Mark Zandi on the Risky Loans Behind the Meltdown
Episode Description
Days before the government stepped in to rescue Fannie Mae and Freddie Mac, Knowledge@Wharton chatted with Mark Zandi, the chief economist and cofounder of what is now Moody's Economy.com, about his new book, Financial Shock: A 360-Degree Look at the Subprime Mortgage Explosion, and How to Avoid the Next Financial Crisis. đź“‚ Finance & Accounting
Brief Summary
Mark Zandi discusses the subprime mortgage crisis and regulatory solutions to prevent future financial disasters.
Key points
- Financial Shock: Understanding the Crisis. Mark Zandi discusses his new book on the subprime mortgage explosion and its implications.
- The Erosion of Underwriting Standards. Zandi reveals the shocking decline in mortgage lending standards leading to the crisis.
- The Great Moderation and Risk Mispricing. Exploring how perceived economic stability led to risky financial behaviors.
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Episode highlights
- Financial Shock: Understanding the CrisisMark Zandi discusses his new book on the subprime mortgage explosion and its implications.“The most fundamental level was how egregious the lending had become.”1:27Oct 14, 2008
- The Erosion of Underwriting StandardsZandi reveals the shocking decline in mortgage lending standards leading to the crisis.“I had no concept to what degree they had declined.”1:57Oct 14, 2008
- The Great Moderation and Risk MispricingExploring how perceived economic stability led to risky financial behaviors.“There was a fundamental reason for this optimism.”4:05Oct 14, 2008
Tension
45/ 100Some tension
