Upload
abhiruproych8723
View
232
Download
0
Embed Size (px)
Citation preview
8/7/2019 GRYFFINDOR Productions
1/30
GRYFFINDOR PRODUCTIONS
IN ASSOCIATION WITH
SUBPRIME
PRESENTS YOU
Subprime crisis,
a complete disasterDirected by-
ABHIRUP ROY CHOUDHURY
SUKANYA ROY CHOUDHURY
PALLABI GOSWAMITANAY PANDIT
8/7/2019 GRYFFINDOR Productions
2/30
ING:
INVESTMENTBANKERS
SUBPRIME LENDERS
PRIVATEREALESTATE PURCHASER
RATING AGENCIES
8/7/2019 GRYFFINDOR Productions
3/30
CO-STARRING
A lot of MoneySubprime
Mortgages
CDOs
MBS
InvestmentProducts
Increasing
Housing PricesDecreasing
Housing Prices
8/7/2019 GRYFFINDOR Productions
4/30
TAKE -1
8/7/2019 GRYFFINDOR Productions
5/30
8/7/2019 GRYFFINDOR Productions
6/30
Subprime lending (near-prime,non-prime, or second-chance
lending) in finance means making
loans that are in the riskiestcategory of consumer loans and are
typically sold in a separate market
from prime loans.
8/7/2019 GRYFFINDOR Productions
7/30
WHAT EXACTLYIS
SUBPRIMEMORTGAGE
CRISIS ????
8/7/2019 GRYFFINDOR Productions
8/30
The subprime mortgage crisis is an ongoing
real estate crisis and financial crisis triggered by
a dramatic rise in mortgage delinquencies and
foreclosures in the United States, with major
adverse consequences for banks and financial
markets around the globe.
Approximately 80% of U.S. mortgages issued inrecent years to subprime borrowers were
adjustable-rate mortgages.
An adjustable rate mortgage (ARM) is a
mortgage loan where the interest rate on the noteis periodically adjusted based on a variety of
indices. All adjustable rate mortgages have an
adjusting interest rate tied to an index.
8/7/2019 GRYFFINDOR Productions
9/30
After U.S. house prices peaked in
mid-2006 and began their steep
decline thereafter, refinancing
became more difficult.
As adjustable-rate mortgages
began to reset at higher rates,
mortgage delinquencies soared.
Securities backed with subprimemortgages, widely held by
financial firms, lost most of their
value.
The result has been a large decline
in the capital of many banks andU.S. government sponsored
enterprises, tightening credit
around the world.
8/7/2019 GRYFFINDOR Productions
10/30
TAKE-2
8/7/2019 GRYFFINDOR Productions
11/30
BEHIND SUBPRIMECRISIS..
8/7/2019 GRYFFINDOR Productions
12/30
THEHAPPYDAYS.
8/7/2019 GRYFFINDOR Productions
13/30
US GOVERNMENT HAD
ENCOURAGED US
BANKS TO LEND MONEYTO PEOPLE TO
ENCOURAGE SPENDING
& INVESTING MAINLY
FOR THE PURPOSE OF
BUYING HOUSES
8/7/2019 GRYFFINDOR Productions
14/30
THESE BANKS GRANTED
LOANS TO LARGE
NUMBER OF
BORROWERS DESPITE
HAVING LOWER INCOME
,UNSURE EMPLOYMENT
STATUS,UNSCRUPULOUS CREDIT
HISTORY, ETC.
8/7/2019 GRYFFINDOR Productions
15/30
HUGE NUMBER OF
BORROWERS AVAILED
OF BANK CREDIT
WITHOUT EVALUATINGTHEIR REPAYMENT
CAPACITIES. THE
ECONOMY WAS FLUSH
WITH LIQUIDITY&STOCK MARKETS WERE
BOOMING.
8/7/2019 GRYFFINDOR Productions
16/30
ASILENT STORMBREWED IN
INTERNATIONAL
FINANCIAL MARKETS
WITH ORIGINS IN THE
US HOUSING
MARKET, WHICH
WITNESSED AN
UNPRECEDENTED
BOOM SINCE 2001.
8/7/2019 GRYFFINDOR Productions
17/30
THE BOOM WAS LEDBY RISING HOUSING
PRICES, LOW
INTEREST RATES &
AGGRAVATED BY
FINANCIAL
INNOVATIONVIZ.
MBS, CDO ANDCDS..
Mortgage-BackedSecurities(MBS),Collateralized Debt
Obligation(CDO),Asset Backed
Securities(ABS),etc.
8/7/2019 GRYFFINDOR Productions
18/30
TAKE-3
8/7/2019 GRYFFINDOR Productions
19/30
THEDISASTER COMMENCES..
8/7/2019 GRYFFINDOR Productions
20/30
HOUSING PRICES IN
USABEGANTO DROP
IN 2006. RISINGINTERESTRATES &
FALLING HOUSING
PRICES LEDTO RISE
IN SUBPRIME
MORTGAGE
DELINQUENCIES.
8/7/2019 GRYFFINDOR Productions
21/30
RESULT: THE HOUSING BUBBLE BURST IN
AUG 2006.
8/7/2019 GRYFFINDOR Productions
22/30
THE SEQUENCE
OFEVENTS..
8/7/2019 GRYFFINDOR Productions
23/30
8/7/2019 GRYFFINDOR Productions
24/30
TAKE-4
8/7/2019 GRYFFINDOR Productions
25/30
IMPA
CTON
G
LOBALECONOMY
8/7/2019 GRYFFINDOR Productions
26/30
Collapse ofFinancial
Institutions.
Severe Credit squeeze.
Consumer aversion to spending Job cuts and serious
unemployment problem
followed
8/7/2019 GRYFFINDOR Productions
27/30
8/7/2019 GRYFFINDOR Productions
28/30
STEPS TAKENTO
FIGHTRECESSION
8/7/2019 GRYFFINDOR Productions
29/30
Economic stimulusFederal Reserve and
central banks
Bank solvency and capitalreplenishment
Regulatory proposals andlong-term solutions
8/7/2019 GRYFFINDOR Productions
30/30