The Subprime Crisis and Financial Regulation: International and Comparative Perspectives

59 Pages Posted: 31 Mar 2010 Last revised: 13 Apr 2010

Kenneth W. Dam

University of Chicago - Law School; Brookings Institution

Date Written: March 26, 2010

Abstract

Most economic and legal discussion of the subprime mortgage loan crisis (and the follow-on financial crisis) focuses on the United States. However, many other countries participated in the subprime securitization aspect of the crisis, not just by buying U.S.-originated consumer mortgage-backed securities but also by using off-balance sheet entities in connection with such securities. The experiences of the United States and of Germany are examined in some detail. In the case of Germany the role of publicly owned banks, such as the Landesbanken, is discussed. With respect to the underlying economic and regulatory issues, European banks tended to use more leverage than U.S. banks and many European countries experienced housing price inflation, just as did the United States. The focus of this research is on the resulting regulatory issues and on various proposed reforms.

Keywords: bank regulation, securitization, Germany, SIV, universal banking, Landesbanken, savings bank, mortgage-backed securities, government sponsored enterprise, credit rating, Basel, capital adequacy, too big to fail

Suggested Citation

Dam, Kenneth W., The Subprime Crisis and Financial Regulation: International and Comparative Perspectives (March 26, 2010). Chicago Journal of International Law, Vol. 10, No. 2, 2010; U of Chicago Law & Economics, Olin Working Paper No. 517. Available at SSRN: https://ssrn.com/abstract=1579048 or http://dx.doi.org/10.2139/ssrn.1579048

Kenneth W. Dam (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-0216 (Phone)
773-702-0356 (Fax)

Brookings Institution ( email )

1775 Massachusetts Ave. NW
Washington, DC 20036-2188
United States

Paper statistics

Downloads
1,165
Rank
13,334
Abstract Views
3,593