Evaluating Policies to Prevent another Crisis: An Economist's View / Paul S. Willen.

Format:

Book

Author/Creator:

Willen, Paul S.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w20100.

NBER working paper series no. w20100

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Evaluating Policies to Prevent another Crisis

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2014.

Summary:

I consider four policies created to address the financial crisis: (1) the ability-to-repay requirement in mortgage underwriting; (2) reform of rating agency compensation, (3) risk retention in securitization, and (4) mandatory loan renegotiation. I show that according to standard models, policies (1)-(3) do not address the standard asymmetric information problems that afflict financial markets. Policy (4) could reduce the deadweight losses associated with asymmetric information but requires that policy makers allocate gains and losses.

Notes:

Print version record

May 2014.