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Forget About Housing, The The Real Cause Of The Crisis Was OTC Derivatives

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Housing equity withdrawal since the financial crisis

Australian Housing Crisis: Mortgage Broker Admits His Clients "Don ..
The accounting mistake stemmed from Merrill Lynch, the Wall Street giant that Bank of America acquired during the financial crisis. The bank agreed to the deal, believing it had found a bargain, but Merrill had wide-ranging problems, which it bequeathed to Bank of America.

states hardest hit by the nation’s housing crisis


Economic bubbles are not recognized by those inside of them, and the entire Western world has become quietly trapped inside the largest economic bubble in history. The global financial crisis that began in 2008 has been (MBSs), such as collateralized debt obligations (CDOs), which were revealed as toxic assets. While the root cause of the financial crisis is assumed to have been the residential real estate asset price bubble, the underlying systemic risk, and the primary reason for the "too big to fail" doctrine whereby governments were compelled to save financial institutions at any cost, lies in over the counter (OTC) derivatives. The preserved the value of bank balance sheets, i.e., of their mortgage portfolios, but what was of far greater importance was that it prevented triggering the conditions of thousands of OTC derivatives contracts, such as credit default swaps (CDS), that would have wiped out virtually all of the largest banking institutions in the world.

 

Nontraditional banking activities and bank failures …


The Bank of England’s chief economist has admitted his profession is in crisis having failed to foresee the 2008 financial crash and having misjudged the impact of the vote.


The error is a jarring bump in the road for Bank of America. For some years after the crisis, it was overwhelmed by the fallout of its disastrous 2008 acquisition of Countrywide Finance, the high-flying mortgage company that fueled many of the excesses of the housing boom. Bank of America took huge losses on distressed Countrywide mortgages and has had to set aside tens of billions of dollars to cover the legal costs of settling home loan abuses. Over the last couple of years, however, the bank’s low-key chief executive, Brian T. Moynihan, appeared to be grinding out a steady recovery, which helped lift the bank’s shares by a third last year.


Economic Research - Federal Reserve Bank of San …

The industry has faced similar criticism over practices stemming from the housing crisis. Amid a surge in foreclosures, state attorneys general accused the banks of using faulty documents without reviewing them and improperly seizing homes. In February, five big banks agreed to pay $26 billion to settle the matter.

Economic analysis and research summaries for a general audience.

Although media attention continues to focus on the political theme of economic recovery and residential real estate, the true cause of what came to be known as the credit crisis continues unabated, outside the purview of the central banks and governments.

2008–present Spanish financial crisis - Wikipedia

What also stands out about the SunTrust settlement is that it covers breakdowns in underwriting practices in the years after the 2008 mortgage crisis, a time when many banks had vowed to clean up their controls.

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In August 2007, , but their efforts were in vein. By June 2008, , after more than doubling in the preceding two years. The event that Warren Buffett anticipated in 2002 occurred on Sunday, September 14th, 2008, when Lehman Brothers filed for bankruptcy, the largest corporate bankruptcy in US history. The failure of Lehman Brothers and directly caused the credit crisis. Since it is impossible for market actors to know what risks or how much leverage their counterparties have, OTC derivatives render credit ratings meaningless. The flow of credit and lending activity halted on a worldwide basis, causing sharp contractions in economic activity and deflation.

Automotive industry crisis of 2008–10 - Wikipedia

JP Morgan's strategy of growth, lead them to become a "too big to fail" bank, requiring government support during the financial crisis. In 2004, the bank agreed to buy Bank One, creating a $1.1 trillion bank holding company. JP Morgan Chase acquired on March 18, 2008, for $2 per share. Six days later, the deal was revised upward to $10 a share, after Bear Sterns shareholders objected to the initial pricing. On September 25, 2008, the (FDIC) closed . The bank was purchased by JPMorgan Chase for $1.9 billion. Washington Mutual shareholders lost all of their equity.