Post-Crisis and the New World Order

Abstract

The recent credit crisis revealed many systemic problems within the residential mortgage-backed securities marketplace. Some of the problems lie squarely with the lending industry, but investors, Wall Street and the U.S. Government also played major roles in creating the disaster. Many people have studied and reported on the lessons learned from the crisis; however, most of the major problems still exist today. This article will discuss some of the flaws that remain in the system and what investors should keep in mind going forward, as employment eventually improves and the housing markets eventually resurrect themselves. Conversely, economic factors that influence loan performance and recommendations for fixing failed policy are not within the scope of this article, and no claim is made that any lessons have been learned. Thus, the principle of caveat emptor remains alive and well.

TOPICS: Financial crises and financial market history, legal and regulatory issues for structured finance