The Global Financial Crisis - 2016 AnalysisSara Marshall
This is an analysis presentation determining if we, a global community, have recovered from the Global Financial Crisis and whether or not there is a possibility of a future financial crisis.
I made this when I was in third year of my college.
This was my attempt to describe the subprime mortgage crisis that lead to the financial meltdown in 2008.
The Global Financial Crisis - 2016 AnalysisSara Marshall
This is an analysis presentation determining if we, a global community, have recovered from the Global Financial Crisis and whether or not there is a possibility of a future financial crisis.
I made this when I was in third year of my college.
This was my attempt to describe the subprime mortgage crisis that lead to the financial meltdown in 2008.
Bubble spotting - Subprime Mortgage crisis / Housing bubble 2007-2008Benjamin Van As
In the early to mid 2000s a housing bubble was created due to easy access to credit. The fall-out once investment bubble popped nearly brought the banking sector to its knees
This short presentation (part of a series on bubbles) explained what happened
[SERIES 4/4] The Global Financial Crisis (2007 - 2009)
from the Frederic Mishkin's The Economics of Money, Banking, and Financial Markets
Financial Crises on Advanced Economies Chapter
Outline:
SERIES 1: Factors Causing Financial Crises
SERIES 2: Dynamics of Financial Crises in Advanced Economies
Series 3: The Great Depression
SERIES 4: The Global Financial Crisis of 2007 - 2009 (The Great Recession)
Other Sources:
The Causes and Effects of the 2008 Financial Crisis
https://www.youtube.com/watch?v=N9YLta5Tr2A
For a class assignment on the 2007-08 economic crisis. We focused on the idea of a "Shifting Economic Position" as the major reason for the crisis (as per assignment) - Leave a comment if you download, please!
http://www.universitieshandbook.com English management training in Germany, Switzerland, England, USA, Japan and Poland.
For many experienced managers, executives and specialists, Boston Business School is the partner of choice when it comes to expanding their skill sets, broadening their functionalities, and globalizing their perspectives.
Explore how Boston Business School's programs meet your needs and priorities in the following fields: http://www.universitieshandbook.com
Bubble spotting - Subprime Mortgage crisis / Housing bubble 2007-2008Benjamin Van As
In the early to mid 2000s a housing bubble was created due to easy access to credit. The fall-out once investment bubble popped nearly brought the banking sector to its knees
This short presentation (part of a series on bubbles) explained what happened
[SERIES 4/4] The Global Financial Crisis (2007 - 2009)
from the Frederic Mishkin's The Economics of Money, Banking, and Financial Markets
Financial Crises on Advanced Economies Chapter
Outline:
SERIES 1: Factors Causing Financial Crises
SERIES 2: Dynamics of Financial Crises in Advanced Economies
Series 3: The Great Depression
SERIES 4: The Global Financial Crisis of 2007 - 2009 (The Great Recession)
Other Sources:
The Causes and Effects of the 2008 Financial Crisis
https://www.youtube.com/watch?v=N9YLta5Tr2A
For a class assignment on the 2007-08 economic crisis. We focused on the idea of a "Shifting Economic Position" as the major reason for the crisis (as per assignment) - Leave a comment if you download, please!
http://www.universitieshandbook.com English management training in Germany, Switzerland, England, USA, Japan and Poland.
For many experienced managers, executives and specialists, Boston Business School is the partner of choice when it comes to expanding their skill sets, broadening their functionalities, and globalizing their perspectives.
Explore how Boston Business School's programs meet your needs and priorities in the following fields: http://www.universitieshandbook.com
X Congreso Nacional de Crédito, Cobranzas y Marketing Financiero - Chile 2015...d2i institute panama
X Congreso Nacional de Crédito, Cobranzas y Marketing Financiero - Chile 2015
CONFERENCIA: MARKETING FINANCIERO: ALCANZANDO A LOS NUEVOS CONSUMIDORES
Utilización de la nano segmentación en el mundo digital.
Reputación digital. Redes Sociales. Inmediatez e innovación disruptiva.
- Rafael Igual (España), Partner & Co-Founder, Social Business Strategist
- Andrés Silva Arancibia, Especialista en Social Media Marketing
Mrotek Schmitz 2010 Cas Annual Meeting Finalkylemrotek
The rise and fall of subprime mortgage securitizations contributed in part to the ensuing credit crisis
and financial crisis of 2008. Some participants in the subprime-mortgage-backed securities market relied at least
in part on analyses grounded in the loss development factor (LDF) method, and many did not conduct their own
credit analyses, relying instead on the work of others such as securities brokers and rating agencies. In some
cases, the parties providing these analyses may have lacked the independence, or at least the appearance of it, that
would have likely better served the market.
