Wall Street and the Housing Bubble
Dartmouth College - Tuck School of Business
University of Michigan at Ann Arbor - Finance
Princeton University - Department of Economics; National Bureau of Economic Research (NBER)
January 27, 2014
We analyze whether mid-level managers in securitized finance were aware of a large-scale housing bubble and a looming crisis in 2004-2006 using their personal home transaction data. We find that the average person in our sample neither timed the market nor were cautious in their home transactions, and did not exhibit awareness of problems in overall housing markets. Certain groups of securitization agents were particularly aggressive in increasing their exposure to housing during this period, suggesting the need to expand the incentives-based view of the crisis to incorporate a role for beliefs.
Number of Pages in PDF File: 44
Keywords: securitization, housing bubble, beliefs
JEL Classification: G01, G20, G21, G23, G24
Date posted: March 12, 2013 ; Last revised: January 28, 2014
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