56 Pages Posted: 25 Mar 2008 Last revised: 15 Jun 2016
Date Written: July 9, 2008
This paper examines the different factors that have contributed to the subprime mortgage credit crisis: the search for yield enhancement, agency problems, lax underwriting standards, failure by the rating agencies to identify a changing environment, poor risk management by financial institutions, lack of transparency, the limitation of extant valuation models and the failure of regulators to understand the implications of the changing environment for the financial system. The paper addresses the different issues and offers suggestions on how to move forward.
Keywords: Subprime mortgages, SIVs, monolines, transparency, valuation
JEL Classification: G22, G30, G32, G38
Suggested Citation: Suggested Citation
Turnbull, Stuart M. and Crouhy, Michel and Jarrow, Robert A., The Subprime Credit Crisis of 07 (July 9, 2008). Available at SSRN: https://ssrn.com/abstract=1112467 or http://dx.doi.org/10.2139/ssrn.1112467