Subprime Meltdown - Essay Example

Only on StudentShare

Extract of sample
Subprime Meltdown

The article begins by discussing the case of New Century and revealing that it represented one of the biggest accounting failures at that time. At one end was the view that the accounting procedures used by the company were faulty and there were major red flags that the company did not watch out for. However, at the other end was the view that the failure of New Century was an inevitable outcome of the overall failure of the U. S Housing Industry and that the company was bound to come down in the midst of a failing market. However, the report does point out certain red flags that were not taken into account by the company and accounted for its failure. The major issue, as highlighted, was that the company did not undertake rigorous research effort into exploring the background of potential borrowers; that it had no benchmark for assessing the quality of its lending. One of the most obvious flaws was to rule out the income level of the borrower before lending him/her the loan; thus, loans were lent despite insufficient collateral. ...Show more

Summary

The article goes at length to discuss the financial credit crunch of 2007, highlighting both the causes and effects of the financial meltdown and its implications for the accounting bodies. Despite the presence of rules and regulations and accounting standards, the financial markets collapsed shattering investor confidence and bringing down with them the confidence and trust in the accounting procedures and laws of major regulatory bodies…
Author : vallieabbott
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Subprime Meltdown"
with a personal 20% discount.
Grab the best paper

Related Essays

Fair Value Accounting and Subprime Crisis
The loans had collateral placed for them. The money was used to purchase subprime instruments like commercial papers. These instruments were trading fairly in the active market prior to the crisis. The observable market prices were used to measure fair value.
3 pages (750 words) Essay
Sub-Prime Mortgage Crisis
The crisis associated with sub-prime mortgage ultimately made considerable rise in the quantity of foreclosures as well as defaults (Jaffee, 2008). In this paper, the aspect of the crisis relating with sub-prime mortgage that was faced by United States and several root causes of the crisis will be discussed.
3 pages (750 words) Essay
Financial Analysis of a Publicly-Traded Company
port, 2011 p.1) Vision It is the "vision of transforming Citi into the world's digital bank" as described by Vikram Pandit, the CEO of the company (Annual Report, 2011, p.12). Major Stakeholders Citi's major stakeholders are institutions and mutual funds that own 63% of the company’s holding and their numbers account for 1004 (Yahoo, 2012).
6 pages (1500 words) Research Paper
Causes for the 2007-2008 Subprime Mortgage Crisis the role of mortgage-backed securities on the bank leverage
Results and Findings 12 2.1 Lehman Brother 12 2.1.1 Lehman Brother before Bankruptcy 12 2.1.2 Bankruptcy of Lehman as a pointer of Subprime crisis 14 2.1.3 Effects of Bankruptcy of Lehman Brothers 16 2.2 Northern Rock 17 2.2.1 Pathway to Bankruptcy 18 2.2.2 Spill over effect of US sub-prime crisis on UK 19 2.2.3 The positive outcome 20 2.3 Housing Price Index 23 4.
34 pages (8500 words) Dissertation
Subprime Mortgage Crisis
While mortgage and house markets downtowns have been causes of economic problems in various parts of the world, but experts assert that this situation is unique (Simkovic 257). This study reveals that, the uniqueness of their situation explains for the first time ever downturns are motivated by a credit crisis in the non-banking area of finance, which is contrary from the norm, whereby such actions have created downturns in the general economy through a credit crisis in the banking zone.
7 pages (1750 words) Research Paper
Valuation Methods of Collateralized mortgage obligations
30 Findings from Review of Literatures in a Broad Approach 33 Background and Recent Trends 33 Practices and Key Issues in CMO Processing 34 The Transformation of the US Banking and Mortgage Markets 37 Securitization and the Mortgage Market 37 The Evolution of Financial Exploitation 38 Balanced Discussions and Alternative Viewpoints 41 Identified Research Gaps 42 Conclusion of Review 44 Summary 46 Chapter 3: Research Methods and Design 50 Introduction 50 Research Method and Design Appropriateness 50 Appropriation of Research Design with the Study Concerned 52 Population, Sampling and Data Collection Procedures and Rationale 53 Appropriateness, Reliability and Validity of the Instruments Selec
30 pages (7500 words) Dissertation
Case: Best Buy
Although the organization has remained competitive in the market, its revenue in the last three years indicates that market forces are becoming stronger and are already threatening to overwhelm its operations. However, the business environment in the 21st century has become very dynamic and the organizations have to engage effective differentiation strategy to survive in the competitive business environment.
4 pages (1000 words) Case Study
The effect of the U.S. Subprime Crisis to the China commercial banks in 2008-2013
The effect of the U.S. Subprime Crisis to the China commercial banks in 2008-2013. The sub-prime mortgage crisis that originated in the United States of America basically started from August 2007 and had transformed the financial markets around the world.
42 pages (10500 words) Dissertation
International Financial Accounting and Theory
The developments in the corporate governance of the United Kingdom companies have led to influential changes which have stimulated similar amendments in the corporate governance of
7 pages (1750 words) Essay
Manufacturing Overhead
Examples which would be included in manufacturing overhead are; Salaries for production supervisors, Operating costs of the new QC system, and Salaries for production supervisors. Predetermined overhead rates are the estimated total
2 pages (500 words) Assignment
Advantages and disadvantages of the FairTax Act
On this basis, different types of taxations are imposed depending on the target source. For instance, income taxes to individuals and corporate, gift taxes and social security taxes. On the other hand, the remittance of tax income on fair tax
3 pages (750 words) Term Paper
Why do oil prices keep falling
The other reason for the fall in oil prices is the decrease in demand in consuming countries owing to the insipid growth of the economy. Another reason for the fall in oil prices is the determination by OPEC not to reduce the production of oil as a measure of propping the
1 pages (250 words) Essay
Find out how much would it cost
to get a custom paper written by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT