Subprime US Banking Financial Crisis Explained Part 3

So from what I understand, a structured investment vehicle is really like a hedge fund in the housing market, only it derives its value from home equity, meaning that people basically traded securities of which the only real value was the market price of the collateral and the dept owed by the borrower, which he/she may or may not be able to pay? ...If that's correct than I don't see how it's possible not to expect a crisis from such a ridiculous investment vehicle.

I have a question,why do we have to have an institution setting the interest rate rather than leaving it to the market,it seems to me that manipulating the interest rate by the fed is what got us in trouble to start with.I think it is impossible for anybody or any institution for that matter given the size and perplexity of our ecconomy to predict the best interest rate at any moment

Hey Coriolanus,
The thing is the FED actually does not "set" interest rates the way most people think.

Basically since they are so big they buy and sell in the open market, causing changes in the money supply, which then causes changes in the interest rates. This is important because at some times we need lower interest rates than other, like right now for example, and the market may not dictate this at the proper times.

There are also about 500 other reasons but I'm out of comment room!

Thank you, nice job!

Great work Dave .knowledge is power, shep from Ireland

what do i need to study to be able to articulate this crisis the way you re able to
what would be a good major in school to take on

can anyone help me?

from what im aware banks took assets off balance sheets to avoid having to hold capital.

for that to happen it needs to be a true sale rite?

does this not mean the assets no longer belongs to the bank? how come it comes back onto thier balance sheet and gets written down??

Hello David, why did the Federal Reserve start to raise interest rates in late 2004?

2007 uptick rule removed - the gang bang by wall street started by targeting aggressively banking stock,
GS, BOFA, MS, MLYNCH, LEHMAN, BEAR STEARS
ask the fat cats they laughing their way to the bank everyday

The Commodity Futures Modernization Act of 2000 or CFMA (H.R. 5660 and S.3283) is United States federal legislation which repealed the Shad-Johnson jurisdictional accord, which had banned single-stock futures in 1982. The legislation also provided certainty that products offered by banking institutions would not be regulated as futures contracts.