A depository is a firm wherein the securities of an investor are held in electronic form and who carries out the transactions of securities by means of book entry. The depository acts as a defecto owner of the securities lodged with it for the limited purpose of transfer of ownership.
Sub-prime mortgage crisis GAO Historical Data Based on the assumption that sub-prime lending precipitated the crisis, some[ who?
Securities and Exchange Commission SEC to relax the net capital rulewhich encouraged the largest five investment banks to dramatically increase their financial leverage and aggressively expand their issuance of mortgage-backed securities. Mortgage underwriting standards declined gradually during the boom period, particularly from to The quality of loans originated also worsened gradually during that period.
The combination of declining risk premia and credit standards is common to boom and bust credit cycles.
In other words, standards gradually declined but defaults suddenly jumped. Furthermore, the authors argued that the trend in worsening loan quality was harder to detect with rising housing prices, as more refinancing options were available, keeping the default rate lower.
A low down payment means that a home represents a highly leveraged investment for the homeowner, with little equity relative to debt.
In such circumstances, only small declines in the value of the home result in negative equitya situation in which the value of the home is less than the mortgage amount owed.
Homeowners with negative equity have less financial incentive to stay in the home. Such strategic defaults were heavily concentrated in markets with the highest price declines. An estimatedstrategic defaults occurred nationwide duringmore than double the total in Such loans were written into mind-numbingly detailed contracts and then swapped for more expensive loan products on the day of closing.
This created negative amortizationwhich the credit consumer might not notice until long after the loan transaction had been consummated.
Countrywide, sued by California Attorney General Jerry Brown for "Unfair Business Practices" and "False Advertising" was making high cost mortgages "to homeowners with weak credit, adjustable rate mortgages ARMs that allowed homeowners to make interest-only payments.
This caused Countrywide's financial condition to deteriorate, ultimately resulting in a decision by the Office of Thrift Supervision to seize the lender.
Countrywide, according to Republican Lawmakers, had involved itself in making low-cost loans to politicians, for purposes of gaining political favors. Risk-taking behavior[ edit ] In a June speech, U.
President Barack Obama argued that a "culture of irresponsibility"  was an important cause of the crisis.
He criticized executive compensation that "rewarded recklessness rather than responsibility" and Americans who bought homes "without accepting the responsibilities.
And a growing economy bred complacency. Formulas for calculating aggregate risk were based on the gaussian copula which wrongly assumed that individual components of mortgages were independent.
In fact the credit-worthiness of almost every new subprime mortgage was highly correlated with that of any other, due to linkages through consumer spending levels which fell sharply when property values began to fall during the initial wave of mortgage defaults.Depository System in India India has adopted the Depository System for securities trading in which book entry is done electronically and no paper is involved.
The physical form of securities is extinguished and shares or securities are held in an electronic form. A stock market, equity market or share market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately.
This system also protects the investors from its exploitation by the stock brokers and ensure transaction of shares at best possible market rates and also ensure prompt execution of transaction and liquidity. An Introduction to the Indian Stock Market orders directly into the stock market trading system.
to Indian stocks through institutional investors.
Many India-focused mutual funds are. Depository System In India Security System For Investors Economics Essay. Print Reference this. Published: 23rd March, Disclaimer: This essay has been submitted by a student. This is not an example of the work written by our professional essay writers. In a depository system, the investors have the advantages like efficient.
Investors searching for higher yields than those offered by U.S. Treasury bonds sought alternatives globally. This system had grown to rival the depository system in scale yet was not subject to the same regulatory safeguards.
and the article goes on to state that the profession of economics is bad at predicting recessions.