Former U.S. Secretary of the Treasury Timothy F. Geithner and Professor Andrew Metrick survey the causes, events, policy responses, and aftermath of the recent global financial crisis.
Lecture: Bad Behavior, Part I
Loading...
來自 Yale University 的課程
全球金融危机
1197 個評分
Explore Related Videos
At Coursera, you will find the best lectures in the world. Here are some of our personalized recommendations for you
與講師見面
Andrew MetrickMichael H. Jordan Professor of Finance and Management
Yale School of Management
Timothy GeithnerLecturer in Management, Yale SOM, Former U.S. Secretary of the Treasury
Yale School of Management
[MUSIC]
Let's examine the evidence for hypothesis one.
Overall, the evidence does not support the hypothesis of bad behavior or
moral hazard as the main driver of the housing crisis.
The first reason is that nonprime loans,
which really are at the center of this story that we've people,
confused people, misled people into taking out nonprime loans.
Actually, these loans performed very well for many years,
it wasn't until the crisis that these loans really started to look very bad.
Does look like people looking at the historical evidence about these loans
would not have thought that they were designed to fail.
Let's take a look at some evidence on this.
These figures are drawn from a paper by Foote, Gerardi, and
Willen who were three economists at the Federal Reserve, who did some
outstanding work in gathering up data and evidence on the housing crisis.
Each of these pictures is really showing us the same set of statistics for
different subsets of mortgages.
What we have in blue is the rate at which these loads are failing,
so that they end up with houses in foreclosure or in delinquency.
And in red is the number of originations.
Looking at all mortgages, where the borrowers have FICO scores,
which are credit scores, below 620.
This is typically used as a cutoff for when we label something as subprime loan.
We go back to 2000 on the X-axis, and you can see that from 2000 to 2004,
the failure rate for subprime mortgages is below 20% and is actually falling.
Now whether or not you think this is a big number, it's a number that had been,
this particular failure rate had been around for a while.
And if you frame it as almost 20% are failing,
that sounds like a lot of failure.
If you frame it as more than 80% of the people who took out these loans,
who would not otherwise have been able to get home loans were successful
in being able to pay off their mortgage, that sounds a lot better.
And so, the way that you frame, of course, success or failure here is important.
But let's emphasize just the statistics which is that this was a stable or
declining percentage until 2005, 2006 where it starts to go up.
Now the originations, looking down below,
start to accelerate during the first half of the GSG period.
The originations are going up at a very fast rate starting in 2003.
The failure rates are going down.
If you were standing in 2005 thinking about taking out such a loan, or thinking
about making such a loan, and you looked at the evidence, the evidence looks like,
wow, this is actually a product that is doing relatively well and certainly even
doing a little bit better over time as we increase the amount of loans that we make.
Okay, the other three figures here are just showing us
different slices of the population, different slices of the loans.
Loans that have LTV equal 100.
This is a loan to value equals 100%.
No money down loans.
And if you look at no money down loans, they're not nearly as
large as subprime originations in terms of the red line, the number of originations.
But here again, we can see the failure rate is around 10% and does not move.
It does not move until we hit the bad part of the crises
starting in late 2005, early 2006.
These are loans that have, they're called low doc or
no doc, which means very little documentation.
So, somebody is going and they say their income is something, but
they have no documentation for their income.
They have no W2s, for example.
The number of originations of low doc or no doc loans also explodes
during the global savings glut period beginning in 2002, 2003.
We see that on the origination line.
But if you look at failure rates,
the failure rates once again are relatively low.
So they are below 10% in 2000, and
they fall during the period of time when the number of originations is exploding.
Now, of course, the failure rates are going to be low here.
The failure rates are going to be low during this time because housing
prices are going up.
When housing prices are going up, people don't tend to not pay their mortgage.
It's easy to refinance your mortgage, for example.
But again,
right now focused just on the evidence if one only looks at the failure rates and
tries to correlate that with what's going on in the market, things look good.
Things do not look as though they were particularly unsafe at all.
In fact, they look to be improving.
Finally, the type of loan that is really quite rare but
it's worthwhile to look at, nevertheless.
These are loans that you would think seem completely crazy at the outset.
These are negative amortization loans that is loans where people will
continue to borrow more rather than in these loans paying off some of your
equity in each period, you're actually increasing the amount of the loan.
And in these loans, the LTV starts at 90% or more.
So you're putting at most 10% down.
And then over the first few years of the loan, you're actually borrowing more.
Plus, these will be low doc or no doc loans.
So we're putting very little money down, and
we are having no documentation of our income.
These are the types of loans that you would sometimes hear people call
liar loans.
So if anything,
we would expect the failure rate on these loans to be very high.
We don't see a significant amount of these loans at all until 2003,
when the Global Saving Club begins to greatly increase the demand to own
the other side of this, to own mortgages.
In the early years of these loans, the failure rates were below ten percent.
Once again, it is not until we see housing prices falling that we start to
notice that these loans are not performing well at all.
[MUSIC]
