Markets, Systemic Risk, and the Subprime Mortgage Crisis

9 Pages Posted: 6 Mar 2008 Last revised: 20 Aug 2010


The subprime mortgage crisis is undermining financial market stability and has the potential to cause a true systemic breakdown. This short and accessible essay, which is based on the author's 2008 Roy R. Ray Lecture at SMU Law School, uses this crisis to demonstrate that existing protections against systemic risk, which focus on banks and largely ignore financial markets, are misguided. Because companies increasingly access financial markets without going through banks, an effective framework for containing systemic risk must focus on markets.

Suggested Citation

Schwarcz, Steven L., Markets, Systemic Risk, and the Subprime Mortgage Crisis. Southern Methodist University Law Review, Vol. 61, No. 2, 2008; Duke Law School Legal Studies Paper No. 190. Available at SSRN:

Steven L. Schwarcz (Contact Author)

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States
919-613-7060 (Phone)
919-613-7231 (Fax)

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