Authors: Kurt W. Rotthoff
Addresses: Stillman School of Business, Seton Hall University, JH 674, 400 South Orange Ave., South Orange, NJ 07079, USA
Abstract: There are many events that led up to the financial crisis of 2008. This study looks at the political policies in place before the crisis happened. Focusing on the decade and a half prior to the crisis, the incentives in the financial industry led to risk mitigation. This response to mitigate risk explains, at least in part, a reason why there was a boom in the Collateralised Debt Obligations (CDO) and Mortgage-Backed Securities (MBS) markets in the years leading up to the crisis.
Keywords: moral hazards; financial crises; employee incentives; financial policies; political policies; politics; risk mitigation; CDOs; collateralised debt obligations; collateralisation; MBSs; mortgage-backed securities; mortgages; securitisation; securities markets; USA; United States; housing; globalisation; trade; global markets.
International Journal of Trade and Global Markets, 2011 Vol.4 No.4, pp.343 - 349
Published online: 08 Apr 2015 *Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article