A new appreciation for the value of independent analysis is clearly a silver lining and an important lesson to be
taken from the crisis. Actuaries are well positioned to lend assistance to the endeavor.
Mortgages are long-duration assets and, similarly, mortgage credit losses are relatively long-tailed. As casualty
actuaries are aware, the LDF method has inherent limitations associated with immature development. The
authors in this paper will cite examples of parties relying on the LDF or similar methods for projecting subprime
mortgage credit losses, highlight the limitations of relying exclusively on such methods for projecting subprime
mortgage credit performance, and conclude by offering general enhancements for an improved approach that
considers the underwriting characteristics of the underlying loans as well as economic factors.
pictorial representation of sub prime crisis. How sub prime crisis happened. Simple and easily understood way. Investment banking,motgages,how it backfired,snapshot of subprime crisis 2008,explanation of subprime crisis,.Why real estate sector lost its boom in US.
3- Tax-Exempt Financing: The "New Normal" or Another Cycle?- Daniel ShimkusMassDevelopment
Daniel Shimkus of TD Bank gives an overview of the current climate and cycles in the world of tax-exempt financing. Part of Current Topics in Tax-Exempt Finance 10/29/2010
Presentatie: Non-Financial Risks: A focus on Operational Risk van Ben Gunnee. De presentatie is gegeven op 25 november 2010 op het Mercer Investment Consulting seminar.
The global financial crisis, brewing for a while, really started to show its effects in the middle of 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems.
On the one hand many people are concerned that those responsible for the financial problems are the ones being bailed out, while on the other hand, a global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-connected world. The problem could have been avoided, if ideologues supporting the current economics models weren’t so vocal, influential and inconsiderate of others’ viewpoints and concerns.
This presentation provides an overview of the crisis with links for further, more detailed, coverage at the end.
A crisis so severe, the world financial system is shaken…
Attached is a wonderful presentation by the wizard financial analyst and writer Arif Anees. Hope you'd all relish this rare stuff..
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Poonawalla Fincorp and IndusInd Bank Introduce New Co-Branded Credit Cardnickysharmasucks
The unveiling of the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card marks a notable milestone in the Indian financial landscape, showcasing a successful partnership between two leading institutions, Poonawalla Fincorp and IndusInd Bank. This co-branded credit card not only offers users a plethora of benefits but also reflects a commitment to innovation and adaptation. With a focus on providing value-driven and customer-centric solutions, this launch represents more than just a new product—it signifies a step towards redefining the banking experience for millions. Promising convenience, rewards, and a touch of luxury in everyday financial transactions, this collaboration aims to cater to the evolving needs of customers and set new standards in the industry.
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USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
how can I sell pi coins after successfully completing KYC
Making Sense of the Mortgage Meltdown
1. Demystifying the Mortgage Meltdown:
What It Means for Main Street,
Wall Street and the U.S. Financial System
James R. Barth Glenn Yago
Senior Fellow Director of Capital Studies
Milken Institute
October 2, 2008
1
2. “I have great, great confidence in our capital markets and in
our financial institutions. Our financial institutions, banks
and investment banks are strong.”
Treasury Secretary Henry Paulson
March 16, 2008
CNN
2
3. … but just six months later…
“The financial security of all Americans … depends on our
ability to restore our financial institutions to a sound footing.”
Treasury Secretary Henry Paulson
September 19, 2008
Press release
3
5. “Any real estate investment is a good investment … ”
… Really?!
5
6. Subprime mortgage meltdown timeline
December 2006–September 2008
Dow Jones U.S. Financial Index
Aug. 16, 2007: Sept. 30, 2007: Oct. 24, 2007: Mar. 11, 2008: Fed Mar. 16, 2008: Mar. 18, 2008: Aug. 1,
Countrywide gets NetBank goes Merrill announces offers troubled JP Morgan Fed cuts 2008: First
650 Feburary–March 2007: More than 25
subprime lenders declare
emergency loan of bankrupt. $7.9 billion in banks as much as Chase offers to discount rate Priority
Bank
$11 billion from a subprime write- $200 billion in buy Bear to 2.4%; Fed
bankruptcy. group of banks. downs, surpassing loans; Fed Stearns; Fed funds rate to closes.
Citi’s $6.5 billion. introduces Term introduces 2.25%.
Securities Primary Dealer Sept. 14, 2008:
Lending Facility. Credit Facility. Lehman files for
550 bankruptcy.
