11. Institutions and Incentives in Mortgages and Mortgage-Backed Securities

Capitalism: Success, Crisis and Reform (PLSC 270)

Guest speaker Will Goetzmann, Director of the Yale International Center for Finance and professor at the Yale School of Management, provides a brief history of debt and financial crises. Professor Goetzmann begins with a discussion on debt slavery in the ancient world, and moves on to real estate financing in New York City. Professor Goetzmann also presents recent research by himself and others on the collapse of the real estate market. He explores the notion that the collapse of the mortgage market followed from the fallout of the larger financial crisis, rather than the other way around. Data on the real estate market is presented and discussed. Larger claims about responsibility of different players for the economic crisis are briefly assessed.

00:00 - Chapter 1. Financial History, with Will Goetzmann
24:20 - Chapter 2. Current Financial Crisis
26:56 - Chapter 3. Price Growth vs. Subprime Approvals
35:12 - Chapter 4. Estimating the Relationship between Past Growth and Future Growth in Mortgage Prices
40:27 - Chapter 5. 2006 Mortgage Regressions
45:44 - Chapter 6. Evidence for Three Demand Effects and Loan Level Likelihood of Approval

Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses

This course was recorded in Fall 2009.