Deciphering the Liquidity and Credit Crunch 2007 – 2008 Flashcards Preview

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Flashcards in Deciphering the Liquidity and Credit Crunch 2007 – 2008 Deck (3)
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1

Factors leading to housing bubble

• Low interest rates in the U.S.
• Decline in lending standards
• Increased popularity of structured products

2

Why there were Low interest rates in the U.S. before housing bubble

– Capital inflows (Asia)
– Lax interest rates by FED

3

Why there was decline in lending standards during the housing bubble

“originate and distribute” model and other trends in banking industry