Cases Analysis on the 2007-2009 Financial Crisis

Please select TWO of the following topics. Write the analysis report on each one of them. The topics listed below can be easily researched because considerable media attention has been devoted to the subject. A lot of information is available at online sources that you can find by using a search engine and inserting a few key terms or phrases. Databases such as Lexis-Nexis Academic can also be electronically accessed via school library’s website.

1. Impact of the Credit Crisis on Financial Market Liquidity: Explain the link between the credit crisis and the lack of liquidity in the debt markets. Offer some insight as to why the debt markets became inactive. How were interest rates affected? What happened to initial public offering (IPO) activity during the credit crisis? Why?

2. Cause of Problems for Financial Institutions during the Credit Crisis: 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.

3. Future Structure of Fannie Mae: Fannie Mae plays an important role in the mortgage market, but it suffered major problems during the credit crisis. Discuss the underlying causes of the problems at Fannie Mae beyond what has been discussed in the text. Should Fannie Mae be owned completely by the government? Should it be privatized? Offer your opinion on a structure for Fannie Mae that would avoid its previous problems and enable it to serve the mortgage market.

4. Bailout of AIG: Review the arguments that have been made for the bailout of American International Group (AIG). If AIG had been allowed to fail, what types of financial institutions would have been adversely affected? That is, who benefited from the bailout of AIG? Do you think AIG should have been allowed to fail? Explain your opinion.

5. Executive Compensation at Financial Institutions: Discuss the compensation received by executives at some financial institutions that experienced financial problems (e.g., AIG, Bear Stearns, Lehman Brothers, Merrill Lynch, Washington Mutual). Should these executives be allowed to retain the bonuses that they received in the 2007–2008 period? Should executive compensation at financial institutions be capped?

6. Role of the Treasury and the Fed in the Credit Crisis: Summarize the various ways in which the U.S. Treasury and the Federal Reserve intervened to resolve the credit crisis. Discuss the pros and cons of their interventions. Offer your own opinion regarding whether they should have intervened.

Submit a 6-10 page report by Feb.9 (Tuesday), 2016.

Important Note: You must cite all the references properly in the report, which needs to be submitted in the Blackboard’s SafeAssignment to check for plagiarism.