July 30, 2008:
Dec. 2006: Feb. 2007: Apr. 2007: New Sept. 16, 2008:
President
Ownit Mortgage, HSBC sets Century, a Fed loans AIG
Bush signs a
a subprime aside $10.6 mortgage $85 billion.
Dec. 12, 2007: housing
lender, files for billion for broker, files
Fed introduces rescue law.
450 bankruptcy. bad loans, for Aug. 6, 2007: Term Auction Sept. 23, 2008:
including bankruptcy. American Home Washington
Facility.
subprime. Mortgage files Mutual is seized
Jan. 11, 2008:
July 31, 2007: for bankruptcy. by FDIC.
Bank of
Two Bear
America agrees June 9, 2008:
Stearns Feb. 13, 2008:
350 hedge funds
Aug. 17, 2007: Fed cuts
to buy
Countrywide. President Bush
Lehman Sept. 29, 2008:
announces a $2.8 Citigroup
file for introduces tax
discount rate to 5.75%; billion loss. agrees to buy
bankruptcy. Jan. 30, 2008: Fed rebate stimulus Sept. 7, 2008: U.S.
Fed introduces Term Wachovia bank.
cuts discount rate program of $168 seizes Fannie Mae
Discount Window July 11, 2008: IndyMac
to 3.5%. billion. and Freddie Mac.
Program. is seized by FDIC.
250
Sources: BusinessWeek, S&P, Global Insight, Milken Institute. 6
8. Home mortgages: Who borrows, how much has been
borrowed, and who funds them?
Total value of housing stock = $19.3 trillion
Subprime
8.4% Securitized
Government-
Mortgage debt 58%
controlled
$10.6 trillion 46%
Prime
91.6%
Non-securitized Private
42% sector-
controlled
54%
Equity in housing stock
$8.7 trillion
Note: total residential and commercial mortgages = $14.7 trillion; 5 percent = $700 billion
Sources: Federal Reserve, Milken Institute. 8
9. The mortgage problem in perspective
80 million houses
27 million are paid off
53 million have mortgages
48 million are paying on time
This compares to
50% seriously
delinquent in the
5 million are behind 1930s.
(9.2% of 53 million with 2.8% in foreclosure)
Sources: U.S. Treasury, Milken Institute. 9
11. Did the Fed lower interest rates too much and for too long?
Federal funds rate vs. rates on FRMs and ARMs
Percent
8
7 30-year FRM rate
6
5
4 Target federal
3 funds rate
1-year ARM rate
2
1 Record low from June 25,
2003, to June 30, 2004: 1%
0
2001 2002 2003 2004 2005 2006 2007 2008
Sources: Federal Reserve, Mortgage Bankers Association, Moody’s Economy.com, Milken Institute. 11
12. Low interest rates Home price bubble
and credit boom and credit boom
US$ trillions Percent US$ trillions Index, January 2000 = 100
4.5 6.0 4.0 250
4.0 3.5
5.5
3.5 200
3.0
3.0 5.0
2.5 150
2.5
4.5
Home
Home 2.0
2.0 mortgage
mortgage originations 100
1.5 4.0 1.5 S&P/Case-Shiller
originations (left axis)
(left axis)
National Home
1.0 1.0
1-Year ARM rate Price Index 50
3.5
0.5 (right axis) 0.5 (right axis)
0.0 3.0 0.0 0
2001 2003 2005 2007
2001 2003 2005 2007
Sources: Inside Mortgage Finance, Mortgage Bankers Association, Moody’s Economy.com, S&P/Case-Shiller, Milken Institute. 12
14. Credit boom pushes Home price bubble California and national
homeownership rate peaks in 2006 home prices reach
to historic high record highs
Percent Index, January 1987 = 100 US$ thousands
70 Q2 2008: 68.1% 380 S&P/ 700
Q2 2004: 69.2% Cas e -Shille r California m e dian
69 330 National Hom e 600 hom e price
Price Inde x California
68 280 500
ave rage
400 1987-2008 U.S. m e dian
67 230
$229,748 hom e price
300
66 180
200
65 130 OFHEO Hom e Price Inde x
100
Ave rage , 1965–Q2 2008: 65.2% U.S. ave rage , 1987-2008: $121,280
64 80 0
1998 2000 2002 2004 2006 2008 1998 2000 2002 2004 2006 2008 1998 2000 2002 2004 2006 2008
Sources: U.S. Census Bureau, OFHEO, Moody’s Economy.com, S&P/Case-Shiller,
California Association of Realtors, Milken Institute. 14
15. Housing starts hit Homes sales reach
a record in 2005 Homes for sale
Millions Millions
a new high
Housing units, millions Millions Millions
4 0.8 7.0 1.5
2.0 Existing homes for Exis ting hom e
January 2006: 1.8 m illion
sale (left axis) s ale s (le ft axis )
5.6 1.2
3 0.6
1.5
4.2 0.9
1.0 2 0.4
Ave rage s tarts ,
2.8 0.6
1959–July 2008: 1.1 m illion Ne w hom e s ale s
1 0.2 (right axis )
0.5 1.4 0.3
July 2008: 641,000 New homes for
sale (right axis)
0.0 0 0.0 0.0 0.0
1998 2000 2002 2004 2006 2008 1998 2000 2002 2004 2006 2008 1998 2000 2002 2004 2006 2008
