PLSC 270: Capitalism: Success, Crisis and Reform

Lecture 13 - The Mortgage Meltdown in Cleveland << previous session | next session >>

Overview:

Professor Rae discusses the subprime mortgage crisis. Major actors are presented and analyzed, including homebuyers, brokers, appraisers, lenders, i-banks, and rating and government agencies. Major actors' incentives and risks are assessed. Professor Rae also presents a brief history of government involvement in mortgage markets. Deregulation of the industry and its consequences are explored, and Professor Rae facilitates a discussion on apportioning blame for the collapse of the U.S. housing market.

Reading assignment:

Case: "Slavic Village Subprime Lending" School of Management-Wall Street Journal Case, Demo Version (2009).

Posner, A Failure of Capitalism, "Apportioning Blame," pp. 269-287.

Class lecture:

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