The Subprime Mess: Incntives That Help
THE SUBPRIME MESS: INCENTIVES THAT HELP
Jim Shoe
SEMINAR MANAGEMENT CONTROL SYSTEMS
INTRODUCTION
The subprime crisis can be described as a series of events with the so-called
‘savings glut’ as Ben Bernanke described as a starting point. Low interest rates and
rising house prices created an opportunity for financial innovation. Credit quality
mattered little because if a buyer couldn’t make the payment, the lender would repossess
the house and sell it quickly in a hot market. When rates started to climb, lenders began
to increase the volume of exotic loans to keep buyers coming. When repossessed houses
couldn’t sell so easily, the credit quality of buyers did matter. The result was a subprime
crisis.
OBJECTIVES
The objective was to examine the management of financial services industry and
determine the role incentives play in its success and failure. Specifically,......
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Approximate Word Count: 1566
Approximate Pages: 7 (250 words per double-spaced page)
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