This is a presentation on the Proposal of the Research Topic- " Who is to be held responsible for the Sub-prime Mortgage Losses" - Provides the basic concepts of understanding the crises. - Their Link with the Accounting Standard and Concepts.

1. SUB PRIME MORTGAGE CRISES
Who is the Responsible Party for the Sub-prime mortgage Loss ?
 Name: Priyanka Maihar
 ID: 0642758

2. Quiz on Banking Knowledge
?? What are the crucial Financial details
the Banks ask for approving a Mortgage
Loan application ??
 Stable job and Income
 Good Credit file history
 Initial Deposit of 10%-20%

3. WHAT WERE THE SUB PRIME MORTGAGE
CRISES ?
 Subprime Mortgages The definition of subprime lending is the loaning
of money to people who are at a higher credit risk than normal. This
means that the borrower's ability to repay the loan is questionable based
on a number of criteria.
 Subprime Crisis : It is a 2007 financial crisis that started in the United
States of America from the high number of defaulting borrowers
with subprime mortgages (Investopedia, 2014).

4. EXPLANATION OF THE CRISES
 Individuals were taking on subprime mortgages, with the
expectations that the price of their home would continue to rise and
that they would be able to refinance their home before the higher
interest rates were to go into effect.
 However, the housing bubble burst and housing prices had reached
their peak. They were now on a decline.

5. KEY ISSUES/ OBJECTIVES
Who is to be BLAMED ?
 Is the solely the Banks in United States of America to be blamed ?
 Other Financial Institution? Eg: Federal Reserve of USA ?
 Is there a link with the “Substance over form” concept
 Rejection of Financial Instrument Standard [ IAS 39 ] by the
European Union ?

6. LINK WITH ACCOUNTING STANDARD AND
CONCEPT
 IAS 39 – Now IFRS 9- Financial Instruments Standard
Members of Accounting Regulatory Committee (ARC), removed – “ Hedge
Accounting & Fair Value Accounting section from IAS 39 in 2004 (Europa, 2004)
 Substance over form
Requires the transactions and events to be recorded in “Economic Substance”
rather than the “Legal Form” in order to give True & Fair View (Accounting
Simplified, 2014).
Were these concepts not correctly and accurately followed?

7.  Implications of crises felt around
the World (BBC, 2009). Not to be
repeated AGAIN !
 Important event to know as
Accounting Graduates
 Help Banks and other Lending
institutions to be conscious in
future.

8. STRUCTURE OF THE REPORT
 Part 1: Introduction to Sub Prime crises and Losses made
 Part 2: Analysis of the Banks and other Financial Institutions.
 Part 3: Research on the link with Substance over form, IAS 39 REJECTION.
 Part 4: My answer = The Conclusion .
 Part 5: Reference List

9. REFERENCE LIST
 Accounting Simplified . (2014). Substance over Legal form . Retrieved from Accounting
Simplified : http://accounting-simplified.com/financial/concepts-and-principles/substance-
over-form.html
 BBC . (2009, August 7). Timeline: Credit crunch to downturn. Retrieved from BBC :
http://news.bbc.co.uk/2/hi/business/7521250.stm
 Europa . (2004, 11 19). IAS 39 Financial Instruments: Recognition and Measurement -
Frequently Asked Questions (FAQ). Retrieved from Europa : http://europa.eu/rapid/press-
release_MEMO-04-265_fr.htm?locale=fr
 Investopedia. (2014). Sub-prime Meltdown. Retrieved from Investopedia:
http://www.investopedia.com/terms/s/subprime-meltdown.asp

10. Any Questions and Suggestions ??
Thank You very Much ! 