The crisis, the worst since the Great Depression of the 1930s, has already brought down a half-dozen major banks and other financial companies. But at its core, the debacle was caused by the fairly recent practice of selling to more and more homebuyers larger loans than they could afford.
Contents contributed and discussions participated by Anna Toronova
How Will Washington Prevent Another Financial Crisis? - 0 views
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Mark Tenhundfeld of the American Bankers Association expects Congress to pass laws against so-called predatory lending. Additionally, he said, it may require a federal license for mortgage lenders. “But enforcement will probably be left to the states,” he said.
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Mark Perlow, a securities attorney with the law firm K&L Gates LLP, thinks the government will require companies to keep a financial stake in all the mortgages, credit cards and similar consumer products they sell. “The originators of debt will have to keep some skin in the game,” he said.
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BBC NEWS | Business | Q&A: Freddie Mac and Fannie Mae - 0 views
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Foreclosure rates have soared In this scenario, the government will guarantee the firms' debts, bring in new management and provide fresh liquidity to make the business less vulnerable to the declining market.
Elements of a Crime: Actus Reus & Mens Rea | SchoolWorkHelper - 0 views
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Actus Reus can be a physical act (hitting someone), a failure to act (watching someone being hit), or a state of being (having stolen property in your possession). It must be shown that a person committed an act prohibited by law.
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Mens Rea is the mental element of a crime. It includes motive, intent, knowledge, and recklessness/carelessness.
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due diligence; meaning that the accused made every effort to avoid committing the crime.
YouTube - Financial Derivatives: What are They? - Housing Bubble Collapse - Unregulated... - 0 views
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AIG was overall successful except in one sector, which was deregulated by the government. When AIG went belly up, all other sectors had money to back up insurance except for the sector that was insuring subprime mortgages- 400 billion dollars in insurance on bets whether people would be able to pay their mortgages; people had a Utopian view on subprime mortgages; AIG was operating under Utopian view and felt like housing prices would never drop <- willful blindness!!
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Definitions - 98 views
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Here is a good site for both the definitions of derivatives and leverage:
http://www.wisegeek.com/what-are-financial-derivatives.htm
Their definition of a derivative is:
"A derivative is a financial instrument that derives or gets it value from some real good or stock. It is in its most basic form simply a contract between two parties to exchange value based on the action of a real good or service. Typically, the seller receives money in exchange for an agreement to purchase or sell some good or service at some specified future date."
Their definition of leverage is:
Leverage is a financial term that refers to the multiplication that happens when a small amount of money is used to control an item of much larger value. A mortgage is the most common form of leverage. For a small amount of money and taking on the obligation of a mortgage, a person gains control of a property of much larger value than the small amount of money that has exchanged hands.
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1.) Actus Reus: conscience act, failure to act, state of being
2.) Mens Rea: intent, general and specific intent, knowledge, recklessness
3.) Due Diligence- (was every effort taken to not commit the crime?)
Definitions can be found here:
http://schoolworkhelper.net/2011/01/elements-of-a-crime-actus-reus-mens-rea/
http://vig.pearsoned.co.uk/catalog/uploads/Elliott_Criminal_C01.pdf
Please post any questions you have for the judges/criteria on this topic.
***Prosecutors feel free to post the charges you believe your opposition is guilty of on this topic.
***Defendants may post their due diligence defenses on this topic.
It doesn't matter if the defendant knew they were committing a moral crime or not to begin with, due diligence defense is based just on the ethical actions of the company. But you're right, due diligence doesn't apply in all cases. In those situations we would just label the Due Diligence category 'Not Valid' and move onto the other two criteria.
But that being said, due diligence can be an excellent defense. It's basically saying you tried your hardest to prevent the financial crisis from occurring and stating the reasons how.