Political Economy Commons^™

The Rescue Of Fannie Mae And Freddie Mac – Module Z: Overview, Rosalind Z. Wiggins, Ben Henken, Adam Kulam, Daniel Thompson, Andrew Metrick

Journal of Financial Crises

In September 2008, as the financial crisis that had begun the previous year escalated, the US government appointed a conservator for two government-sponsored enterprises (GSEs), the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), that dominated the secondary mortgage market and were among the largest participants in the global capital markets. The conservatorships were the hallmark of a multipart rescue plan intended to save the firms from insolvency and a disorderly collapse and required the combined and coordinated efforts of several government agencies and instrumentalities. Ultimately, the government invested $191.5 billion into the …

The Rescue Of Fannie Mae And Freddie Mac–Module F: Federal Reserve’S Large-Scale Asset Purchase (Lsap) Program, Daniel Thompson, Adam Kulam

Journal of Financial Crises

By late 2008, the secondary mortgage markets were suffering high default rates, causing mortgage lending to slow and the value of mortgage securities to plummet. The Federal Reserve lowered the federal funds rate, and the government placed Fannie Mae and Freddie Mac into conservatorship, yet credit in housing and other financial markets remained tight. On November 25, the Fed announced its intent to purchase up to $500 billion in agency mortgage-backed securities (MBS) and $100 billion in agency debt to reduce the cost and increase the availability of mortgage credit, which would support housing markets and improve conditions in financial …

The Rescue Of Fannie Mae And Freddie Mac – Module E: The Housing And Economic Recovery Act Of 2008, Daniel Thompson

Journal of Financial Crises

As the U.S. housing crisis worsened in 2007, and through 2008, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) headed towards insolvency. At the same time, contractions in private securitization resulted in these two government-sponsored enterprises (GSEs) purchasing nearly half of all new mortgages. In July, the government passed the Housing and Economic Recovery Act of 2008 (HERA) to provide a more effective regulator and to address public uncertainty regarding whether the government would back the GSEs’ assets and liabilities. HERA provided Treasury and the newly formed Federal Housing Finance Agency (FHFA) …

The Rescue Of American International Group Module Z: Overview, Rosalind Z. Wiggins, Aidan Lawson, Steven Kelly, Lily S. Engbith, Andrew Metrick

Journal of Financial Crises

In September 2008, in the midst of the broader financial crisis, the Federal Reserve Board of Governors used its emergency authority under Section 13(3) of the Federal Reserve Act to authorize the largest loan in its history, a $85 billion collateralized credit line to American International Group (AIG), a $1 trillion insurance and financial company that was experiencing severe liquidity strains. In connection with the loan, the government received an equity interest representing 79.9% of the company’s ownership. AIG continued to experience a depressed stock price, asset devaluations, and the risk of ratings downgrades leading to questions about its solvency. …

The Rescue Of American International Group Module E: Maiden Lane Iii, Lily S. Engbith, Devyn Jeffereis

Journal of Financial Crises

Starting in mid-2007, American International Group (AIG) faced increasing collateral calls from counterparties looking to protect their positions in credit default swap (CDS) contracts that AIG had written on residential and commercial collateralized debt obligations (CDOs) (US COP 2010, 28-30). Per these agreements, the AIG parent company was responsible for insuring the value of the CDOs against the risk of a negative credit event, such as default (GAO 2011, 5; US COP 2010, 29-30). AIG’s immediate need for liquidity on September 16, largely driven by a securities lending program and those collateral calls, prompted the Federal Reserve to lend the …

The Rescue Of American International Group Module D: Maiden Lane Ii, Lily S. Engbith, Devyn Jeffereis

Journal of Financial Crises

In September 2008, American International Group (AIG) faced increasing difficulty in returning cash collateral to counterparties looking to terminate, rather than roll over, their securities lending agreements, in part because the company had invested the collateral in residential mortgage-backed securities (RMBS), which were becoming illiquid. The Federal Reserve Bank of New York (FRBNY) provided liquidity to the company, including through the Securities Borrowing Facility (SBF), which allowed for the repayment of cash collateral but did not address the falling values of the RMBS. In November 2008, the Federal Reserve Board authorized the creation of Maiden Lane II (ML II), a …

The Rescue Of American International Group Module B: The Securities Borrowing Facility, Lily S. Engbith, Alec Buchholtz, Devyn Jeffereis

