scholarly journals Regulating Household Leverage

2019 ◽  
Author(s):  
Anthony A Defusco ◽  
Stephanie Johnson ◽  
John Mondragon
Keyword(s):  
Interest Rates ◽  
Agency Costs ◽  
Third Parties ◽  
Mortgage Market ◽  
Housing Crisis ◽  
Demand Elasticities ◽  
Market Friction ◽  
Default Rates ◽  
The Cost ◽  
The U.S

Abstract This article studies how credit markets respond to policy constraints on household leverage. Exploiting a sharp policy-induced discontinuity in the cost of originating certain high-leverage mortgages, we study how the Dodd–Frank “Ability-to-Repay” rule affected the price and availability of credit in the U.S. mortgage market. Our estimates show that the policy had only moderate effects on prices, increasing interest rates on affected loans by 10–15 basis points. The effect on quantities, however, was significantly larger; we estimate that the policy eliminated 15% of the affected market completely and reduced leverage for another 20% of remaining borrowers. This reduction in quantities is much greater than would be implied by plausible demand elasticities and indicates that lenders responded to the policy not only by raising prices but also by exiting the regulated portion of the market. Heterogeneity in the quantity response across lenders suggests that agency costs may have been one particularly important market friction contributing to the large overall effect as the fall in lending was substantially larger among lenders relying on third-parties to originate loans. Finally, while the policy succeeded in reducing leverage, our estimates suggest this effect would have only slightly reduced aggregate default rates during the housing crisis.

scholarly journals Historically Illustrating the Shift to Neoliberalism in the U.S. Home Mortgage Market

Societies ◽  
2019 ◽  
Vol 9 (1) ◽  
pp. 6 ◽  
Author(s):  
Ivis García
Keyword(s):  
Mortgage Market ◽  
Historical Case Study ◽  
Housing Crisis ◽  
Historical Case ◽  
Savings And Loans ◽  
New Policies ◽  
Home Mortgage ◽  
Oil Crises ◽  
Building Societies ◽  
The U.S

This article takes a long view of the U.S. housing market; from its inception as locally owned and operated Building Societies, through one of the first major U.S. housing crises in the early 1930s, as well as through the prosperous and surprisingly stable post-WWII era the so-called “Long Boom” during Keynesianism. As labor shortages became more severe, accompanied by stagflation and the simultaneous urban, fiscal, and oil crises of the late 60s and early 70s, key sectors of the U.S. economy rallied to dismantle established Keynesian policies. While the new policies associated with laissez–faire economic liberalism certainly aided in the mobility of capital, the overall economy as a result of this neoliberal turn became increasingly unstable and inequitable. This article seeks to add knowledge to the neoliberalism theory. The author concludes, based on a historical case study of the Savings and Loans industry, that neoliberalism was not a deterministic overthrow of neoliberal ideologues but a haphazard response to the contradictions of Keynesian logic. It is only from a historical approach that we may be able to understand the current housing crisis, foster policy innovation, and allow for institutional change within the U.S. mortgage market sector.

Financial Crisis American Style

2009 ◽  
Vol 8 (3) ◽  
pp. 146-170 ◽  
Author(s):  
Barry Bosworth ◽  
Aaron Flaaen
Keyword(s):  
Financial Crisis ◽  
Interest Rates ◽  
The United States ◽  
Mortgage Market ◽  
Secondary Market ◽  
Domestic Investment ◽  
Regulatory Structure ◽  
Public Deficit ◽  
Export Sector ◽  
The U.S

This paper reviews some of the research on the causes of the financial crisis of 2008–09, highlights the key events that triggered a financial panic in September 2008, and summarizes the key policy actions that the United States has taken to ameliorate the crisis. We document the characteristics and growth of the sub-prime mortgage market, and the distorted incentives and flawed regulatory structure surrounding the secondary market for mortgage-backed securities. We also assess the role for macroeconomic determinants of the crisis that serve to explain the bubble in U.S. asset prices, most notably low global interest rates attributed to either loose monetary policy or excess global saving. Although low global interest rates may have contributed to the boom in housing markets and speculative excesses, we believe that the financial innovations and microeconomic distortions played a more fundamental role. Finally, a recovery marked by higher private saving, weak domestic investment, and a large public deficit appears to be unsustainable. Ultimately, the U.S. economy will need to shift about 3 percent of GDP from domestic consumption to the export sector. This will pose some serious challenges to Asian economies that have come to rely on exports to the U.S. market.

