22 in a historical account of crises over eight

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22 In a historical account of crises over eight centuries, Carmen Reinhart and Kenneth Rogoff (2010) This Time Is Different: Eight Centuries of Financial Folly , Princeton University Press, discuss the role played by capital inflows in engendering a vast number of financial crises. Raghuram Rajan (2010) Fault Lines: How Hidden Fractures Still Threaten the World Economy , Princeton University Press, also attributes the crisis of 2007-09 to the global imbalances that have resulted in substantial flows from surplus countries
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146 (such as China) to deficit countries (such as the United States and the United Kingdom) and provided “easy money” for governments of deficit countries and their financial sectors to misallocate credit. 23 These results are generally consistent with those presented by Dwight Jaffee, in April 2010, in testimony before the Financial Crisis Inquiry Commission that the GSEs engaged in large dollar volumes of high risk-lending in each of the years 2003-2007 (see Table 3-3 Jaffee, Dwight M. (2010) “The Role of the GSEs and Housing Policy in the Financial Crisis”, Testimony for the Financial Crisis Inquiry Commission, February 27 2010, Washington D.C.) 24 See Treasury Under Secretary Gary Gensler’s speech to the House Banking Subcommittee on Capital Markets, Securities and Government Sponsored Enterprises, March 22, 2000, available at 25 Source: Lehman Brothers (April 2008) 26 See Acharya, Viral V., Philipp Schnabl and Gustavo Suarez, 2009, “Securitization without risk transfer”, working paper, New York University Stern School of Business. 27 There is also an entirely over-the-counter and bilateral repo market that tends to be between large dealers and hedge funds, and is often for more illiquid and riskier collateral than Treasuries and Agencies. Adam Copeland, Antoine Martin and Michael Walker (2010) “The Tri-Party Repo Market Before the 2010 Reforms”, Working Paper, Federal Reserve Bank of New York, explain the important differences in operations and during-crisis behavior between the tri-party repo market and the dealer-hedge fund repo market. 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 , 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.
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