See Crouhy's Box 17-4 in his Chapter 9 of Essentials of Risk Management.
While I agree with the statement in this highlighted box, I feel it is critical that everyone understand another aspect that Crouhy's entirely ignores here.
It is very easy to simply blame the credit crisis on "greed" and the "banking industry itself".
Crouhy entirely ignores the Community Reinvestment Act (CRA). While I am not an expert on the CRA by any means, it is a fact that many (most) banks in the US were required to lend to subprime borrowers via congressional legislation.
While greed and banking industry practice contributed to the crisis, the American government iteself played a much large role, not to mention the significant responsibility never sufficiently assigned (in my opinion) to the Rating Agencies.
Just thought the BT subscribers would find this interesting and informative.
While I agree with the statement in this highlighted box, I feel it is critical that everyone understand another aspect that Crouhy's entirely ignores here.
It is very easy to simply blame the credit crisis on "greed" and the "banking industry itself".
Crouhy entirely ignores the Community Reinvestment Act (CRA). While I am not an expert on the CRA by any means, it is a fact that many (most) banks in the US were required to lend to subprime borrowers via congressional legislation.
While greed and banking industry practice contributed to the crisis, the American government iteself played a much large role, not to mention the significant responsibility never sufficiently assigned (in my opinion) to the Rating Agencies.
Just thought the BT subscribers would find this interesting and informative.
