How Risk Sensitivity Led To The Greatest Financial Crisis Of Modern Times (Resource Investor)
March 14th, 2009 | by DebtFree.net |Subprime mortgages account for less than 1% of the world’s debt stock. How could they cause the greatest financial crisis in modern times? “Risk sensitivity” is this column’s answer. Regulators gave bankers incentives to combine bad loans with good ones and securitise the package in complex structures. The inseparability of the suspect parts meant problems with one package questioned the value …
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