Hot Topic
Marriott Salon 2, Marriott Pavilion/Lobby Level
The Financial Crisis
A discussion of the causes, short-term solutions, and longer-term implications of the current financial crisis. Professor Willis will discuss the crisis at the retail level – the evolution from credit rationing to risk-based pricing of mortgages, the effects of risk-based pricing on consumers’ mortgage decisions, the financial and psychological antecedents of borrower demand for mortgages posing a high risk of foreclosure, and the marketing and sales practices that respond to and create that demand. Professor Black will cover the securitization of home mortgages and the development of derivatives that contributed to the financial crisis. He will describe the legal and regulatory actions that allowed for these developments and explain why the securitization of heterogeneous subprime mortgages and the existence of an over-the-counter credit default swap market are fundamentally inconsistent with a stable financial system. Professor Wilmarth will speak on the role of large financial conglomerates and the failure of the various regulators (especially the OCC, the OTS, the Fed and the SEC) to control the risk-taking of those conglomerates.
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