- The deregulation of the financial markets and the use of derivatives were not the cause of the financial crisis (Dissenting view of Peter Wallison, FCIC, Financial Crisis Inquiry Report, page 443).
- The cause of the financial crisis was, in fact, the proliferate of subprime mortgages in the years leading up to 2008 (Dissenting view of Peter Wallison, FCIC, Financial Crisis Inquiry Report, page 444).
- Not many people had said prior to the crash that the instruments and practices were too risky (Dissenting view of Peter Wallison, FCIC, Financial Crisis Inquiry Report, page 446).
Monday, October 31, 2011
RJA #10c: Objections
RJA #10b: Reasons
- Reason 1: The FCIC concluded that failures in regulation and supervision led to the collapse of the financial markets (Financial crisis inquiry report page xviii).
- Reason 2: Even those who were once proponents of deregulation such as Chris Cox, the head of the SEC, admit that more regulation is necessary in light of the newly developed instruments ( Roger Lowenstein, The end of wall street, page 236).
- Reason 3: The financial crisis could have been averted had the big mortgage banks been scrutinized by more prudent lending standards (Financial crisis inquiry report page xix and page xxiii).
- Reason 4: The regulations of the banking sector that were in place before Reagan took office were in place solely to protect the investors and consumers of banking products.(http://www.infoplease.com/ce6/history/A0835397.html).
- Reason 5: The unregulated use of Derivatives as an investment tool contributed greatly to the instability of the financial system (Financial crisis inquiry report page xxiv).
RJA #10a: Claim
What was the root cause of the 2008 financial crisis?
Claim:
Deregulation of the financial and banking sectors, leading to the increased use of complex financial instruments, had a major role in causing the crash in 2008.
(page xviii of the Financial Crisis Inquiry Report)
Claim:
Deregulation of the financial and banking sectors, leading to the increased use of complex financial instruments, had a major role in causing the crash in 2008.
(page xviii of the Financial Crisis Inquiry Report)
Thursday, October 27, 2011
RJA #9b: Freewriting
What are the root causes of the 2008 financial crisis?
I believe that the financial crisis of 2008 was cause by years of deregulation, leading to unbridled speculation and securitization with risky assets. This belief is upheld by research on the topic. The sources I have looked at provide me with the information that I need to come to the conclusion that the use of the complex financial instruments and mathematical algorithms that are used to assess risk and securitize risky assets were the main cause of the crisis in 2008. The greed of Wall Street bankers was also a major contributor, in my opinion. If they hadn’t have pushed so hard on the government agencies for the deregulations they enjoy and which allowed them to continue with the practices that have, in hindsight, proved to be do detrimental to the financial system of the United States and of the world. The repeal of the Glass- Steagal Act in 1999 led to banks being able to merge with security underwriting companies. The merger between Citicorp and Travelers’ Insurance Group led to the formation of Citigroup. This merger occurred without congressional approval, so it was technically illegal. The congress then granted the company an exception while they passed the legislation to make the merger legal. The article in the 1987 time magazine quotes that the wall street investment bankers wanted to keep commercial banks out of the securities business, because ‘they would get in over their heads if they were allowed such privileges.’ How right they were! And twenty one years before the crisis, no less!
I believe that the financial crisis of 2008 was cause by years of deregulation, leading to unbridled speculation and securitization with risky assets. This belief is upheld by research on the topic. The sources I have looked at provide me with the information that I need to come to the conclusion that the use of the complex financial instruments and mathematical algorithms that are used to assess risk and securitize risky assets were the main cause of the crisis in 2008. The greed of Wall Street bankers was also a major contributor, in my opinion. If they hadn’t have pushed so hard on the government agencies for the deregulations they enjoy and which allowed them to continue with the practices that have, in hindsight, proved to be do detrimental to the financial system of the United States and of the world. The repeal of the Glass- Steagal Act in 1999 led to banks being able to merge with security underwriting companies. The merger between Citicorp and Travelers’ Insurance Group led to the formation of Citigroup. This merger occurred without congressional approval, so it was technically illegal. The congress then granted the company an exception while they passed the legislation to make the merger legal. The article in the 1987 time magazine quotes that the wall street investment bankers wanted to keep commercial banks out of the securities business, because ‘they would get in over their heads if they were allowed such privileges.’ How right they were! And twenty one years before the crisis, no less!
