biases that regulators are found to be susceptible to and evaluates the regulatory changes made in the Act as well. Then‚ the fifth section explains the micro-oriented reforms to consumer protection that focus on addressing the fraudulent and predatory lending practices leading up to the crisis. The final section of this paper will conclude with a summary of the main findings in relation to the research
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In year 2007‚ United States witnessed the Subprime Mortgage Crisis‚ which was known as the “Mortgage meltdown”. It triggered a national financial crisis‚ which led to a tremendous decline is the housing market‚ rise in foreclosures and the collapse of some leading banks. This essay will look into the various causes of the subprime crisis as well as the parties who are responsible for this economic tragedy. Years prior to the crisis‚ United States had large inflow of foreign funds. In 2001 to 2003
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- 3 - N05/3/ECONO/HP1/ENG/TZ0/XX/M Paper Specific Markscheme In addition to the assessment criteria use the paper-specific markscheme below. Award up to the maximum marks as indicated. Examiners should be aware that candidates may take a different approach‚ which if appropriate should be fully rewarded. 1. (a) Explain the differences between monopolistic competition and oligopoly as market structures. [10 marks] • large number of firms (m.c) versus a few dominant firms (oligopoly) • differentiated
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1.1 Introduction There is a meticulous proverb about the bank’s lending –“if you owe the bank taka 100‚ that’s your problem. If you owe the bank taka 100 million‚ that’s the bank’s problem.” To be frank‚ lending to the businesses‚ governments‚ and individuals is one of the most important services banks and their closest competitors provide‚ and it is the riskier. The principal reason banks and many competitor lenders are issued charter of incorporation by government is to make loans to their
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competition they have less incentive to cut costs‚ e.g. they may employ surplus labour. Other effects of this increase in Monopoly power include; an increase in the firm’s supernormal profits at the expense of the consumer. This could be used to finance predatory pricing and force rivals out of business‚ this will reduce competition even further. Also‚ if firms get too big they may suffer from diseconomies of scale which leads to higher average costs. However‚ an increase in the concentration ratio is not
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think subprime loans are an ethical in some ways but for the most part it’s got misused. One way that I think subprime was misused was the fact that when the economy began to slow down‚ people started working more and earning less money‚ subprime lending continued to lend to increasingly risky buyers. 2. Discuss the ethical issues that caused the downfall of Countrywide Financial? There were many ethical issues that contributed to the downfall of Countrywide Financial. People were enticed into the
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home equity and sub-prime loans (which‚ due in part to their higher cost structure charge a higher price per dollar loaned).” Subprime loans were a key factor in Countrywide’s immense success and rapid growth. However‚ the company’s reliance on a lending practice that was
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These factors includes; the subprime lending‚ growth of the housing bubble‚ easy credit conditions‚ deregulation‚ extremely high use of financial leverage and an excessive complex innovation in the derivatives markets that were poorly understood by many investors as well as regulators and a large number of frauds in the financial industry were reported after the crisis. The specific factor‚ which made the greatest contribution to the crisis was the subprime lending in the United States. It all began
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15 Lending Money and Securing Loans A company can finance its activities by selling shares or by raising money from banks or other money-lending institutions. If the company is granted a loan‚ the lender may become a debenture-holder. A debenture has never been satisfactorily defined. In Levy v. Abercorris Slate and Slab Co.(1883) 37 Ch D 260‚ Chitty J said “In my opinion a debenture means a document which either creates a debt or acknowledges it‚ and any document which fulfils either of these
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Small enterprises pay more taxes than big ones. This system of taxation should be more fair‚ because for small enterprises there is no stimulus not to develop‚ but even to conduct their own business. Lastly‚ in our country there is no appropriate lending system. Banks do not want to credit small business‚ because there is more probability that
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