Why do we have a financial crisis today? Apparently stable and profitable companies, banks and even markets begin to struggle. Where are the roots for this development? The financial crisis of today can be tracked back to the housing bubble and to the following
housing crisis in the USA. But who where the participants and what were their actions? The following chapters try to give some explanations and reasons for this.
The housing bubble in the U.S and the following financial crisis had got their own reasons and drives. It is important to know these explanations and mechanisms to avoid such developments in the future. Managers and leaders should know, which reactions
follow which actions.
The objective of this assignment is to explain the reasons for the U.S housing bubble and the mistakes made by the participants of this development. The work on the assignment started with a mind map of questions like: who are participants of the house bubble crisis, what are the connections between these participants, and what were their actions. All findings of this assignment are mainly Internet based and complemented by literature sources regarding topics like financial crisis, housing bubble, and subprime mortgage crisis. After providing a brief overview of the advance of the housing bubble, with a look to the Asia crisis, the premises of the housing bubble are explained. Following to that the housing boom is described in more detail. Afterwards, the focus will be changed to customer loyalty. Along with that the customer value and satisfaction is very important for a long term company-customer relationship. At the end of this assignment the conclusion sums up with the genesis of the housing bubble.
Table of Contents
List of Abbreviations
List of Figures
List of Tables
1 Introduction
Problem Definition
Objectives
Methodology
2 The Advance of the Housing Bubble
2.1 The Asia Crisis 1997 - 1998
2.2 Fanny Mae and Freddie Mac
3 The Housing Bubble
3.1 Premises
3.1.1 The Role of the Fed and the Oversupply of Money
3.1.2 Lending Standards in the US
3.1.3 Prices of and Supply with new Houses over the last Decades
3.1.4 Securitization (ABS, MBS, CDO)
3.2 Housing Boom
3.2.1 Over financing
3.2.2 Consumption by Credit
3.2.3 Houses “Under Water”
3.3 The Final Crash
4 Conclusions
Bibliography
ITM Checklist
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