Sources: U.S. Census Bureau, OFHEO, Moody’s Economy.com, Milken Institute. 15
17. Who is a subprime borrower?
National FICO scores display wide distribution What goes into a FICO score?
Percentage of population
40 Types of credit in use
Prime = 79%
10%
New credit
30 27 Payment history
10%
Subprime = 21% 35%
20 18
15 Length of
12 13
credit history
10 8
5 15%
2
0
up to 500- 550- 600- 650- 700- 750- 800+ Amounts owed
499 549 599 649 699 749 799
30%
Sources: myFICO.com, Milken Institute. 17
19. ARMs look attractive to many borrowers
Percent
8.0
7.0 30-year FRM rate
6.0
5.0
4.0
1-year ARM rate
3.0
2.0
2001 2002 2003 2004 2005 2006 2007 2008
Sources: Mortgage Bankers Association, Moody’s Economy.com, Milken Institute.
19
20. ARM share grows, following low interest rates
Percent of all outstanding home mortgages
25
20
15
10
5
0
2001 2002 2003 2004 2005 2006 2007 2008
Sources: Mortgage Bankers Association, Moody’s Economy.com, Milken Institute.
20
21. Largest share of ARMs go to subprime borrowers
Percent of mortgage type
60
FHA ARM Prime ARM Subprime ARM
50
40
30
20
10
0
2001 2002 2003 2004 2005 2006 2007 2008
Sources: Mortgage Bankers Association, Moody’s Economy.com, Milken Institute.
21
22. Subprimes take an increasing share
of all home mortgage originations
US$ trillions
8.4%
4.0
Subprime
21.3% Prime
7.4% 18.2% 20.1%
3.0 Subprime's
share: 7.9%
7.8%
2.0
1.0
0.9%
0.0
2001 2002 2003 2004 2005 2006 2007 Q2 2008
Sources: Inside Mortgage Finance, Milken Institute. 22
25. Subprime and Alt-A shares quadruple between 2001
and 2006, then fall in 2007
2001, $2.2 trillion 2006, $3.0 trillion 2007, $2.4 trillion Q1 2008, $480 billion
4.9% 4% 9% 9.6%
2% 5% 2.7% 14%
7.9% 14% 2%
7% 33.2%
11% 8%
13%
8%
20% 47.3%
57.1% 20% 16% 14% 67.2%
p
FHA & VA Subprime
Conventional, conforming prime Alt-A
Jumbo prime Home equity loans
Sources: Inside Mortgage Finance, Milken Institute. 25
26. ARM hybrids dominate subprime originations (2006)
Prime conventional Alt-A
Subprime
Other
Fixed Other
ARM Othe r
9% ARM
7% ARM
4%
ARM 23%
30-year
hybrids ARM balloon
with 40- to
23% 50-year
amortization
26%
Fixed Fixe d ARM hybrids 2- and 3-year
70% 31% 46% hybrids 61%
Sources: Freddie Mac, Milken Institute. 26
28. The mortgage model switches from
originate-to-hold to originate-to-distribute
Residential mortgage loans Residential mortgage loans
1980: Total = $958 billion Q2 2008: Total = $11.3 trillion
Securitized
15.6%
Held in
portfolio
41%
Held in Securitized
portfolio 59%
84.4%
Sources: Federal Reserve, Milken Institute. 28
30. The rise and fall of private-label securitizers
New securities issuance
2% 4%
13% 6% 15%
42% 20%
21% 56% 18%
1985 2001 2006 First half 2008
Total = $110B Total = $1.3T Total = $2.0T Total = $734B
29% 22% 33%
35%
38% 46%
Ginnie Mae Freddie Mac Fannie Mae Private-label
Sources: Inside Mortgage Finance, Milken Institute. 30
31. The rise and fall of private-label securitizers
Outstanding securities
6% 7% 7%
14% 18% 30%
35%
13% 55% 25%
26%
1985 2001 2006 First half 2008
Total = $390B Total = $3.3T Total = $5.9T Total = $6.8T
26%
39% 29%
33% 37%
Ginnie Mae Freddie Mac Fannie Mae Private-label
Sources: Inside Mortgage Finance, Milken Institute. 31
33. Ratio of home Debt-to-income ratio Home mortgage share of
price to household of households has household debts reaches
