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28 acharya viral v and t sabri oncu(2010 “the

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Unformatted text preview: 28 Acharya, Viral V. and T. Sabri Oncu (2010) “The Repurchase Agreement (Repo) Market”, Chapter 11 in Regulating Wall Street: The Dodd-Frank Act and the New Architecture of Global Finance, edited by Viral V Acharya, Thomas Cooley, Matthew Richardson and Ingo Walter, John Wiley & Sons. 29 Page 44 of May 1996 CBO report, “Assessing the Public Costs and Benefits of Fannie Mae and Freddie Mac”. 30 Patrick Hosking, Christine Seib, Marcus Leroux and Grainne Gilmore “run on the bank” Sunday Times , September 15, 2007. 31 http://www.huduser.org/publications/pdf/CMAR_VegasNV.pdf , 32 “CBO’s Budgetary Treatment of Fannie Mae and Freddie Mac”, Congressional Budget Office Background Paper, January 2010. According to its August 2010 projection, the CBO estimates that mortgage guarantees and portfolio investments by Fannie Mae and Freddie Mac will add $53 billion to the budget for the 2011-2020 period. 33 The day-to-day management of the mortgage is left to a servicer, who typically is in closest contact with the borrower and who collects a fee that is based on the size of the loan. The servicer must decide whether to modify each mortgage. This arrangement has led some to worry that servicers either lack the authority or have insufficient incentives to undertake costly modifications. 34 Piskorski, Tomasz, Amit Seru, and Vikrant Vig (2009), "Securitization and Distressed Loan Renegotiation: Evidence from the Subprime Mortgage Crisis." Research Paper No. 09-02. Chicago Booth School of Business, August 2009. 35 “What Do Subprime Securitization Contracts Actually Say About Loan Modification?” John P. Hunt, March 2009, Berkeley Center for Law, Business, and the Economy Working Paper. 36 Haughwout, Andrew, Ebiere Okah, and Joseph S. Tracy (2009), “Second Chances: Subprime Mortgage Modification and Re-Default,” Federal Reserve Bank of New York Working Paper. 37 See Acharya, Viral V., Philipp Schnabl and Gustavo Suarez (2009) “Securitization without risk transfer”, Working paper, New York University Stern School of Business. 38 See Ashcraft, Adam, Morten Beck and W. Scott Frame (2009) “The Federal Home Loan Bank System: The Lender of Next-to-Last Resort?” Working Paper, Federal Reserve Bank of New York. 39 For a succinct history of central banking in the United States, see Thomas Cooley, Kermit Schoenholtz, George Smith, Richard Sylla and Paul Wachtel (2010) “The Power of Central Banks and the Future of the Federal Reserve System”, Chapter 2 in Regulating Wall Street: The Dodd-Frank Act and the New Architecture of Global Finance , edited by Acharya, Cooley, Richardson and Walter: John Wiley & Sons. 40 In his diary from days when the conservatorship plan was being hatched in July 2008, the then Treasury Secretary Henry Paulson recounts that the Federal Reserve Governor Ben Bernanke recognized that this was clearly a fiscal matter, but that the Board of Governors would consider it in the interest of financial stability if the Treasury were to be granted emergency authorities to take over the GSEs and...
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28 Acharya Viral V and T Sabri Oncu(2010 “The Repurchase...

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