Week I Discussion Question

Week I Discussion Question - WEEKI:DISCUSSIONQUESTION...

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WEEK I: DISCUSSION QUESTION 1 Week I: Discussion Question What role did the Accounting profession play in the recent sub prime mortgage  crisis? What could they have done differently? In the beginning of this decade, the US interest rates were at record lows,  subprime lending accounted for 80% of loans being issued ( Senator Dodd: Create,  Sustain, Preserve, and Protect the American Dream of Home Ownership , 2007).  In  order to lore new borrowers, banks more often than not offered adjustable rate  mortgages to their clients which provided them with lower payments compared to those  offered by traditional mortgages.  As subprime lending grew exponentially, investment  firms and banks saw an opportunity to take advantage of the boom by securitizing the  loans into new investment vehicles called Collateralized Debt Obligations (CDO)(Evans  & Jain, 2010).  As organizations grew their investments in CDOs, accounting 
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