income surges increased rapidly a new high in 2007
Home mortgage debt/disposable Percent
Median home price/ Q2 2007: 73.7%
personal income 75
median household income Q4 2007: 139.5%
150
5.0 2005: 4.69
4.5
70
125
Q2 2008: 73.4%
4.0
3.5 2007: 4.29
100 Average, 1957–2007: 79.7% 65
3.0 Average, 1952–2008: 64.2%
Average, 1967–2007: 3.38
2.5
75 60
1998 2001 2004 2007
1998 2001 2004 2007 1998 2001 2004 2007
Sources: U.S. Census Bureau, OFHEO, Federal Reserve, Moody’s Economy.com, Milken Institute. 33
35. The recent run-up of home prices was extraordinary
Index, 2000 = 100
250
Annualized growth rate of nominal home index: 3.4% Current
boom
200 Great
Depression
World
World 1970’s 1980’s
150 War I
War II boom boom
100
50 Long-term trend line
0
1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Sources: Robert Shiller, Milken Institute. 35
36. Home prices don’t go up forever
Change in home prices in 100 plus years
Percentage change in nominal home price, year ago
30
World Great World 1970’s 1980’s Current
25 War I Depression War II Boom Boom Boom
20
Average, 1890–2007: 3.7%
15
10
5
0
-5
-10 +/- one standard deviation
-15
-20
1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Sources: Robert Shiller, Milken Institute. 36
37. 2005: The collapse begins
Home price indices, percent change on a year earlier
20 S&P/Case-Shiller
10 city
15 S&P/Case-Shiller
national
10
OFHEO
5
0
-5
-10
-15
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Sources: S&P/Case-Shiller, OFHEO, Moody’s Economy.com, Milken Institute. 37
38. Forty-six states had falling prices
in the fourth quarter 2007
United States: - 9.3% (fourth-quarter annualized growth)
Source: Freddie Mac. 38
39. If you bought your house…
One year ago… Five years ago…
-1.0 Charlotte 48.4 Seattle
-3.2 Dallas 48.0 Portland
-4.7 Denver 28.2 Washington
-5.2 Boston 27.9 New York
-5.8 Portland 26.8 Phoenix
-7.1 Seattle 26.3 Los Angeles
-7.3 New York 26.3 Tampa
-7.3 Cleveland 26.0 Miami
-8.1 Atlanta 24.4 Las Vegas
-9.5 Chicago 22.9 Charlotte
-13.9 Minneapolis 20.5 Composite 10
-15.7 W ashington 18.6 Composite 20
-15.9 Composite 20
14.3 Chicago
-16.3 Detroit
9.1 San Francisco
-17.0 Composite 10
6.6 Atlanta
-20.1 Tampa
Dallas
6.5
-23.7 San Francisco
6.1 San Diego
-24.2 San Diego
5.9 Boston
-25.3 Los Angeles
4.8 Denver
-27.9 Phoenix
-0.7 Minneapolis
-28.3 Miami
-28.6 -3.8 Cleveland
Las Vegas
-21.3 Detroit
% change in price, June 07-08 % change in price, June 03-08
Sources: S&P/Case-Shiller, Milken Institute. 39
40. Housing starts Homes sit longer … as home
sharply decline on the market … appreciation slows
Percent change, year ago Number of months that Percent Months
30 homes sit on the market Pe rce ntage change from
12 20 ye ar ago in m e dian 0
15 Existing homes hom e s ale s price
10 (le ft axis ) 2
0 10
8 4
-15
6 0 6
-30 8
4
June 2008: -41.9% -10 Num be r of m onths
-45 July 2008: -39.2% 10
2 New homes hom e s s tay on
m ark e t (right axis )
-60 0 -20 12
1998 2000 2002 2004 2006 2008 1998 2000 2002 2004 2006 2008 1999 2001 2003 2006 2008
Note: Shaded area represents fluctuation within one standard deviation from mean (1.28%)
Sources: Mortgage Bankers Association, OFHEO, Moody’s Economy.com, Milken Institute. 40
44. Subprime mortgages accounted for half
or more of foreclosures since 2006
Number of home mortgage foreclosures started (annualized, in thousands)
