Saturday, November 15, 2008

7 reasons for current financial crisis

Reason for current Financial crisis - Ref: Neel Kashkari -
I know many of you have been wondering what are the reasons for credit crunch,
These are the 7 major reasons

Reasons for Financial Crisis aka Credit Crunch
No 7 being the most important.

1) Decade of benign economic condition resulting in low inflation & Low interest rates
2) Financial innovation acceleration
3) Investors increase in confidence to diversify and distribute risks
4) Exceeded leverage on financial systems
5) Weakened underwriting mortgage standard
6) Little or no down payment and no documentation
7) Regulators, Investors and Home owners think home prices can only go up

Please pass your comments and is welcome to share

Neel Kashkari - Interim Assistant Secretary of the Treasury for Financial Stability @ Wharton Financial Conference