Stress Among Female Employees in Banks

Topics: Subprime mortgage crisis, Subprime lending, Mortgage Pages: 10 (3180 words) Published: August 28, 2013
What is Subprime Crisis?

It's an ongoing financial crisis triggered by a dramatic rise in mortgage delinquencies and foreclosures in the U.S, with major adverse consequences for banks and financial markets around the globe, e.g Europe, Asia and Latin America. Began with the bursting of the US housing bubble and high default rates on 'Subprime' and adjustable rate mortgages (ARM), beginning in approximately 2005-2006. Subprime Crisis affected the financial sector in Feb 2007, when HSBC, world largest(2008) bank, wrote down its holdings of subprime related MBS by $10.5 billion, the first major subprime related loss reported. In 2007, atleast 100 mortgage companies either shutdown, suspended operation or were sold.

Subprime crisis caused panic in financial markets and encouraged investor to take their money out of risky mortgage bonds and shaky equities and put it into commodities as "store of value". Financial speculation on commodity futures following the collapse of the financial derivatives markets has contributed to the world food price crisis and oil price increases due to a 'commodities super-cycle'. Financial speculators seeking quick returns have removed trillions of dollars from equities and mortgage bonds, some of which has been invested into food and raw materials. Lehman Brothers declared bankruptcy on 15 September 2008, after the secretary of the Treasury Henry Paulson, citing moral hazard, refused to bail it out.

Introduction
Sub prime mortgage crisis has made the total number of job losses in United States for year to date is more than 230,000.It has risen to more than five percent compare to year 2006. (AEP, 2008) This has happen because of credit crisis which started in the sub prime mortgage market. .Sub prime mortgage started in United States and had caused a deep slump in global trade including Malaysia. The Definition of Subprime Mortgage crisis

The commencement of the subprime crisis can be map out back to the time when banks luring cheap short-term credit for sub prime borrowers a few years ago. (Aseambankers, 2008) The low interest rate environment has spurred increases in mortgage financing and substantial increases in house prices. (Croupy et all.., 2008) The huge demand for these loans triggered the miscalculation of risk and made it possible for any consumer to buy a house. Individuals were speculating on the booming property market by buying multiple properties. The US federal Reserve in turn had kept interest rates low, thus giving consumer high reasonable price to own properties.( Aseambankers,2008) The lender primary consideration for loan quality was the ability to sell in the secondary market.(Gwinner & Sanders, 2008) A subprime mortgage is to establish a loan to unqualified borrower. Often these borrowers have less or even no credit history. Subprime mortgages often offer interest- only loans. Borrowers are to repay the interest towards the beginning of the loan tenure. (Amadeo, 2010)

1.) The cause and risk of sub prime mortgage crisis to the various market in Malaysia. Primarily due to lesson learned in 1997 crisis, most Asian countries also have much better financial regulatory regimes in place than they did a decade ago. Their commercial banks have better corporate governance and better internal risk management and their corporate sectors have much lower leverage. Direct exposure to both sub-prime and derivatives overseas is limited. (APCO, 2008) Broadly speaking, there has been no sub prime mortgage lending in emerging markets. Malaysia financial system has not been affected by the crisis .Malaysia Second Finance Minister ensures that Malaysia has sufficient tools and strengths within its economy to withstand a slowdown in the global economy. Despite of the comment in the news that our financial market is not affected by sub prime mortgage crisis, Malaysia still feels the heat on the incident. The deep slump in world trade and commodity prices had a much bigger...
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