2,000
Subprime: 12% of mortgages
Subprime
serviced (M arch 2008)
1,600 FHA and VA
50%
Prime (includes Alt-A)
54%
1,200
56%
800 55% 8%
9%
37% 36% 37% 44% 47% 52% 42%
11% 37%
400 29% 29% 29% 22% 20% 13%
17%
31% 33%
34% 35% 34% 34% 33% 32%
0
Dec. 2003 June Dec. 2004 June Dec. 2005 June Dec. 2006 June Dec. 2007 M arch
2004 2005 2006 2007 2008
Sources: Inside Mortgage Finance, Milken Institute. 44
45. Subprime ARMs have the worst default record
Home mortgages delinquent or in foreclosure (percent of number)
35
Q2 2008, Subprime ARM: 33.4%
30
Subprime FRM: 11.8%
25
FHA and VA: 5.8%
20
Prime FRM: 3.0%
15
10
5
0
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
1998 1999 1999 2000 2001 2002 2002 2003 2004 2005 2005 2006 2007 2008
Sources: Mortgage Bankers Association, Milken Institute. 45
46. Percentage of homes purchased in Q2 2008
that now have negative equity
United States = 44.8%
< 20%
>= 20% and < 35%
>= 35% and < 50%
>= 50%
Sources: Zillow.com, Milken Institute. 46
47. Percentage of homes sold for a loss (Q2 2008)
United States = 32.7%
< 15%
>= 15% and < 30%
>= 30% and < 45%
>= 45%
Sources: Zillow.com, Milken Institute. 47
48. Percentage of homes sold that were in
foreclosure (Q2 2008)
United States = 18.6%
< 1%
>= 1% and < 25%
>= 25% and < 40%
>= 40%
Sources: Zillow.com, Milken Institute. 48
50. Losses/write-downs, capital raised, and jobs cut
by financial institutions worldwide
US$ billions Number of jobs cut
200 60,000
Jobs cut (right axis)
160 48,000
120 Capital raised 36,000
(left axis)
80 Losses/write-downs 24,000
(left axis)
40 12,000
0 0
Prior quarters Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008
Note: Q3 data are through September 25, 2008.
Sources: Bloomberg, Milken Institute. 50
51. What is the cumulative damage?
Cumulative losses/write-downs, capital raised, and jobs cut by financial institutions worldwide
US$ billions Number of jobs cut
600 140,000
500 120,000
Jobs cut (right axis) 100,000
400
Capital raised (left axis) 80,000
300
Losses/write-downs (left axis) 60,000
200
40,000
100 20,000
0 0
Prior quarters Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008
Note: Q3 data are through September 25, 2008.
Sources: Bloomberg, Milken Institute. 51
52. Recent losses/write-downs and capital raised
by selected financial institutions
US$ billions, through September 25, 2008 Losses /write-downs Capital raised
Citigroup, United States 55.1 49.1
Merrill Lynch, United States 52.2 29.9
UBS, Switzerland 44.2 28.2
HSBC, United Kingdom 27.4 5.1
Wachovia, United States 22.7 11.0
Bank of America, United States 21.2 20.7
Morgan Stanley, United States 15.7 5.6
IKB Deutsche, Germany 15.0 12.3
Washington Mutual, United States 14.8 12.1
Royal Bank of Scotland, United Kingdom 14.4 23.5
World total 521.9 379.2
Sources: Bloomberg, Milken Institute. 52
53. Financial stock prices take big hits
Percentage change in stock price, December 2006–September 2008
-99.8 W ashington Mutual
-99.7 Lehman Brothers
-97.5 Freddie Mac
-97.4 Fannie Mae
-95.4 AIG
-94.3 Bear Stearns*
-93.9 W achov ia
-90.0 Countrywide**
-72.8 Merrill Lynch
-66.0 Morgan Stanley
-65.6 UBS Equity
-35.8 Goldman Sachs
-34.4 Bank of America
-3.3 JP Morgan & Chase
5.5 W ells Fargo
Note: * Bear Stearns stock price is to May 2008. ** Countrywide stock price is to June 2008.
