Kurt Eggert, a law professor who has testified to Congress on these issues and is a past member of the Federal Reserve Board's Consumer Advisory Council, recently provided some thoughts on the following question: Is "subprime" becoming a form of branding a crisis that actually is larger than the global uncertainty stemming from sales of bundled American mortgages in the residual market?
“The credit crunch is outstripping the subprime market and the subprime crisis if anything reveals that lenders weren't doing good risk assessment. Now, the entire market is much more wary of risk and unwilling to make loans without being able to determine the risk characteristics of the borrower,” Prof. Eggert points out. “Given that much of the subprime risk out there is not transparent, is hidden away in complex structured entities that are difficult to price, this is causing the credit crunch we've seen out there.”
“As to banks writing down their other loans, banks should be writing down loans that have gone bad and if they don't, if they try to conceal the reduced value of these loans, this can cause broader harm as again other parties become suspicious of the true value of their holdings,” Prof. Eggert adds. “So, we should be encouraging both banks and rating agencies to be writing down loans and ratings of securities backed by loans as those go bad.”
Below is Prof. Eggert's bio.
“The credit crunch is outstripping the subprime market and the subprime crisis if anything reveals that lenders weren't doing good risk assessment. Now, the entire market is much more wary of risk and unwilling to make loans without being able to determine the risk characteristics of the borrower,” Prof. Eggert points out. “Given that much of the subprime risk out there is not transparent, is hidden away in complex structured entities that are difficult to price, this is causing the credit crunch we've seen out there.”
“As to banks writing down their other loans, banks should be writing down loans that have gone bad and if they don't, if they try to conceal the reduced value of these loans, this can cause broader harm as again other parties become suspicious of the true value of their holdings,” Prof. Eggert adds. “So, we should be encouraging both banks and rating agencies to be writing down loans and ratings of securities backed by loans as those go bad.”
Below is Prof. Eggert's bio.
Professor Kurt Eggert is a Professor of Law and Director of Clinical Legal Education. He also runs Chapman's Alona Cortese Elder Law Center, and teaches both clinical and doctrinal classes. His scholarship has focused on several different areas, among them predatory lending, consumer credit, gambling regulation, and elder abuse. He has testified to Congress on predatory lending issues and is a member of the Federal Reserve Board's Consumer Advisory Council, where he chairs the subcommittee on Consumer Credit. Previously, he was an adjunct professor of law, teaching Elder Law, at Loyola Law School. From 1990 until 1999, he was a senior attorney at Bet Tzedek Legal Services in Los Angeles, where he specialized in complex litigation, including consumer fraud and home equity fraud. Professor Eggert received his B.A. from Rice University, magna cum laude and Phi Beta Kappa, and received his Juris Doctor from Boalt Hall, the University of California at Berkeley School of Law. He teaches Legal and Equitable Remedies, Elder Law, Legal Research and Writing, Civil Procedure and Depositions/Discovery Complex Litigation.
Posts
0 comments:
Post a Comment