42 Pages Posted: 22 Mar 2013
Date Written: March 2013
We analyze whether mid-level managers in securitized finance were aware of the housing bubble and a looming crisis in 2004-2006 using their personal home transaction data. To the extent that the practice of securitization may have led to lax screening of subprime borrowers, we find that the average person in our sample did not expect it to lead to problems in the wider housing market. Certain groups of securitization agents were particularly aggressive in increasing their exposure to housing during this period, suggesting the need to expand the incentives-based view of the crisis to incorporate a role for beliefs.
Suggested Citation: Suggested Citation
Cheng, Ing-Haw and Raina, Sahil and Xiong, Wei, Wall Street and the Housing Bubble (March 2013). NBER Working Paper No. w18904. Available at SSRN: https://ssrn.com/abstract=2237817