Sources: Bloomberg, Milken Institute. 53
54. Financial market capitalization takes big hit
Total loss in market value: $728 billion, December 2006–September 2008
-142 AIG
-101 W achov ia
-80 Bank of America
-74 UBS Equity
-60 Morgan Stanley
-50 Fannie Mae
-44 Merrill Lynch
-43 W ashington Mutual
-42 Freddie Mac
-41 Lehman Brothers
-28 Goldman Sachs
-24 Countrywide**
-21 Bear Stearns*
4 W ells Fargo
US$ billions 17 JP Morgan & Chase
Note: * Bear Stearns stock price is to May 2008. ** Countrywide stock price is to June 2008.
Sources: Bloomberg, Milken Institute. 54
56. Tightened standards for real estate loans
Net percentage of domestic respondents tightening standards for commercial real estate loans
100
80 The end of S&L crisis
Dotcom Subprime
LTCM
60
40
20
0
-20
-40
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Sources: Federal Reserve, Milken Institute. 56
57. Widening spreads between
mortgage-backed and high-yield bonds
Basis points, spread over 10-year Treasury bond
1,800
Maximum spread: 08/29/2008: 955.8 bps
1,600
1,400 Merrill Lynch Mortgage-Backed Securities Index
1,200
1,000 Merrill Lynch High-Yield Bond Index
800
600
400
200
0
01/2004 07/2004 01/2005 07/2005 01/2006 07/2006 01/2007 07/2007 01/2008 07/2008
Sources: Merrill Lynch, Bloomberg, Milken Institute. 57
58. Liquidity freeze
Spread between 3-month LIBOR Spread between 3-month LIBOR and
and T-bill rate overnight index swap rate
Basis points Basis points
350 140
Se pte m be r 18, 2008: 313 bps
Se pte m be r 19, 2008:
300 120 127.5 bps
Augus t 20, 2007: 240 bps
250 100
Ave rage s ince
80 Augus t 2007: 69.8 bps
200
Ave rage s ince
150 60
Augus t 2007: 130 bps
Ave rage s ince 40 Ave rage s ince
100 De ce m be r 2001: 21.1 bps
1985: 76 bps
20
50
0
0
2006 2007 2008
2006 2007 2008
Sources: Bloomberg, Milken Institute. 58
59. Counterparty risk increases
Basis points spread, basis points
Average CDS
500
AIG rescued
400
Lehman Brother files for bankruptcy
and Merrill Lynch acquired
300
Government announces support for
Fannie Mae and Freddie Mac
200
Bear Stearns acquired
100
0
07/2007 09/2007 11/2007 01/2008 03/2008 05/2008 07/2008 09/2008
Note: Counterparty Risk index averages the market spreads of the credit default swaps (CDS) of fifteen major
credit derivatives dealers, including ABN Amro, Bank of America, BNP Paribas, Barclays Bank, Citigroup, Credit
Suisse, Deutsche Bank, Goldman Sachs Group, HSBC, Lehman Brothers, JPMorgan Chase, Merrill Lynch,
Morgan Stanley, UBS, and Wachovia.
Sources: Datastream, Milken Institute. 59
60. Commercial paper issuance dries up
Quarterly change in outstanding amount, US$ billions
150
100
50
0
-50
-100
Issuers of asset-backed securities
-150
Other issuers
-200
Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008
Sources: Federal Reserve, Milken Institute. 60
62. Congress and White House responses
HOPE NOW
The Economic Stimulus Act of 2008
Housing and Economic Recovery Act of 2008
Conservatorship of Fannie Mae and Freddie Mac
Temporary guaranty program for money market funds
Temporary ban on short selling in selected
companies
Bailout package?
62
64. Looking for a bottom?
Economists say the economy isn’t at its low point yet,
and house prices likely won’t get there until 2009
Does this feel like the bottom When will home prices hit bottom?
to a downturn?
