U.S. Subprime Mortgage Crisis: Policy Reactions

Posted: 27 May 2009

See all articles by Laura Alfaro

Laura Alfaro

Harvard University

Renee Kim

Harvard University - Business School (HBS)

Date Written: November 20, 2008

Abstract

By March 2008, the U.S. Government and the U.S. Federal Reserve Board had taken various policy measures over the last few months to tackle the subprime mortgage crisis that threatened to drag the economy into a recession. The Bush administration approved a fiscal stimulus package exceeding $150 billion. Interest rates had been repeatedly cut at the fastest pace in decades, to 2.25% as of March 2008. The Fed, in an unprecedented move, helped JPMorgan Chase to take over Bear Stearns, which was on the brink of collapse. Yet as the global economy faced slower growth stemming from the U.S. mortgage crisis, policy makers were caught in an intense debate over what the 'right' solution would be, and the implication of these policies on global imbalances.

Suggested Citation

Alfaro, Laura and Kim, Renee, U.S. Subprime Mortgage Crisis: Policy Reactions (November 20, 2008). HBS Case No. 708-036, Available at SSRN: https://ssrn.com/abstract=1407147

Laura Alfaro (Contact Author)

Harvard University ( email )

Cambridge, MA 02138
United States

Renee Kim

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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