The U.S. Banking System From a Northern Exposure: Stability versus Efficiency

1994 ◽  
Vol 54 (2) ◽  
pp. 325-341 ◽  
Author(s):  
Michael D. Bordo ◽  
Hugh Rockoff ◽  
Angela Redish
Keyword(s):  
Interest Rates ◽  
Banking System ◽  
The United States ◽  
Bank Failures ◽  
Rates Of Return ◽  
Data Set ◽  
The Cost ◽  
Canadian Banking ◽  
Comparative Stability ◽  
The U.S

This article asks whether the vaunted comparative stability of the Canadian banking system has been purchased at the cost of creating an oligopoly. We assembled a data set that compares bank failures, lending rates, interest paid on deposits, and related variables over the period 1920 to 1980. Our principal findings are (1) interest rates paid on deposits were generally higher in Canada; (2) interest income received on securities was generally slightly higher in Canada; (3) interest rates charged on loans were generally quite similar; and (4) net rates of return to equity were generally higher in Canada than in the United States.

Domestic Asset Tracing: Identifying, Locating and Freezing Stolen and Hidden Assets

2016 ◽  
Vol 1 (1) ◽  
pp. A42-A65 ◽  
Author(s):  
Carl J. Pacini ◽  
William S. Hopwood ◽  
Debra T. Sinclair
Keyword(s):  
Third Parties ◽  
Asset Recovery ◽  
Rate Of Recovery ◽  
Covert Operations ◽  
The Cost ◽  
The U.S ◽  
Word Document

ABSTRACT The rate of recovery of stolen and hidden assets from fraud and other schemes is low. This paper explores two steps of the investigative sequence in pursuing domestic (onshore) asset recovery when the objective is to recover specific assets (or their equivalent value) lost to fraud or hidden for some other purpose: asset identification and location (tracing) and asset freezing. Before pursuing asset tracing and freezing, an attorney, a forensic accountant, and a client must consider various factors, including the cost and likelihood of recovery, as well as whether there are third parties (e.g., banks, lawyers, and accountants) from whom recovery may be sought. It is necessary to obtain certain basic identifying information for any suspect or target, as well as their associates, relatives, and friends. This information can be gleaned from electronic databases, surveillance, covert operations, interviews, and other sources. This article also covers the places where assets can be hidden, as well as the various asset freezing measures available in the U.S., such as attachment, replevin, garnishment, lis pendens, and injunctions. Numerous useful websites and databases are noted throughout the paper (a list is available as a downloadable Word document, see Appendix A). The article concludes with an analysis of the importance of protecting the attorney-client privilege for a non-testifying forensic accountant.

scholarly journals International Real Estate Review

2007 ◽  
Vol 10 (1) ◽  
pp. 151-170
Author(s):  
Cynthia Holmes ◽  
◽  
Michael LaCour-Little ◽  
Keyword(s):  
Default Risk ◽  
Small Sample Size ◽  
Mortgage Lending ◽  
Small Sample ◽  
Mortgage Market ◽  
Multifamily Housing ◽  
Loan Pricing ◽  
Loan Terms ◽  
The Cost ◽  
The U.S

We combine loan data from distinct sources to compare and contrast multifamily mortgage lending in Canada and the U.S. After a general comparison of the multifamily housing markets in the two countries, we focus on loan pricing and non-price contract terms in the two environments. We find longer loan terms in the U.S. compared to Canada and attribute this to the greater liquidity available from a more established secondary mortgage market. We also find that while nominal rates are higher in Canada, mortgage spreads are actually lower, a result likely due to contract features that raise the cost of default for borrowers and restrict prepayments". In terms of loan performance, we found greater prepayment risk in U.S. mortgages and greater default risk in Canadian mortgages, although findings regarding default are limited by small sample size.

scholarly journals An Evaluation of Turkish Mortgage System from the Perspective of Global Economic Crisis

2011 ◽  
Author(s):  
Mustafa Topaloğlu
Keyword(s):  
Interest Rates ◽  
Economic Crisis ◽  
Mortgage Market ◽  
Mortgage Loans ◽  
Subprime Mortgage ◽  
Consumer Loans ◽  
The World ◽  
World Economic ◽  
The Law ◽  
The Cost

Turkish mortgage system was established by the law number 5582 and the title of "The Law Amending the Laws Related to Housing Finance System" in 2007. Even though the entry into force of this act expressed as "Pay the rent as the landlord-performing”, no bring up short of the interest rates of a housing loan were observed. In fact, Mortgage application could not be branch out yet. The distinguishing feature of the mortgage system, mortgage collateral pools of consumer loans with guaranteed by mortgage backed securities to be issued, sold in the capital market, also called the mortgage money is the safeguard of cheap funds. Using this fund for financing provided by banks as a result of re-housing resource for the consumer to pay the cost of housing loan interest rate is relatively go into a decline. Meanwhile, after the abundance of finance in the world, the so-called subprime mortgage, loans to non-qualified borrower, triggered the world economic crisis occurred. May well be, Turkey was unimpressed the crisis because of the not being set secondary mortgage market. All the public in charge of economy has introduced prevention of packages of measures.