Yes 1st half
6%
27% 2010
2nd half
29%
2009
1st half
38%
2009
2nd half
17%
No 2008
73% 1st half
4%
2008
Source: Wall Street Journal. 64
65. How far do home prices have to fall?
Annual rents as percent of home prices
6.5 Q2 1971: 6.08%
6.0
5.5
5.0
4.5 Q1 2008:
3.93%
Average, 1960–Q1 2008: 5.04%
4.0
Average, 2000–Q1 2008: 4.06%
3.5
Q4 2006: 3.48%
3.0
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Sources: Davisa, Lehnertb, Martin (2007), Milken Institute. 65
66. Combinations of rental price growth rates and rent-to-price
ratios to get home prices back to their Q4 2006 value
Annual home price price decline
Annual home decline required
-2.0% -5.0% -10.0% -15.0% -20.0%
3.80% 2010 Q3 2008 Q4 2008 Q2 2008 Q2 2008 Q2
Rent-to-price ratio
4.00% 2013 Q1 2009 Q4 2008 Q3 2008 Q2 2008 Q2
5.00% 2024 Q1 2014 Q1 2010 Q4 2009 Q3 2009 Q1
5.04%
2024 Q3 2014 Q2 2010 Q4 2009 Q3 2009 Q1
average
6.00% 2026 Q4 2017 Q3 2012 Q3 2010 Q4 2009 Q4
Sources: Davisa, Lehnertb, Martin (2007), Milken Institute. 66
67. Alternative measures of the affordability of
mortgage debt for California
US$/month
4,000 Payment with 100% LT V
Payment with 90% LT V
3,500
Payment with 80% LT V
3,000 M ortgage payment assumptions: Every month, a home is purchased at
median price, buyer takes out a 30-year conforming, fixed-rate loan with 80%
2,500 LT V. Payment also includes 1% property tax per year, 0.1% property
insurance.
2,000
1,500
1,000
Maximum affortablility limit is
500
38% of median household
0
1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Sources: Moody’s Economy.com, Milken Institute. 67
69. The importance of Fannie Mae and Freddie Mac
US$ billions
3,000
2,443
2,500
2,067
2,000
1,410
1,500
886 879 944
1,000
500
0
Fannie Mae: Fannie Mae: Freddie Mac: Freddie Mac: Commercial Savings
total assets total MBS total assets total MBS banks: total institutions:
outstanding outstanding residential real total
estate assets residential real
estate assets
Sources: Freddie Mac, Fannie Mae, FDIC, Milken Institute. 69
70. Fannie Mae and Freddie Mac: Too big with too little capital?
US$ billions
3,000
Total assets
2,443
2,500
Total MBS outstanding
2,000 1,778
1,500 1,410
1,301
1,123
1,022
1,000 803 752 844 805 886 879
500 288 316
133 41
0
Fannie Mae Freddie Mac Fannie Mae Freddie Mac Fannie Mae Freddie Mac Fannie Mae Freddie Mac
1990 1990 2003 2003 2006 2006 2Q 2008 2Q 2008
Sources: Freddie Mac, Fannie Mae, Milken Institute. 70
71. Fannie Mae and Freddie Mac are highly leveraged
Mortgage book of business over capital measures
300
Fannie Mae 244x Freddie Mac
250
200 167x
150
100 81x
60x 60x 64x 65x 56x 58x 59x 55x 57x
48x 52x 56x
50 -393x
0
Core capital Fair value Core capital Fair value
2005 2006 2007 2008Q2
Sources: Freddie Mac, Fannie Mae, FDIC, Milken Institute. 71
73. Leverage ratios of different types
of financial firms (June 2008)
Lev erage ratio, total assets/common equtity
Freddie Mac 67.9
Fannie Mae 21.5
Federal Home Loan Banks 23.7
Brokers/hedge funds 31.6
Savings institutions 9.4
Commercial banks 9.8
Credit unions 9.1
Sources: Federal Deposit Insurance Corporation, Office of Federal Housing Enterprise Oversight,
National Credit Union Administration, Bloomberg, Google Finance, Milken Institute. 73
74. Too much dependence on debt?
Leverage ratios at biggest investment banks
Total assets/total shareholder equity
2000 2005 2007 June 2008
40
35 34 33
32 31 31
30
30 28 27 28
26
24 24
25 22 23 22 22
19 19
20 18
15
10
5
n.a.
0
Bear Stearns Merrill Lynch Morgan Stanley Lehman Brothers Goldman Sachs
Sources: Bloomberg, FDIC, Milken Institute. 74
75. Most new securities issued in 56 percent of MBS issued from
2007 were rated AAA by S&P 2005 to 2007 were eventually
Number of securities rated downgraded
0 1,000 2,000 3,000 4,000 5,000
AAA
AA+
S&P Total Downgraded Downgraded
AA / Total
AA-
A+ AAA 1,032 156 15.1%
A 4,090, or 51%, of new
A- AA(+/-) 3,495 1,330 38.1%
BBB+ securities rated by
BBB S&P w ere rated AAA A(+/-) 2,983 1,886 63.2%
BBB-
BB+ BBB(+/-) 2,954 2,248 76.1%
BB
BB- BB(+/-) 789 683 86.6%
B+
B B(+/-) 8 7 87.5%
B-
CCC+
Total 11,261 6,310 56.0%
CCC+
CCC-
CC Note: A bond is considered investment grade if its credit rating
C is BBB- or higher by S&P
D
Sources: Bloomberg, Inside Mortgage Finance, Milken Institute. 75