Financial Statistics for the United States and the Crisis: What did They get Right, What did They Miss, and how Should They Change?

Matthew J. Eichner, Donald L. Kohn, Michael Palumbo
2011 Social Science Research Network  
Although the instruments most closely associated with the Wnancial crisis of 2008 and 2009, including option adjustable-rate mortgages, structured investment vehicles (SIVs), and "CDO squareds," were novel, the underlying themes were familiar from previous episodes: Competitive dynamics resulted in excessive leverage and risk taking by large, interconnected Wrms, in heavy reliance on short-term sources of funding to Wnance long-term and ultimately terribly illiquid positions, and in common
more » ... ures of many major Wnancial institutions to speciWc credit and liquidity risks. Understandably, in the wake of the crisis, Wnancial supervisors and policymakers want to expand and improve the information infrastructure to obtain better and earlier indications regarding these critical, and apparently recurring, core vulnerabilities in the Wnancial system.
doi:10.2139/ssrn.1783655 fatcat:ksi3coxp35b23gvhnueqcgkw4q