Banking and Monetary Policy_Butkiewicz_Date__032510

Banking and Monetary Policy_Butkiewicz_Date__032510 - 48:...

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Chapter 8 continued Subprime mortgage fiasco—important 37: people exaggerated incomes so higher payment lead to them not being able to pay for it 39: interest rate jumped because teaser rate and was usually adjustable - Underwater: value house< value loan - Target interest rate between 0 and .24 (Fed) - Measures of delinquents 40: September 15 2008—crisis exploded; when things got really bad 42: investments banks (used to be)—partnership so ‘playing’ with own money so were safe but now take risks to hopefully get bonus/incentive for doing well 44: if bounced check have to pay about $35 extra 45: other problem= when 4 weeks up and don’t have $ and if goes on more than one, owe almost twice the loan in just interest - Wal-Mart wants to get into banking; is in Mexico but not in U.S. 47: illegal loan sharks- whatever interest they want, consequences if do not repay the loan
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Unformatted text preview: 48: small business administration 1983 49: implicit guarantee- that if get in trouble government will helpBelief 53: wanted to end redlining processCRA 54: one government owned bank in U.S. Chapter 9 4: banksloans= how make profit, deposits= liability (asset to us though) 5: double entry bookkeepingoffsetting changes 6: banks want liabilities to use money to make loans-Negotiable- can be sold 7: 1201 today til 1201 tomorrow-$ banks have on deposit with fed reserve banks-Increase price reflects interest-Reporepurchase not reposes 8: expect ATM to hold cash 10: clearing balancecertain amount of money to clear check (earn credit with Feds) 11: $56 billion surplus 2009 12: cant own stock or junk bonds 14: proprietary trading...
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This note was uploaded on 08/29/2010 for the course ECON 302 taught by Professor Abrams during the Spring '08 term at University of Delaware.

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Banking and Monetary Policy_Butkiewicz_Date__032510 - 48:...

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