Journal of Financial Crises

In 2008, American International Group (AIG) was among the largest insurance corporations in the world and maintained a profitable securities lending program. However, AIG invested much of the cash collateral received from counterparties in residential mortgage-backed securities, whose value began to collapse rapidly and unexpectedly, creating liquidity strain for AIG when borrowers returned their securities. Because of these strains, credit downgrades, and losses, in September, the company sought assistance from the Federal Reserve which, on October 6, 2008, approved the establishment of the Securities Borrowing Facility by the Federal Reserve Bank of New York (FRBNY). The FRBNY agreed to loan …

Stress Tests And Policy, Greg Feldberg, Andrew Metrick

Journal of Financial Crises

Ten years after the Federal Reserve’s crisis-era bank stress test, it is time to recalibrate the stress tests for “peacetime.” Outside of a crisis, supervisors should tailor stress tests to focus on their comparative advantages by taking a macroprudential focus, with severe scenarios that enable them to learn about emerging risks in both traditional and shadow banking sectors. In peacetime, also, supervisors should emphasize risk- management practices and be wary of forcing rapid changes in capital levels for individual banks, while linking stress-test results with countercyclical capital buffers across the system.

Sustainable Economic Development In The Post-Covid Era In Asia And The Pacific, Yasuyuki Sawada

CBER Conference

The second day of the 1st International Conference at the CBER, IBA Karachi commenced with an opening address by the Chief Economist at the Asian Development Bank (ADB), Mr. Yasuyuki Sawada. Speaking about the outbreak of the Covid-19 virus and how it has destabilized the economic outlook and widened existing social inequalities, impacting lives and livelihoods of millions in Asia-Pacific region and beyond, Sawada remarked, “Regional GDP contracted by 0.2% in 2020 with East Asia faring much better. After a sharp contraction last year, growth in South Asia will rebound in 2021. However, the recovery will be uneven”. Dr. Sawada’s …

The Financial Facet To Sino-African Cooperation: Analyzing Potential Motivations Behind Chinese Investment In African Countries, Jacob T. Carnevale

Political Science Theses and Capstones

China’s reputation transitioned from political isolation throughout the twentieth century to international influence in the twenty-first century. We see this in the continent of Africa, especially, where multiple countries experience political and economic hardships. Today, China invests in African countries to alleviate these hardships and strengthen foreign relations. Some scholars contend that much of China’s approach to foreign direct investment (FDI) in Africa stems from China’s domestic interests, while other scholars contend it is more about relationship-building. Taking note that China does both, I ask which aspect to Sino-African relations primarily motivates Chinese lending in Africa. To analyze this question, …

Employment Trends And Poverty Status: Men And Women In The New York City Metro Area Between 2000 And 2017, Sarah Kostecki

Center for Latin American, Caribbean, and Latino Studies

Introduction:

This report examines employment trends and poverty status among men and women aged 25-54 in the New York City metropolitan area. The report assesses the characteristics of these persons, while examining trends and differences in poverty status by sex, race/ethnicity, and across the five largest Latino nationalities.

Methods:

This report uses the American Community Survey PUMS (Public Use Microdata Series) data for all years released by the Census Bureau and reorganized for public use by the Minnesota Population Center, University of Minnesota, IPUMSusa, (https://usa.ipums.org/usa/index.shtml). See Public Use Microdata Series Steven Ruggles, J. Trent Alexander, Katie Genadek, Ronald Goeken, Matthew …

Asset Classes, Nicolas L. Jacquet

Research Collection School Of Economics

This paper proposes a theory of endogenous differences in liquidity of assets based on the interaction between differences in the risk of assets and differences in liquidity needs of investors. An equilibrium of the model, which always exists and is unique, displays a class structure, where investors’ types sort themselves across different types of assets. I also provide a detailed analysis of the possible types of sorting and of the consequences for the cross-sectional properties of asset prices and their velocity. The framework can also be useful to think about what constitute a ""light-to-liquidity" and a "safe asset".

Space Exploration: Nasa Investment Into The Private Space Sector And Public Opinion, Brooke Ziegenhagen

Senior Theses

The space exploration industry has entered a new era with companies such as SpaceX and Blue Origin leading the way to the privatization of space. This paper examines public opinion regarding the source of space exploration funding and proposes possible motivations for these sentiments. This is followed by an assessment on NASA’s investment trends into the commercial space industry. Both probes review the past decade, to reveal the public-private relationship in this new era and finally, conclude whether or not public opinion plays a role in the degree of NASA investment and what that role may be.

