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Subprime Market Roller Coaster Disaster, Willa E. Gibson
Subprime Market Roller Coaster Disaster, Willa E. Gibson
Akron Law Faculty Publications
This essay discusses the economic and societal implications of the subprime market losses with an emphasis on the federal regulators’ inability to curtail such losses. It discusses collateralized mortgage obligations and how these debt securities fueled the subprime market. The essay discusses how each of the players – lenders, debtors, investment bankers, securities firms and investors – speculated on homes whose values were a mere illusion. It describes how each party along the chain starting with the lender, used basic risk-shifting principles to engage in reckless speculation assuming they could externalize the cost associated with their behavior. It also identifies …