Raution Credit Crisis 633 V.3
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Transcript of Raution Credit Crisis 633 V.3
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Credit Crisis 2007-2008 Credit Crisis 2007-2008
By: Raution JaiswalWillamette University(Atkinson Graduate School of Management)
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Eventful 2008Eventful 2008March - Bear Stearns: Sale to
JPMorgan @ $10; $29bn loan from Fed
July - Fannie Mae / Freddie Mac $200bn commitment
September - Lehman Brothers Holdings Files for bankruptcy sold to Barclays
September - Merrill Lynch sold to Bank of America for $50bn.
September - AIG: Treasury provides $85bn
September - Washington Mutual failed and sells branch system to JPMorgan for $1.9bn.
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How are financial sector stocks doing?How are financial sector stocks doing?
XLF Financial Sector SPDR ETF
DJIA
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Changing LandscapeChanging Landscape
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New bank holding companies
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Chain ReactionChain Reaction
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Who to blame?Who to blame?
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Heroes & VillainsHeroes & Villains
Homeowners
Mortgage Brokers
Commercial & Investment Banks
Securities Underwriters
Credit Rating Agencies
Corporate Investors
Corporate Shareowners
Regulators
Lack of Prudence at All Levels
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IssuesIssues
Moral hazardConflicts of InterestRegulationFinancial engineering
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Top 8 lessons from the credit crisisTop 8 lessons from the credit crisis
1. Economy is essentially not predictable and understandable
2. Risk needs respect
3. Models have their limits
4. Regulation has its limits too
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5. (Il)liquidity is the ultimate killer
6. Monetary policy-single focus is price stability
7. Accounting can change everything
8. The double edged sword of leverage
Top 8 lessons from the credit crisisTop 8 lessons from the credit crisis
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