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)
NBER Working Paper No. w18904
We analyze whether mid-level managers in securitized finance were aware of the housing bubble and a looming crisis in 2004-2006 using their personal home transaction data. To the extent that the practice of securitization may have led to lax screening of subprime borrowers, we find that the average person in our sample did not expect it to lead to problems in the wider housing market. 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.
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Number of Pages in PDF File: 42working papers series
Date posted: March 22, 2013
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