rate to up to 19%
As a result, inflation rate of 13.5% (1981)
plunged to 3.2%(1983)
Therefore, steep increase of interest rate put people
with housing loan unable to redeem their loan
US government prosecuted 1800 executives of bankrupted S&Ls
Government also enacted ‘Financial Institution Reform, Recovery and Enforcement Act’ to persecute moral hazard
purchase
homes
S&L organizations grew rapidly,
as the generation of baby boomers
started purchasing houses
S&L banks asked Congress to remove restrictions of their business in order to expand their business : Deregulation
As the competition between S&L banks became severe, expanded business, they started to lend mortgage to the people with low credit rating
rate leaders must be exposed and punished. It also made loose standard and false profit exist no longer in business world. In the bill a restriction to an auditor was added saying that accounting firms should rotate the in-charge partners on an auditing assignment every 5 years in order to prevent auditors from getting too cozy with their corporate clients.
III. The reasons of Enron Crisis
II. What Are Credit Derivatives?
Derivatives are defined as the exchange or contract which has economic values deriving from the reference assets or index. According to their types, there are overall forward, future, option, and swap. Derivatives are the financial derivatives, which are enabled to trade in the market while consisting of separating the credit risk only to the holder of basic p
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