Business
The 2008 Commercial-Paper Freeze Showed Why Ordinary Companies Need Financial Markets
Financial crises do not remain confined to banks and traders. Many large businesses use commercial paper—short-term unsecured debt—to…
Category: Economy
The macro picture: inflation, growth, jobs, interest rates and central bank decisions.
Economy
Why the Fed Began Paying Interest on Bank Reserves During the 2008 Crisis
For much of its history the Federal Reserve did not pay interest on balances that banks held with…
Economy
Bear Stearns in March 2008: When a Securities Firm Ran Out of Funding
Bear Stearns was a major securities firm with substantial assets, yet in March 2008 it faced an acute…
Economy
Lehman Brothers in 2008: Why Bankruptcy Shocked Markets Beyond One Firm
Lehman Brothers filed for bankruptcy on September 15, 2008. The event is often treated as the single beginning…
Economy
AIG in September 2008: How Collateral Calls Spread a Credit Crisis to Insurance
The American International Group crisis illustrates that a company can be destabilized by financial contracts even when its…
Economy
The 2008 Foreclosure Spiral: How Falling Home Prices Reduced Demand for Homes
Falling house prices are sometimes presented as the consequence of fewer buyers. During the US mortgage crisis, the…
Economy
Why Mortgage Securitization Spread Credit Risk Without Eliminating It
Securitization converts pools of loans into securities purchased by investors. It can provide new funding for mortgages and…
Economy
How Subprime Lending Expanded Before the 2007 Mortgage Crisis
In the early 2000s American lenders extended mortgages to households that had previously struggled to qualify. That expansion…
Economy
South Korea’s 1997 Debt Rollover Shows How Coordination Can Stop a Funding Panic
When South Korea faced severe foreign-currency funding pressure at the end of 1997, the immediate question was whether…
Economy
Black Monday 1987: How a Market Sell-Off Became a System-Wide Liquidity Test
On October 19, 1987, the Dow Jones Industrial Average fell 22.6 percent in one trading day. The headline…