Reference no: EM131359480

Assignment

Your project is to research the subprime difficulties that led to the subsequent credit crisis and current economic situation. There are many elements to the subprime situation that require understanding if current economic conditions are to be understood. I am looking for a comprehensive report on the subprime crisis and the current state of the economy. A comprehensive report is one that explains the history of the subprime era, beginning with the extension of subprime loans and ending with the current state of our economy. Make a narrative make a story as your write this paper as you EXPLAIN what they means.

As such, you should consider the following issues (answer them in a from of an essay like a story and narrative) make this as a guidelines:

1. What is a subprime loan? How do subprime loans differ from standard loans? Bespecific.

2. How do lending standards for subprime loans differ from standard loans?

3. Why were subprime loans extended by mortgage lenders given the high credit risk?

4. What triggered the defaults of subprime loans? In other words, what conditions in the economy began the process of defaults in the subprime market?

5. What are mortgage backed securities? How are they relevant to the subprime meltdown?

6. What sectors were affected by subprime defaults? (i.e., Banks?,Mutal funds?, Hedge funds?, Who? Explain). How were these institutions affected?

7. Explain how the subprime mess lead to a credit crisis. That is, why have defaults in the subprime market reduction.

8. Select a financial institution that had serious financial problems as a result of the credit crisis. Determine the main underlying causes of the problems experienced by that financial institution. Explain how these problems might have been avoided.

9. What actions has the Federal Reserve taken? What is the Federal Reserve is trying to accomplish?

You are not required to answer every question explicitly. I mention them to guide you in your thinking. Additionally, there is overlap among the items above. However, please keep in mind that although you need not address every point individually, a complete report will address most of the above issues at least implicitly. The goal of this project is for you to be well versed on the subprime situation and subsequent economic crisis. Your report must be properly referenced. You may use any resource available except: (1) students outside your group, (2) faculty members, (3) online research paper services.

If you are using outside sources PLEASE CITE YOUR SOURCES INSIDE THE BODY PARAGRAPH ALSO AT REFERENCE PAGE (AT A SEPARATE PAGE).