ECON 161A Lecture Notes - Lecture 14: Market Liquidity, Credit Default Swap, Term Auction Facility
Document Summary
Exam: it"s cumulative (about 80% is on previous or could"ve been tested on previous exams) 2007 09 us financial crisis & recession. It was only in certain sectors and it wasn"t in the broader economy. 90"s mid 2000"s: growing demand for mortgage-related securities mortgage-related securities like mortgage backed securities they wanted to buy because they wanted to have securities that looked like mortgages but aren"t actually mortgages. They were also rated very highly because of traunching. Lead to some groups of financial intermediaries so they made loans of lower quality so in . During this time period, the subprime loan became popular (a prime loan is conforming mortgage to gse standards set by fannie mae and freddie mac) Review: these gov. sponsored enterprises buy mortgages from banks, package them, and sell mortgage-backed securities (have a generally good quality because they buy conforming mortgages that meet this standard)
