Lessons from the Crisis

Kenneth E. Scott

Stanford Law School

November 10, 2009

Stanford Law and Economics Olin Working Paper No. 385

A lot happened even before the perceived beginning of this crisis in 2007, so although the events are recent, I will give an overview from a US perspective of the period from 2001 to date, in our search for the lessons to be learned. Much of it is probably familiar, but worth revisiting.

I will break this necessarily simplified account into 3 stages: First, a look at the key factors that led to the increasing riskiness of US home mortgages; second, how those risks were transmitted as securities from US housing lenders to institutional investors around the globe; and third, how those risks led to huge losses and created a credit crunch that moved the impact from the financial economy to the real economy and produced a severe recession. Then we will have a factual foundation for deriving the lessons that ought to be taken away from this very expensive experience.

Number of Pages in PDF File: 28

Keywords: crisis, financial crisis, economy, securities, investors, credit crunch

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Date posted: November 10, 2009 ; Last revised: November 19, 2009

Suggested Citation

Scott, Kenneth E., Lessons from the Crisis (November 10, 2009). Stanford Law and Economics Olin Working Paper No. 385. Available at SSRN: https://ssrn.com/abstract=1503631 or http://dx.doi.org/10.2139/ssrn.1503631

Contact Information

Kenneth E. Scott (Contact Author)
Stanford Law School ( email )
559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
650-723-3070 (Phone)
650-725-0253 (Fax)

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