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Bernake suggests Panic triggered financial crisis?

In an April 13th 2012 speech at the Russell Sage Foundation and The Century Foundation Conference on “Rethinking Finance” in New York, Federal Reserve Chairman Ben Benanke suggested that losses in subprime mortgage portfolios had less or far less to do with the financial crisis than classic financial panic.

The chairman pointed out that in 2007, the total quantity in subprime mortgages outstanding was less than $1 trillion, and that judged in relation to global markets, aggregate exposure to subprime markets was modest.

The chairman noted that daily paper losses on global stock markets often exceeds the losses suffered on subprime mortgages suffered during the entire subprime crisis, without any ill effects on market functioning or the economy.