Monetary And Fiscal Policies In The Covid-19 Crisis. Will They Work?, Daniel Lacalle

Journal of New Finance

The spread and mortality rate of the COVID-19 virus has created enormous strains on global healthcare systems and driven governments to take extreme measures to contain the virus, including the lock down of most citizens and shutting down most economic sectors. Due to these unique challenges and coming from an economy that was weak already in 2018 and 2019, the world faces a global crisis of unprecedented impact and high uncertainty about the recovery process. In this paper, we analyze how the world economy is addressing the COVID-19 pandemic. We start with the situation of the main economic regions at …

A Pandemic Of Protectionism: How Economic Isolationism Affects The Economy, Álvaro Martín

Journal of New Finance

The aim of this paper is to study the economic consequences of protectionism from a macroeconomic perspective. For that purpose, we estimate the impact of tariffs on different economic variables as GDP growth, trade volume or unemployment, comparing the effects for two groups of countries: high-income and low-income. For this, we build a regression model to estimate the effects of tariff changes on each of these variables, differentiating between the two groups of countries. Tariffs contribute to increase unemployment, generate lower economic growth and reduce trade volumes, but by how much? This is very relevant in the actual pandemic environment …

Money Trumps Ethnicity: An Overview Of Local Election In Kendari, M. Najib Husain, La Husen Zuada

Jurnal Politik

This paper explains how money politics and ethnic politics work at the same time, and which one of them is more influential when the two are confronted. By examining the 2017 regional election in the city of Kendari, this paper finds that both ethnic politics and money politics were used by contestants running in the election to gain voter support. Nevertheless, ethnic politics failed to maintain voter loyalty when contested with money politics that was designed carefully, massively, right on target, well-structured, and was supported by a solid and militant team.

Refusing To Die: Programmatic Goods In The Fight Against Covid-19 In Sampang Regency, Endik Hidayat, Daniel Susilo

Jurnal Politik

This article discusses programmatic distributive politics in the villages in Sampang Regency during the COVID-19 pandemic. This study seeks to answer the forms of programmatic goods distributed in Sampang during the pandemic. This study employs qualitative methods and chose ten villages in Sampang as its case study due to Sampang’s achievement in maintaining its green zone status for the longest period in East Java. This article shows that there have been shifts in the bupati’s relationships with the village heads, from what was previously transactional prior to the pandemic to be more collaborative in efforts to contain the spread of …

Reimagining Post-Secondary Training, Community College, And Welfare Supports, Aaron Azerad

Dissertations, Theses, and Capstone Projects

This paper seeks to study the income patterns at the sub-bachelorette level through community colleges and workforce training programs. Using 2018 U.S. Census PUMA microdata, this thesis not only explores which fields of study, industries, and occupations have a sufficient number of observations to determine whether they provide incomes which are commensurate with a middle class livelihood but, also whether these jobs are plentiful in number.

The second goal is to evaluate the effects of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (the Clinton era welfare reform) and how it has influenced Giuliani era ‘work requirement’ initiatives tied …

Corona's Bio-Economic Crisis And The Post-Corona World, Cyrus Bina

Economics & Management Publications

While pandemics are pervasive, this is for the first time that the capitalist mode of production reached the outer limits of biology, biosphere, ecology, economy, geography, and international relations in unison resulting in an all-encompassing crises that devastated the entire planet. The upshot of this pandemic has overwhelmed the infrastructure of public health across the globe with stunning speed and with infections in millions in just a few months and the velocity of economic damage and devastation much worse than the Great Depression of the last century. It is also the “proof of the pudding” for the “conquest of mode …

Lessons Learned: Ron Borzekowski, Mercedes Cardona, Rosalind Z. Wiggins

Journal of Financial Crises

Ron Borzekowski was a senior economist at the Federal Reserve Board when he was detailed to join the Financial Crisis Inquiry Commission (FCIC) as a senior researcher and later became deputy to research director Greg Feldberg. The 10-member bipartisan commission, charged with investigating and determining the causes of the crisis, held more than 19 hearings, and interviewed more than 700 people from September 2009 to Jan. 2011. It issued a 662-page report explaining why the crisis came about and the roles of financial institutions, government, and the public. This Lessons Learned is based on an interview with Mr.Borzekowski.