RJA #9a: MLA-Style Annotated Bibliography
Bibliography
Commission, Financial Crisis Inquiry. Financial
Crisis Inquiry Report. Washington, D.C., 2008.
This source is very reliable. It is the report published by the commission of congressmen who analyzed the financial crisis. The report mainly focuses on the causes of the financial crisis, and as such will be where I draw most of my info from for my paper.
Henry M. Paulson, Jr.
On the brink. New York: Business Plus, 2010.
This is another reliable book, I believe, because it is written by the Secretary of the treasury, Henry Paulson Jr. This book outlines the events leading up to and after the crash in 2008.
Koepp, Stephen.
"Rolling back regulation." TIME 06 July 1987.
http://www.time.com/time/magazine/article/0,9171,964890,00.html
http://www.time.com/time/magazine/article/0,9171,964890,00.html
Tuesday, October 18, 2011
RJA #8c: Field Research Plan–
For my field research, I plan on using my survey that we created, I posted it publicly on my facebook page, and will try and have my friends take it; I will also create some fliers around school for others to take it. Hopefully this will provide my some info about people's thoughts and feelings about the crisis. I also plan to use the blog website Internet Experts, and I hope to find some good sources here to interview. Also, I am going to write a letter to Suze Orman, asking her questions on what her opinions are on the causes of the financial crisis. I was also going to write President Obama and Ben Bernanke. I don't know if I'll get a response, but it's worth a try. Some questions I would have for such individuals would include:What was the most influential cause of the 2008 financial crisis, in your opinion?Do you think that the government should have done more or less when dealing with the crisis? Were you satisfied or dissatisfied with the ways in which the government dealt with the situation? Do you believe that more regulation or less regulation is the solution to the economic problems we have seen? How big of an impact in the big picture context of the global recession did the mortgage practices of American banks, such as Mortgage-backed Securities, Credit Default Swaps, and the derivative market have?
When do you believe that the recession will turn around? Do you think that the 2008 economic crisis could have been avoided in any way?
When do you believe that the recession will turn around? Do you think that the 2008 economic crisis could have been avoided in any way?
RJA #8b: Background Essay Plan
Background essay thesis statement:
The primary cause for the 2008 financial crisis in the United States was the use of complex risk assessment instruments such as CDO's and interest-based derivatives.
Some info that I want to include in my background essay include the following.
-The effects of greed on the financial crisis
---Wall street salaries and bonuses
-The effects of the housing sector on the financial crisis
---Credit default swaps
---Collateralized debt obligations
---Interest based derivatives
---Subprime mortgages
---Toxic assets
-The effects of deregulation on the financial crisis
---Reagan
---Bush sr.
---Bush jr.
---Clinton
The primary cause for the 2008 financial crisis in the United States was the use of complex risk assessment instruments such as CDO's and interest-based derivatives.
Some info that I want to include in my background essay include the following.
-The effects of greed on the financial crisis
---Wall street salaries and bonuses
-The effects of the housing sector on the financial crisis
---Credit default swaps
---Collateralized debt obligations
---Interest based derivatives
---Subprime mortgages
---Toxic assets
-The effects of deregulation on the financial crisis
---Reagan
---Bush sr.
---Bush jr.
---Clinton
Monday, October 17, 2011
RJA #8a: Summary
TIME
Reassessing Risk
This article in the Wednesday, Nov. 05, 2008 issue of TIME magazine discusses the transformation of the practice of assessing the risk of investments throughout time. It mentions at the start that a form of risk assessment has been around for centuries, but now, with the advent of many new computing technologies, corporate banks and other financial institutions are able to produce complicated instruments, such as credit-default swaps and collateralized debt obligations. These instruments at first were treated as a profit center, with no regard for the extreme risk involved or even the mathematical models and algorithms made to analyze the value of the underlying assets. The article discusses a few firms that have removed themselves from practices involving these instruments, and also outlines why there should be a move forward for more to do the same.
