lecture 11, soc 149

lecture 11, soc 149 - Case 3a: Mortgage Fraud and the...

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Case 3a: Mortgage Fraud and the Economic Meltdown of 2007/09 What happened? Housing driven economy in the post 9/11 period started to fall in 2006 Housing prices started to decline Falling prices started to create negative equity in houses New ‘exotic’ mortgages were starting to reset (2/28)
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What happened in 2007/2009? Many of these loans were refi loans Cash already taken out and spent Falling housing prices started to shake credit markets By 2007 credit squeeze had started No new loans; calling in loans
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How did we get to where we are now? March 2008 Bear Stearns collapses Too much leveradged debt No new money (credit squeeze) Default imminent Treasury Department bribes (30 billion) Chase JP Morgan Bank to buy out Bear Stearns Defaults or near spread July: Freddie Mac and Fannie Mae
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Bailouts and losses grow September 2008 Govt takes over Freddie, Fannie Mid September, 2008 Lehman Brothers too big to fail AIG too big to fail Government takes over both companies Lost: 14 trillion in household wealth (housing; pensions) Lost: 11 trillion in stock equity between October, 2007 and March, 2009
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Impact of this on jobs http://cohort11.americanobserver.net/latoya egwuekwe/multimediafinal.html
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lecture 11, soc 149 - Case 3a: Mortgage Fraud and the...

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