Skip to Content (press Enter/Return)
Essays
Topics
preview

Financial Crisis of 2008

Best Essays
Open Document
The Financial Crisis of 2008 was the worst financial crisis since the Great Depression, however a lot of American’s want tougher law of be enforced against executives and companies they think started the mess (Jost/Misconduct). Civil charges have been brought up against major banks for misleading investors, but a federal judge rejected a proposed settlement saying it was too lenient (Jost/Misconduct). The flood of subprime mortgages roiling the housing market in the U.S. is also causing the worldwide credit crisis (Jost/Crisis). Investment banks everywhere are taking billion-dollar losses, forcing them to revalue their belongings (Jost/crisis). This crisis started under the surface for many years then emerged into the public in March 2008 when cash-strapped Bears Steams were being forced to sale to JP Morgan Chase; they did this for a worthless $2 a share (Jost/Misconduct). The Financial Crisis happened because of these 5 things; systemic risk, too big to fail banks, payment systems, credit rating agencies, and hedge funds.
Systemic Risk
What is this?
Systemic Risk is a risk that triggers an event, for example, the failure of a large financial firm. This can and most likely will seriously harm the broader economy and impair financial markets (Bullard). In finance, component or groups of a system can be contained and not harm the entire system (Bullard). There are systemic concerns that prompted U.S. Department of the Treasury and the Federal Reserve to act to prevent several large firms to go into bankruptcy (Bullard). The economy could benefit from reforms that are reducing systemic risks, for example creation of an improved regime that would solve failures of big financial firms (Bullard).
Involvement of Government
The infor...

... middle of paper ...

.... Web. 29 Apr. 2014.
Payment Systems Seminar,. 'Banking Seminar'. N. p., 2000. Web. 28 Apr. 2014.
Quarterly Review,. 'Risk, Regulation, And Bank Holding Company Expansion Into Nonbanking'. N. p., 2014. Web. 28 Apr. 2014.
Quirk, William. 'Good Fences Make Good Bankers: Too Big To Fail Becomes Too Big To Jail: An Update.'. N. p., 2014. Web. 29 Apr. 2014.
Rand.org,. 'Hedge Funds Not A Primary Cause Of The Financial Crisis, But Could Contribute To Systemic Risk | RAND'. N. p., 2012. Web. 29 Apr. 2014.
Saulwick, Jacob. 'Reserve Warns Of Asian Asset Grab'. N. p., 2014. Web. 29 Apr. 2014.
Sec.gov,. 'SEC.Gov | Hedge Funds'. N. p., 2014. Web. 29 Apr. 2014.
Sec.gov,. 'SEC.Gov | Nationally Recognized Statistical Rating Organizations (Nrsros)'. N. p., 2014. Web. 29 Apr. 2014.
Waters, Maxine. 'How To Prevent Another Financial Crisis'. Bank Think. N. p., 2013. Web. 29 Apr. 2014.
Get Access
Related
Get Access