A link to the article, Reassessing risk.
Plagiarism checker:
Sentence1: "05, 2008 issue of TIME magazine discusses the transformation of the practice of assessing the risk of investments throughout time"
Sentence2: "This article in the Wednesday, Nov"
Sentence3: "It mentions at the start that a form of risk assessment has been around for centuries, but now, with the advent of many new computing technologies, corporate banks and other financial institutions are able to produce complicated instruments, such as credit-default swaps and collateralized debt obligations"
Sentence4: "These instruments at first were treated as a profit center, with no regard for the extreme risk involved or even the mathematical models and algorithms made to analyze the value of the underlying assets"
Sentence5: "The article discusses a few firms that have removed themselves from practices involving these instruments, and also outlines why there should be a move forward for more to do the same"
Sentence6: ""
Reassessing Risk
This article in the Wednesday, Nov. 05, 2008 issue of TIME magazine discusses the transformation of the practice of assessing the risk of investments throughout time. It mentions at the start that a form of risk assessment has been around for centuries, but now, with the advent of many new computing technologies, corporate banks and other financial institutions are able to produce complicated instruments, such as credit-default swaps and collateralized debt obligations. These instruments at first were treated as a profit center, with no regard for the extreme risk involved or even the mathematical models and algorithms made to analyze the value of the underlying assets. The article discusses a few firms that have removed themselves from practices involving these instruments, and also outlines why there should be a move forward for more to do the same.
A link to the article, Reassessing risk.
Plagiarism checker:
Sentence1: "05, 2008 issue of TIME magazine discusses the transformation of the practice of assessing the risk of investments throughout time"
Sentence2: "This article in the Wednesday, Nov"
Sentence3: "It mentions at the start that a form of risk assessment has been around for centuries, but now, with the advent of many new computing technologies, corporate banks and other financial institutions are able to produce complicated instruments, such as credit-default swaps and collateralized debt obligations"
Sentence4: "These instruments at first were treated as a profit center, with no regard for the extreme risk involved or even the mathematical models and algorithms made to analyze the value of the underlying assets"
Sentence5: "The article discusses a few firms that have removed themselves from practices involving these instruments, and also outlines why there should be a move forward for more to do the same"
Sentence6: ""
Sunday, October 9, 2011
RJA #7a: Evaluation of Sources
Book:
The Financial Crisis Inquiry Report
The authors of this book are the senators in the commission by the same name. This suggests credibility in my opinion. It is a recent work, just being released in January 2011. This book is one that I think will prove to be the most informative of all of my sources. What better of a source to have than the congressional committee that has spent the last year researching my topic? I think that the audience of this work includes both the specialists and a popular audience.
Periodical:
The US financial crisis: lessons for theories of institutional complementarity
This article was published by the Oxford University press by the author John Campbell. This author has written many peer reviewed articles that appear in reputable journals, such as the American Journal of Sociology, British medical journal, and the British Journal of Sociology, and offer a wide range of topics, such as economics, globalization, and health care. The article is meant to be used as institutional analysis. The issue of the Socio-economic Review in which this particular article is contained was published on January 22, 2011.
Website:
Financial Crisis Inquiry Commission Official website
This website is supported by Stanford University, and has many resources available, such as a full resource library and a hearings and testimony section. The site seems very well maintained, and has an informative interactive graphic in the header. You can adjust the graph you want to see, including indicators such as the unemployment rate and the Dow Industrial Average, and the time frame goes back 50 years. You can even download a PDF version of the full report for free on this website (of course I found this out only after I bought the kindle edition for my iPad). I think that the purpose of this website is to educate the country about the financial crisis and how to avoid anything like that happening again. I think that this is a valuable website.
