History 1807 Lecture Notes - Lecture 7: Credit Default Swap, Freddie Mac, Mortgage Insurance
6 Nov 2015
School
Department
Course
Professor
Document Summary
Credit default swaps was the tipping point of crisis collapse of mortgage industry was caused by greed increasing demand for capital specialization of wall street. 19800/90s was when wall street wanted to get its hands on money, so they got into the mortgage industry. Mortgages impossible without the help of the gov. Freddie mac is a competitor, and can buy private mortgages. Ginnie is created and run by the gov. Wall street banks buy the mortgages and securitize them. Take the mortgage, bundling them up, securitizing them, and sell them. Main reason ppl bought the backed securities because they thought it was safe. Belief is that you never lose money on real estate. Wall street needed to find a way to convince people that these securities were. 1938-1968, one of the safest things you could invest in was fannie mae people forgot that fannie had been privatized till 1990, fannie was still essentially dealing with safe mortgages safe.
