SOCI201 Lecture Notes - Lecture 19: Securitization

• School: University of Delaware
• Department: Sociology
• Course: SOCI201
• Professor: Best Joel

Document Summary

The two markets have experienced similar stages of development: 1. Deregulation by federal law and subsidies for borrowing: 2. Conditions for these types of debts became so relaxed that the housing and education markets were fundamentally changed because of consumer access to plentiful subsidized loans. Asset bubbles: traditionally defined as irrational behavior leading to a continual growth of demand for an asset. (belief in future price growth caused market participants to sharply drive up asset prices. Because most consumers are able to borrow money to finance housing or education, they are less sensitive to price, and therefore look at education and housing opportunities based on features. Now, colleges frequently recruit students with increasingly luxurious lifestyle amenities instead of focusing on academic pursuits. The for-profit institutions (colleges) rely on loan money almost exclusively, and want to recruit as many students as possible and retain them for as long as possible until the students reach maximum student loan amounts.