The Financial Crisis Inquiry Report
The authors of this book are the senators in the commission by the same name. This suggests credibility in my opinion. It is a recent work, just being released in January 2011. This book is one that I think will prove to be the most informative of all of my sources. What better of a source to have than the congressional committee that has spent the last year researching my topic? I think that the audience of this work includes both the specialists and a popular audience.
Periodical:
The US financial crisis: lessons for theories of institutional complementarity
This article was published by the Oxford University press by the author John Campbell. This author has written many peer reviewed articles that appear in reputable journals, such as the American Journal of Sociology, British medical journal, and the British Journal of Sociology, and offer a wide range of topics, such as economics, globalization, and health care. The article is meant to be used as institutional analysis. The issue of the Socio-economic Review in which this particular article is contained was published on January 22, 2011.
Website:
Financial Crisis Inquiry Commission Official website
This website is supported by Stanford University, and has many resources available, such as a full resource library and a hearings and testimony section. The site seems very well maintained, and has an informative interactive graphic in the header. You can adjust the graph you want to see, including indicators such as the unemployment rate and the Dow Industrial Average, and the time frame goes back 50 years. You can even download a PDF version of the full report for free on this website (of course I found this out only after I bought the kindle edition for my iPad). I think that the purpose of this website is to educate the country about the financial crisis and how to avoid anything like that happening again. I think that this is a valuable website.
Tuesday, October 4, 2011
RJA #6c: Multimedia
Blinkx
2008 financial crisis
keywords
10/4/2011
202000 results
relevance- 4
Blinkx
banking regulation
keywords
10/4/2011
25000 results
relevance-5
2008 financial crisis
keywords
10/4/2011
202000 results
relevance- 4
Blinkx
banking regulation
keywords
10/4/2011
25000 results
relevance-5
RJA #6b: Social Media
Collecta
"Hello, thanks for trying to find Collecta Real-Time Search.
We have removed our consumer facing site but we are still researching applications for our technology.
Please contact us if you have any questions or ideas to share. Thanks! "
relevance- 0
Blogscope
financial crisis + deregulation
search math
10/4/2011
424 results
relevance- 3
Blogscope
“Financial crisis” AND “mortgage backed securities”
boolean phrase
10/4/2011
"Error Report: An error has occured while searching. Most likely, its a temporary problem, which should disappear if yousimply reload the page. We regret the inconvenience."
Reloading didn't work. relevance- 0
Blogscope
Financial crisis bank fraud
keywords
10/4/2011
1170 results
relevance- 3
Bigola
Financial crisis
keywords
10/4/2011
66 results
relevance-0
not one related page to my search!
I think that social media sites are very bad research tools.
"Hello, thanks for trying to find Collecta Real-Time Search.
We have removed our consumer facing site but we are still researching applications for our technology.
Please contact us if you have any questions or ideas to share. Thanks! "
relevance- 0
Blogscope
financial crisis + deregulation
search math
10/4/2011
424 results
relevance- 3
Blogscope
“Financial crisis” AND “mortgage backed securities”
boolean phrase
10/4/2011
"Error Report: An error has occured while searching. Most likely, its a temporary problem, which should disappear if yousimply reload the page. We regret the inconvenience."
Reloading didn't work. relevance- 0
Blogscope
Financial crisis bank fraud
keywords
10/4/2011
1170 results
relevance- 3
Bigola
Financial crisis
keywords
10/4/2011
66 results
relevance-0
not one related page to my search!
I think that social media sites are very bad research tools.
RJA #6a: Websites
Alta vista
+financ* + regulat* + crisis +2008
search math
10/04/2011
More than 10 pages of results
relevance of first page -5
+financ* + regulat* + crisis +2008
search math
10/04/2011
More than 10 pages of results
relevance of first page -5
Alta vista
+financ* + crisis + deregulat*+2008
search math
10/04/2011
0 results
relevance -0
Alta vista
“Financial crisis” AND 2008 AND “market reaction”
boolean phrase
10/04/2011
More than 10 pages results
relevance -4
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