July 6–July 8, 2009
Securitization is a tool for bank risk management. However, when it is misapplied by prodigal lenders and borrowers, financed by money-center banks, and guaranteed by negligent third parties, it becomes a recipe for financial collapse. To restore confidence in the financial system, the cornerstone of its existence, the concerned parties must get back to the basics of bank risk management and avoid the greedy and irrational behavior that pervaded this mortgage-lending debacle.
1. Introduction
2. Models of Change: From Financial Innovation to Financial Destruction
3. Irrational Exuberance: From the Stock Market to the Mortgage Market
4. The Functions of a Financial System: The Role of Confidence
5. Securitization: Good News/Bad News
1. Recap and Preview
2. Risk Management and the Risks of Banking
3. Credit Risk and the Subprime Lending Debacle
4. Interest-Rate Risk
1. Recap and Preview
2. Liquidity Risk
3. Bank Capital Adequacy
4. Market Value of Bank Equity vs. Book Value
5. Catch-Up, Review, and SHAZAM