The Fall of the House of Credit: What Went Wrong in Banking and What Can Be Done to Repair the Damage?
Cambridge University Press
Edition: Illustrated, 7/9/2009
EAN 9780521762144, ISBN10: 0521762146
Hardcover, 382 pages, 22.9 x 15.2 x 2.2 cm
Language: English
How was it possible for problems in one relatively small sector in the global financial system - the American sub-prime mortgage market - to lead to the most serious economic crisis in living memory? In this book, Alistair Milne untangles the complex world of modern banking and examines solutions to the crisis. He shows how the banks misused their ability to securitize loans and, by borrowing short and lending long, exposed themselves to exceptional risks when asset prices started to fall. But it has been above all a collapse in trust and confidence, rather than poor lending decisions, which has fuelled the crisis. Despite all the talk of 'toxic' assets, the book argues that most assets are sound and can be repaid. The imperative is to restore confidence through collective action involving asset purchases, guarantees and recapitalization. Failure to do so will mean that taxpayers will be carrying a crippling tax burden for generations to come.
List of figures
List of tables
List of boxes
Introduction
1. Where did all the money go? An analysis of the causes and cure of the current global banking crisis
2. Build up, meltdown and intervention
3. We have been here before, haven't we?
4. A basic funding tool - the tranched mortgage backed security
5. Using tranching to make short term transaction profits
6. Borrowing short and lending long
the illusion of liquidity in structured credit
7. The levees break
8. The flood of losses
9. Central banks and money markets
10. The run on the banks
11. Conclusions
repairing the house of credit
Index.
'The Fall of the House of Credit is a horror story, worthy of Poe, about the origins and impact of our ongoing financial and economic nightmare. A very easy and highly insightful read, for both layman and professional, the House of Credit offers a way out of our deep financial pit that's novel and that may actually work!' Laurence J. Kotlikoff, Boston University