The Subprime Crisis and Financial Regulation: International and Comparative Perspectives
Kenneth W. Dam
University of Chicago - Law School; Brookings Institution
March 26, 2010
Chicago Journal of International Law, Vol. 10, No. 2, 2010
U of Chicago Law & Economics, Olin Working Paper No. 517
Most economic and legal discussion of the subprime mortgage loan crisis (and the follow-on financial crisis) focuses on the United States. However, many other countries participated in the subprime securitization aspect of the crisis, not just by buying U.S.-originated consumer mortgage-backed securities but also by using off-balance sheet entities in connection with such securities. The experiences of the United States and of Germany are examined in some detail. In the case of Germany the role of publicly owned banks, such as the Landesbanken, is discussed. With respect to the underlying economic and regulatory issues, European banks tended to use more leverage than U.S. banks and many European countries experienced housing price inflation, just as did the United States. The focus of this research is on the resulting regulatory issues and on various proposed reforms.
Number of Pages in PDF File: 59
Keywords: bank regulation, securitization, Germany, SIV, universal banking, Landesbanken, savings bank, mortgage-backed securities, government sponsored enterprise, credit rating, Basel, capital adequacy, too big to fail
Date posted: March 31, 2010 ; Last revised: April 13, 2010
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