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
Q

Factors leading to housing bubble

A
  • Low interest rates in the U.S.
  • Decline in lending standards
  • Increased popularity of structured products
2
Q

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

A

– Capital inflows (Asia)

– Lax interest rates by FED

3
Q

Why there was decline in lending standards during the housing bubble

A

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