MARKET TAX TRADING TRANCHE TRANCHES TRANSACTION TRANSACTION COSTS TRANSITION ECONOMIES TREASURY TREASURY BONDS UNDERLYING MORTGAGES UNDERWRITERS VARIABLE RATE Jaffee, Dwight M. The U.S. Subprime Mortgage Crisis : Issues Raised and Lessons Learned |
| geographic_facet |
United States |
| relation |
Commission on Growth and Development Working Paper;No. 28 |
| description |
The subprime mortgage crisis ranks among
the most serious economic events affecting the United States
since the great depression of the 1930s. This study analyzes
key issues raised by the crisis at three levels: (i) issues
directly and specifically relating to subprime mortgage
lending; (ii) issues relating to the securitization of
subprime mortgages; and (iii) issues affecting financial
markets and institutions. These issues are fundamental to
risk bearing, sharing, and transfer in financial markets and
institutions around the world. Many of the issues raised by
the U.S. subprime crisis also apply to high-risk loan
markets in developing countries. The framework applied in
the paper analyzes subprime mortgage lending as a major
financial market innovation. Although conditions were
conducive for subprime lending to arise as a financial
innovation, financial innovations are necessarily risky
undertakings, all the more so when they create new classes
of risky loans and securities. The lessons learned from the
crisis can thus be usefully applied to issues of the growth
and development of emerging economies, as well as pointing
the way to the design of new and efficient policies for
subprime lending in the developed economies. |
| format |
Working Paper |
| author |
Jaffee, Dwight M. |
| author_facet |
Jaffee, Dwight M. |
| author_sort |
Jaffee, Dwight M. |
| title |
The U.S. Subprime Mortgage Crisis : Issues Raised and Lessons Learned |
| title_short |
The U.S. Subprime Mortgage Crisis : Issues Raised and Lessons Learned |
| title_full |
The U.S. Subprime Mortgage Crisis : Issues Raised and Lessons Learned |
| title_fullStr |
The U.S. Subprime Mortgage Crisis : Issues Raised and Lessons Learned |
| title_full_unstemmed |
The U.S. Subprime Mortgage Crisis : Issues Raised and Lessons Learned |
| title_sort |
u.s. subprime mortgage crisis : issues raised and lessons learned |
| publisher |
World Bank, Washington, DC |
| publishDate |
2017 |
| url |
http://documents.worldbank.org/curated/en/612021468130801823/The-U-S-subprime-mortgage-crisis-issues-raised-and-lessons-learned http://hdl.handle.net/10986/28008 |
| _version_ |
1764465953148502016 |
| spelling |
okr-10986-280082021-04-23T14:04:46Z The U.S. Subprime Mortgage Crisis : Issues Raised and Lessons Learned Jaffee, Dwight M. ACCOUNTING ARBITRAGE ASSET CLASS ASSET MANAGERS ASSET-BACKED SECURITIES ASYMMETRIC INFORMATION AUCTION AUTO LOANS BAILOUT BANK INVESTORS BANK LENDERS BANKING REGULATIONS BANKING SYSTEM BANKRUPTCY BENEFICIARIES BORROWER BROKERS CAPITAL MARKET CAPITAL MARKETS CAPITAL REQUIREMENTS CATASTROPHE BONDS COLLATERAL COMMERCIAL BANK COMMERCIAL BANKS COMMERCIAL MORTGAGE COMMERCIAL MORTGAGES COMMERCIAL PAPER COMMERCIAL PAPER MARKET COMPETITIVE MARKET CONSUMER BORROWERS CONSUMER LOANS CONSUMER PROTECTION CONSUMER PROTECTION LEGISLATION CONTRACT DESIGN CONTRACT DESIGNS COUPON COUPONS CREDIT CARD CREDIT DEFAULT CREDIT DEFAULT SWAPS CREDIT ENHANCEMENTS CREDIT QUALITY CREDIT RATING CREDIT RATING AGENCIES CREDIT RATINGS CREDITORS CREDITWORTHINESS CURRENCY DEBT DEBT INSTRUMENTS DEBT OBLIGATION DEBT OBLIGATIONS DEBT OUTSTANDING DEBT RATIOS DEBT SECURITIES DEBT SERVICE DEFAULT PROBABILITIES DEFAULT RATE DEFAULT RATES DEFAULT RISK DEFAULTS DEFICITS DEPOSIT DEPOSITORY INSTITUTIONS DEPOSITS DERIVATIVE DERIVATIVE INSTRUMENTS DERIVATIVE MARKET DERIVATIVE MARKETS DERIVATIVES DEVELOPING COUNTRIES DIVERSIFIED INVESTORS DIVERSIFIED PORTFOLIOS DUE DILIGENCE ECONOMIC GROWTH EMERGING ECONOMIES EMERGING ECONOMY EXCHANGE COMMISSION EXPENDITURES FEDERAL RESERVE FINANCIAL