The Credit Crisis

The Credit Crisis

Cheap money, an uncontrollable appetite for multi-leveraged, risky debt -- both corporate and mortgage-related -- hedge funds built around exotic financial instruments and financial institutions that eschewed reliable credit standards in a seemingly unquenchable thirst for growth are the elements that have worked in concert to create a level of credit market turmoil not seen since the Great Depression.  Even more remarkable is how some of the most respected names in banking and finance fell prey to poor credit judgement.  CreditPulse will run a series of articles that takes a closer look at some of the fundamental mistakes that created this crisis and how they can be avoided in the future. 

Recent Articles

Federal Reserve Chairman Ben Bernanke will go down in the history books for launching an unprecendented range of unconventional, controversial programs to fight a financial crisis, a recession and slow economic growth.  "Activist bent."  

Shortly after Ben Bernanke was nominated to the Federal Reserve Board by President George W. Bush in 2002, he wrote a paper in which he argued that monetary policy, rather than President Ronald Reagan's economic policy, was one of the main reasons for the economic boom of the 1980s and 1990s.

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Vanguard founder John C. Bogle points the blame for the credit crisis at more than just easy credit, cavalier risk attitudes and complex derivatives.  A breakdown in traditional ethical standards and managerial self-interest over company-interest are also to blame, says Bogle.

John C. Bogle, the founder and former chief executive of The Vanguard Group, one of the world's largest investment management firms with approximately $1.3 trillion in assets, has weighed in with his views of the current financial crisis in a profound op-ed published in today's WSJ.

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Stanley O'Neal former CEO of Merrill Lynch, James Cayne former CEO of Bear Stearns and Charles Prince former CEO of Citigroup all lost their jobs within a two and a half month period between Oct. 30, 2007 and Jan. 8, 2008 as the result of huge losses due to poor credit decisions.  

Over the past decade, in an environment of cheap money and sustained economic growth led by exports and consumer spending, Wall Street investment firms and their global counterparts discovered that soaring profits could be generated through high yield bond offerings based on the riskiest

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