Did Securitization Lead to Riskier Corporate Lending?

by Joao Santos, Federal Reserve Bank of New York There’s ample evidence that securitization led mortgage lenders to take more risk, thereby contributing to a large increase in mortgage delinquencies during the financial crisis. In this post, I discuss evidence from a recent research study I undertook with Vitaly Bord suggesting that securitization also led …

Consumer Contraction Continues to Slow

We are becoming more convinced with each passing week that the rate of contraction of on-line consumer demand for discretionary durable goods “bottomed” at the end of May 2011. The climb in the year-over-year contraction rate curve (decrease in the rate of contraction) since then has been significant:

Explaining the Housing Bubble

In the simplest terms, the housing bubble was caused by a flood of liquidity chasing mispriced risk.