CRISIS FINANCIAL DEVELOPMENT FINANCIAL DISTRESS FINANCIAL INSTITUTIONS FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL RISK FINANCIAL SERVICE PROVIDERS FINANCIAL SYSTEM FISCAL POLICIES FLOATING RATES FORECLOSURE FORECLOSURES FOREIGN CAPITAL FOREIGN EXCHANGE FRAUD FUTURES FUTURES MARKET GOVERNMENT GUARANTEE GOVERNMENT GUARANTEES GOVERNMENT REGULATION HEDGE FUND HEDGE FUNDS HOLDING HOME LOAN HOME MORTGAGE HOME MORTGAGES HOMEOWNERSHIP ILLIQUID MARKETS ILLIQUIDITY INDIVIDUAL INVESTORS INDIVIDUAL LOAN INFLATION INSTITUTIONAL INVESTORS INSTRUMENT INSURANCE INTEREST RATE INTEREST RATE RISK INTEREST RATES INTERNATIONAL BANK INTERNATIONAL DEVELOPMENT INTERNATIONAL SETTLEMENTS INVENTORY INVESTMENT ACTIVITIES INVESTMENT BANK INVESTMENT BANKS INVESTMENT DECISIONS INVESTMENT FUNDS INVESTMENT POLICY INVESTMENT PORTFOLIOS INVESTMENT STRATEGIES INVESTMENT STRATEGY INVESTMENT VEHICLES INVESTOR LOSSES LEGAL PROHIBITIONS LEGAL SYSTEM LENDER LENDERS LIABILITY LIEN LINE OF CREDIT LIQUIDATION LIQUIDITY CRISES LOAN LOAN APPLICATION LOAN APPLICATIONS LOAN DEFAULT LOAN DEFAULTS LOAN DEMANDS LOAN MARKETS LOAN OFFICERS LOAN PERFORMANCE LOAN TERMS LOAN VOLUMES LOANABLE FUNDS LOCAL BANK LONG TERM CAPITAL LONG-TERM CAPITAL LONG-TERM DEBT MARK TO MARKET MARK TO MARKET ACCOUNTING MARKET DEVELOPMENTS MARKET DISCIPLINE MARKET ECONOMY MARKET FAILURES MARKET LIQUIDITY MARKET PARTICIPANTS MARKET PRICES MARKET STABILITY MARKET TRADING MARKET VALUE MATURITY MATURITY MISMATCH MATURITY MISMATCHES MONETARY AUTHORITY MONETARY POLICIES MONETARY POLICY MORAL HAZARD MORTGAGE MORTGAGE BONDS MORTGAGE FINANCE MORTGAGE LOAN MORTGAGE LOANS MORTGAGE MARKET MORTGAGE MARKETS MORTGAGE-BACKED SECURITIES MORTGAGES NATURAL DISASTER NATURAL DISASTERS OUTSTANDING AMOUNT OUTSTANDING LOANS PENSION PORTFOLIO PORTFOLIOS PRINCIPAL PAYMENTS PROBABILITY OF DEFAULT PROPERTY RIGHTS PRUDENTIAL REGULATION REAL ESTATE COLLATERAL REAL ESTATE LOANS REGULATORY FRAMEWORK REGULATORY STRUCTURE RETURN RETURNS RISK ASSESSMENTS RISK MANAGEMENT RISK OF DEFAULT RISKY LOAN RISKY LOANS RISKY SECURITIES SECURITIES SECURITIES INDUSTRY SETTLEMENT SETTLEMENT SYSTEMS SHORT-TERM BORROWINGS STOCK BROKERS STOCK MARKET TAX TRADING TRANCHE TRANCHES TRANSACTION TRANSACTION COSTS TRANSITION ECONOMIES TREASURY TREASURY BONDS UNDERLYING MORTGAGES UNDERWRITERS VARIABLE RATE The subprime mortgage crisis ranks among the most serious economic events affecting the United States since the great depression of the 1930s. This study analyzes key issues raised by the crisis at three levels: (i) issues directly and specifically relating to subprime mortgage lending; (ii) issues relating to the securitization of subprime mortgages; and (iii) issues affecting financial markets and institutions. These issues are fundamental to risk bearing, sharing, and transfer in financial markets and institutions around the world. Many of the issues raised by the U.S. subprime crisis also apply to high-risk loan markets in developing countries. The framework applied in the paper analyzes subprime mortgage lending as a major financial market innovation. Although conditions were conducive for subprime lending to arise as a financial innovation, financial innovations are necessarily risky undertakings, all the more so when they create new classes of risky loans and securities. The lessons learned from the crisis can thus be usefully applied to issues of the growth and development of emerging economies, as well as pointing the way to the design of new and efficient policies for subprime lending in the developed economies. 2017-08-28T17:01:28Z 2017-08-28T17:01:28Z 2008 Working Paper http://documents.worldbank.org/curated/en/612021468130801823/The-U-S-subprime-mortgage-crisis-issues-raised-and-lessons-learned http://hdl.handle.net/10986/28008 English en_US Commission on Growth and Development Working Paper;No. 28 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research United States |