2008 Financial Crisis - Causes

  • AIG
    • AIGFP
    • Securities Lending / Repos
    • GICs
    • Risk Management Generally
  • CDS, CDOs
  • Derivatives
  • Fear / Greed
  • GLBA - Gramm–Leach–Bliley - Repeal of
  • Leverage
  • Mark to Market Accounting
  • Monolines
    • MBIA, AMBAC
  • Mortgages
    • Origination
    • Subprime
  • Rating Agencies
    • Moody's, Fitch, Standard and Poors
  • Real Estate
    • RMBS
    • CMBS
  • Regulation
    • OTS
    • State Insurance Regulators
    • SEC
  • State insurance regulation was not a factor in the economic downturn and should not be swept into any proposed financial services overhaul.

2009 0402 - NCOIL Letter to Senators Dodd, Frank, Shelby, Bachus - 2p

  • AIG’s U.S. Insurance Companies are Solvent
    • The problems at AIG necessitating a Federal loan are not with its insurance subsidiaries.
    • The problems stem from the operations of AIG’s holding company, its financial products division, and its securities lending division, regulated at the Federal level by the Office of Thrift Supervision (OTS).
    • The State regulated insurance subsidiaries remain solvent and able to pay claims.
    • Throughout the liquidity crisis at the AIG holding company level, consumers remained protected by State rules preventing the holding company from simply raiding capital from its profitable and well-capitalized insurance subsidiaries. 
    • While the AIG insurance businesses and their State regulators were not part of the problem, they will be a key part of the solution.

2008 1006 - Letter - NAIC to GOV - Praeger to Waxman, Davis - [link to NAIC Page - 4p]

Bill POSEY (R-FL).  I think fundamentally we all agree that the whole crisis was caused by greed, pure and simple, and there is more than enough blame to go around.

  • 2009 0305 - GOV (House) - Perspectives on Systemic Risk
    • [PDF-254p, VIDEO-YouTube-Part 1of 2 - Bad Copies] - <mp3, mp4> - R
    • House -  Committee on Financial Services - Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises
  • 1976 0304, 0309, 0311, and 0316 - GOV (House) - The Financial Reform Act of 1976 - Part 1
    • [PDF-589p-GooglePlay]
    • (p232) - FHLB - Statement of the Federal Home Loan Bank Board on the Financial Reform Act of 1976
      • One promising approach is to encourage more S&L's to issue mortgage backed bonds that will be more attractive to pension funds and life insurance companies than the underlying mortgages themselves.
  • Commentators on the financial and economic crisis of 2007-2008 have blamed "mark-to-market accounting" for much of the crisis; indeed, one estimate is that simply relaxing accounting rules on how companies report their finances to the public could cure "70% of the problem."1
  • 1. See Newt Gingrich, Suspend Mark-to-Market Now!, FORBES.COM, Sept. 29, 2008,
    http://www.forbes.com/2008/09/29/mark-to-market-oped-cx ng_0929gingrich.html (citing BRIAN
    S. WESBURY & ROBERT STEIN, MARK-TO-MARKET MAYHEM 2 (2008), http://www.ftportfolios.com/Commentary/EconomicResearch/2008/9/25/mark-to-market-mayhem (stating that mark-to-market accounting has caused 70% of the financial crisis without elaborating on the basis for this quantitative conclusion)); see also William M. Isaac, How to Save the Financial System, WALL ST. J., Sept. 19, 2008, at A23 (stating that mark-to-market accounting is the "biggest culprit" in the financial crisis).

2009 - LR - One Cheer for Credit Rating Agencies: How the Mark-to-Market Accounting Debate Highlights the Case for Rating-Dependent Capital Regulation. John P. Hunt - 31p

  • John MICA (R-FL). Mr. Turner, did you think Glass-Steagall, the repeal——
  • Lynn TURNER (SEC-former Chief Accountant). I think the repeal of Glass-Steagall was a contributing factor here.
  • Mr. MICA. OK, Mr. Commissioner?
  • Eric DINALLO (New York State Insurance Department-Superintedent / Commissioner). I agree.

GOV (House) - The Causes and Effects of the AIG Bailout- AIG Bailout Oversight Hearing, Panel 1 - [PDF-171p,