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Learning From Financial History: An Academic Never Forgets, David J. Reiss
Learning From Financial History: An Academic Never Forgets, David J. Reiss
David J Reiss
Those with short-term memories have been dominating our debate over the future of the Consumer Financial Protection Bureau. They argue that the financial industry has learned its lesson and they point to a more rational marketplace today. But the Bureau was designed to regulate the subprime mortgage market and other consumer credit markets through the credit cycle. A strong Bureau should be built today to deal with the inevitable irrational exuberance of lenders and consumers once the cycle rises from its current depths to the heights of tomorrow.
Is Competition The Solution Or The Problem? An Analysis Of U.S. Mortgage Securitization, Michael N. Simkovic
Is Competition The Solution Or The Problem? An Analysis Of U.S. Mortgage Securitization, Michael N. Simkovic
Michael N Simkovic
This article’s original contribution to the literature about the causes of the U.S. mortgage crisis of the late 2000s is to analyze two important causes that have thus far only been discussed in passing. First, this article provides evidence that fragmentation of the securitization market in the mid-2000s and competition between mortgage securitizers undermined securitizers’ ability to control originators, and that such competition led to a race to the bottom on underwriting standards. Second, this article provides evidence of a shift in market power away from securitizers and toward originators during the mid-2000s, and argues that this shift in power …