Jump to ContentJump to Main Navigation
New Directions in Financial Services Regulation$
Users without a subscription are not able to see the full content.

Roger B. Porter, Robert R. Glauber, and Thomas J. Healey

Print publication date: 2011

Print ISBN-13: 9780262015615

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262015615.001.0001

Show Summary Details
Page of

PRINTED FROM MIT PRESS SCHOLARSHIP ONLINE (www.mitpress.universitypressscholarship.com). (c) Copyright The MIT Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in MITSO for personal use.date: 21 September 2021

Comments by Harvey J. Goldschmid

Comments by Harvey J. Goldschmid

(p.59) Comments by Harvey J. Goldschmid
New Directions in Financial Services Regulation

Roger B. Porter

Robert R. Glauber

Thomas J. Healey

The MIT Press

This chapter takes on a similar view as that of the previous chapter: that the underlying cause of the crisis in 2008 was due to private-sector failures. It maps out what was wrong about the view that Susan Bies set forth early 2009: the view that interest rates were not raised faster, and that mortgage underwriting was not strengthened enough. The chapter then notes that according to Alan Greenspan, banks were not simply giving away money to people who couldn’t pay it back. Instead, the chapter adds, banks and mortgage companies were not holding on to the responsibility for getting paid back, a responsibility that was passed on in a form of collateralized debt obligations (CDOs). The formulas these CDOs used were considered to be weak, according to credit rating agencies. In the end, the chapter suggests that there was a basic breakdown in the management and governance of large Wall Street firms, banks, and other institutions.

Keywords:   private-sector failures, Richard Zeckhauser, Susan Bies, mortgage underwriting, Alan Greenspan, collateralized debt obligations, CDO, credit rating agencies

MIT Press Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs, and if you can't find the answer there, please contact us.