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Financial Crisis and Recovery: Causes of the Crisis

In 2007, the worst financial crisis since the Great Depression commenced in the United States and much of the rest of the developed world. This research guide provides links to resources on the crisis and its aftermath.

The Causes

"What Caused the Financial Crisis?," Bill Thomas, Keith Hennessey & Douglas Holtz-Eakin, The Wall Street Journal, Thursday, Jan. 27, 2011 (available at LexisNexis, username and password required).

Subprime Mortgages

Corporate Governance

Government Regulation

Derivatives

Practical Law Company: Derivatives Overview (Resource ID: 3-387-5073):  A note on general derivatives concepts, including an explanation of common types of derivatives (registration available for free law school account).

Practical Law Company: Mechanics of Derivatives Clearing (Resource ID: 9-505-9203): A note on the clearing process for swaps and derivatives in light of global regulatory initiatives, such as Title VII of the Dodd-Frank Act that will require many over-the-counter (OTC) derivatives to be traded on exchanges and cleared through clearinghouses (registration available for free law school account).

Credit Rating Agencies

Banks

Fannie Mae & Freddie Mac

Gretchen Morgenson & Joshua Rosner, Reckless Endangerment (2011), traces the roles of Fannie Mae and Freddie Mac in the subprime mortgage crisis and the agencies' use of government subsidies to enrich their executives and buy influence, while lowering lending standards and increasing taxpayers' risks.