scholarly journals Responses Of Interest Rates In Mexico To U.S. Monetary Policy

2011 ◽  
Vol 19 (2) ◽  
Author(s):  
Yu Hsing
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Arch Model ◽  
Federal Funds Rate ◽  
Stable Relationship ◽  
Long Run ◽  
Regression Parameters ◽  
Time Deposit ◽  
The Cost ◽  
The U.S

<p class="MsoBodyText" style="line-height: normal; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt; mso-bidi-font-style: italic;"><span style="font-family: Times New Roman;">This paper examines potential responses of interest rates in Mexico to the U.S. monetary policy. The regression is cointegrated in that the dependent and independent variables have a long-run stable relationship. The GARCH or ARCH model is applied to estimate regression parameters. The results show that the T-bill rate, the cost of funds rate, and the time-deposit rate in Mexico are significantly affected by the change in the U.S. federal funds rate. In addition, these interest rates are negatively associated with real M2 and real tax revenues and positively affected by the real exchange rate, real government spending, and the expected inflation rate. </span></span></p>

The impact of regulations on labor markets in the U.S.

2019 ◽  
Vol 1 (1) ◽  
pp. 36-40
Author(s):  
Souad Adnane
Keyword(s):  
Supply And Demand ◽  
Demand Model ◽  
Lead Teachers ◽  
Associate's Degree ◽  
Childcare Workers ◽  
Educational Requirements ◽  
The Cost ◽  
Women's Labor Force Participation ◽  
The Impact ◽  
The U.S

The District of Columbia (DC) Office of the Superintendent of Education (OSSE) issued in December 2016 new educational requirements for childcare workers, according to which, all childcare center directors in the District must earn a bachelor’s degree by December 2022 and all lead teachers an associate’s degree by December 2020 (Institute for Justice, 2018). Moreover, DC has one of the lowest staff-child ratios in the country. How are regulations pertaining to childcare workers’ qualifications and staff-child ratio affecting the childcare market in DC? The present paper is an attempt to answer this question first by analyzing the effects of more stringent regulations on the cost and availability of childcare in the U.S based on existing studies. It also uses the basic supply and demand model to examine the possible impact of the new DC policy on the cost, quality and supply of childcare in the District and how it will affect working parents, especially mothers. Next, the paper discusses the impact of deregulation based on simulations and regressions conducted by studies covering the U.S., and implications for quality. It concludes that more stringent childcare regulations, regarding educational requirements and staff-child ratios, are associated with a reduced number of childcare centers and a higher cost, and eventually affects women’s labor force participation.

scholarly journals 503. The Misappropriation of COVID-19 Related TV Ad Expenditures

2020 ◽  
Vol 7 (Supplement_1) ◽  
pp. S317-S317
Author(s):  
Kartavya J Vyas
Keyword(s):  
Cost Effectiveness ◽  
Performance Metrics ◽  
Control Measures ◽  
Mortality Data ◽  
Preventive Interventions ◽  
Social Distancing ◽  
Epidemic Curve ◽  
Incidence And Mortality ◽  
The Cost ◽  
The U.S

Abstract Background With nearly three-fourths of the U.S. population isolated in their homes between early March and the end of May, almost all of whom regularly watch television (TV), it was no surprise that companies began to purchase airtime on major television networks to advertise (ad) their brands and showcase their empathy with the populace. But how would the coronavirus disease 2019 (COVID-19) epidemic curve have changed had these same dollars been allocated to proven preventive interventions? Methods Performance and activity metrics on all COVID-19 related TV ads that have aired in the U.S. between February 26th and June 7th, 2020, were provided by iSpot.tv, Inc., including expenditures. COVID-19 incidence and mortality data were collected from the Centers for Disease Control and Prevention (CDC). Descriptive statistics were performed to calculate total TV ad expenditures and other performance metrics across industry categories. Leveraging a previously published stochastic agent-based model that was used to assess the cost-effectiveness of non-pharmaceutical interventions to control COVID-19, the number of cases that would have been prevented had these same dollars been used for preventive interventions was calculated using cost-effectiveness ratios (CERs), the cost divided by cases prevented. Results A total of 1,513 companies purchased TV airtime during the study period, totaling approximately 1.1 million airings, 215.5 billion impressions, and $2.7 billion in expenditures; most of the expenditures were spent by the restaurant (15.9%), electronics and communications (15.4%), and vehicle (13.7%) industries. The CERs for PPE and social distancing measures were $13,856 and $29,552, respectively; therefore, had all of these TV ad dollars instead been allocated to PPE or social distancing measures, approximately 194,908 and 91,386 cases of COVID-19 may have been prevented by the end of the study period, respectively. Figure 2. COVID-19 cases prevented had TV ad expenditures been reallocated for interventions. Conclusion Americans were inundated with COVID-19 related TV ads during the early months of the pandemic and companies are now showing some signs to relent. In times of disaster, however, it is paramount that the private sector go beyond showcasing their empathy and truly become socially responsible by allocating their funds to proven prevention and control measures. Disclosures All Authors: No reported disclosures

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