Downloaded 65 times
More Related Content
Similar to Financial Crisis 2008
Financial Crisis 2008
- 1. Financial Crisis 2008 Overview WHATHAPPENED | HOW IT HAPPENED | AFTERMATH By Thanuja Seneviratne
- 2. Agenda What Happened Before September 2008 Freddie Mac & Fannie Mae Collapse of Lehman Brothers AIG Fear & TARP Spreading Global How it Happened Sub-prime Mortgage Lending CDOs & Derivatives Housing Bubble bust Aftermath Blue Monday Crash & Further advancement in Europe Financial Crisis Inquiry Commission Occupy Wall Street
- 3. What Happened BeforeSeptember 2008 In 2005, Raghuram Rajan presented his paper "Has Financial Development Made the World Riskier?" In 2006, Nouriel Roubini warned IMF about housing bubble bust and possible recession In 2006, Satyajit Das published his book “Traders, Guns & Money” describing the risks of derivatives In 2007, key Mortgage Lending companies collapse In 2008 Jan, Financial Markets downturn started In 2008 Mar, Bear Stearns acquired by JPMorgan for $2 for share
- 4. What Happened FreddieMac & Fannie Mae Government sponsored Enterprises (GSE) Exempted from regulation Issue mortgage-backed securities (MBS’s) just like investment banks By Sept 2008, they are in debt of MBS’s worth $ 5 trillion Sept. 2008, Treasury intervention, placed the two under government supervision
- 5. What Happened Collapseof Lehman Brothers Longest-running Wall Street CEO Dick Fuld Hank Paulson and government meet up with other bankers in Wall Street Moral Hazard Chapter 11 Bankruptcy Shockwave of events after the Leahman bankruptcy
- 6. What Happened AIGFear & TARP AIG in the brink Understanding Credit Default Swaps USD 85 Billion lending by Federal Reserve Inevitable collapse of whole financial system Hank Paulson and Congress meeting for USD 700 billion bailout proposal as TARP Defeat of Emergency Economic Stabilization Act – Bailout Bill Passing of Bailout Bill in October 2008 Capital injection of the large financial institutions
- 7. What Happened SpreadingGlobal G7 Summit in October 2008 Iceland Bankruptcy Europe shockwave and the glimpses of riots
- 8. How it Happened Sub-prime Mortgage Lending Prime mortgage lending Housing Bubble Investors and greed of Wall Street lead to sub-prime mortgage lending Underwritting & Bonus scheme
- 9. How it Happened CDOs & Derivatives Traditional derivatives in commodities market Ideas for minimizing credit risks for banks First credit default swap and Blythe Masters Synthetic Collateral Debt Obligations (CDOs) Rating companies and risk levels De-regulation of derivatives New age in financial markets!
- 10. How it Happened Housing Bubble bust Unexpected happened! Foreclosures spreading throughout US CDOs going bad and insurance companies cannot keep their obligations Mortgage companies going under followed by Investment banks and insurance companies Investors losing the investments and stock market plummet
- 11. Aftermath Blue MondayCrash & Further Advancement in Europe RBS losses and British reaction Denmark, France and Germany response World Bank projection of world production loss
- 12. Aftermath Financial CrisisInquiry Commission (FCIC) 19 public hearings with major bankers and other parties Report and Conclusions Was avoidable! De-regulation Governance and risk management Lack of transparency Government’s ill-preparedness Systematic breakdown of ethics and practices
- 13. Aftermath Occupy WallStreet Protest movement Enter the Anonymous hacktivist group “We are 99%” Income inequality Noam Chomsky spoke out and Michael Moore addressed the crowd Further marches and protests throughout 2011 and 2012
- 14.