Where Do You Stand
September 2008 Results and Comments
As of 6:00 p.m. Eastern time,
10 October, 7,698 responses.
In each issue of the CFA Institute Centre's monthly newsletter, Advocacy Update, we seek readers' views on
a topical issue, hoping to better inform our work on the issues,
concerns, and topics of most interest to you and your local financial
markets.
|
Question 1
|
|
The primary cause of the subprime crisis was:
You answered:
-
A normal correction of market excess and speculation in the real
estate mortgage area: 19%
-
A failure of regulation: 11%
-
A serious breach of ethics and integrity: 9%
-
All of the above: 52%
-
Other: 9% Responses include: Excess (leverage,
speculation, money creation/liquidity); Greed (on part of all
players); Abnormal market correction; Ineffective risk
management; Lack of internal controls/lack of regulation;
Government policy (Federal Reserve, promotion of mortgages to
those who couldn’t afford them, promotion of
consumption/deregulation)
View complete responses as of:
23 September (PDF);
24 September (PDF);
25 September (PDF);
29 September (PDF);
2 October (PDF)
|
|
Question 2
|
|
Do you believe that financial institutions have fully and fairly
disclosed the value of their assets?
You answered:
-
Yes: 5%
-
No: 47%
-
Some have, some have not: 48%
|
|
Question 3
|
|
To what extent are the following participants to blame for the
creation and magnitude of the subprime crisis?
You answered:
|
|
Not at all
|
|
|
|
Completely
|
Weighted Score
|
|
|
1
|
2
|
3
|
4
|
5
|
|
|
Individual real estate speculators who took out the loans in
the first place.
|
10%
|
19%
|
23%
|
32%
|
16%
|
3.25
|
|
Mortgage underwriters and their misapplication of loan
standards.
|
1%
|
3%
|
10%
|
45%
|
41%
|
4.23
|
|
Financial firms that engineered and proliferated highly
structured mortgage-backed securities.
|
3%
|
9%
|
18%
|
40%
|
30%
|
3.83
|
|
Financial firms that hold these securities — often in
off-balance-sheet structures — with inadequate risk and
internal control systems.
|
1%
|
6%
|
19%
|
42%
|
32%
|
3.99
|
|
Credit rating agencies and careless or negligent ratings on
mortgage-backed securities.
|
1%
|
6%
|
16%
|
42%
|
36%
|
4.05
|
|
Lax regulators and insufficient regulation of investment and
banking institutions.
|
4%
|
15%
|
24%
|
33%
|
23%
|
3.56
|
|
|
Question 4
|
|
The level of governmental support through bailouts is:
You answered:
-
Reasonable and necessary: 37%
-
Should not have been done and should go no further: 9%
-
Should go further in some cases in order to prevent greater
collapse of markets: 22%
-
Excessive and inappropriate; taxpayers should not assume losses
of the financial sector: 24%
-
Other: 8% Responses include:
Excessive/inappropriate/unfair/unreasonable BUT necessary under
the circumstances; Too ad hoc and inconsistent in approach; Those
who made bad decisions should suffer consequences (investors and
management); Action is contrary to our market system; Action
should have been taken earlier
View complete responses as of:
23 September (PDF);
24 September (PDF);
25 September (PDF);
29 September (PDF);
2 October (PDF)
|
|
Comments
|
|
Any general comments on the causes of
or proposed solutions to the credit crisis?
You answered:
There was greed at all levels.
The Federal government/Congress/political system are to blame,
including:
-
Congress forced the concept of affordable housing
-
Congress coerced creation of lending practices
-
Federal Reserve provided “easy money”
-
over expansion of credit
-
creation of Fannie/Freddie big mistake
-
predatory lending
-
poor regulatory oversight
More focus should be on those who caused the problems, including:
-
credit rating agencies
-
corporate investors
-
banks
-
mortgage brokers
-
underwriters
-
corporate shareholders
-
actual homeowners
|
