Number: RL34412
Title: Containing Financial Crisis
Authors: Mark Jickling, Government and Finance Division 
Abstract: In mid-2007, mounting losses in subprime mortgage markets triggered disturbances throughout the international financial system. The scale of the turmoil has been surprising, given the small size of the U.S. subprime market in relation to global financial markets. Not only is subprime a comparatively small market, its problems were known well in advance: when the rapid rise in housing prices stopped in 2006, it was inevitable that many subprime borrowers would have difficulty making payments, particularly those whose adjustable mortgage rates were scheduled to reset in 2007 and 2008. A Swiss bank CEO called subprime loan losses "probably the longest anticipated crisis we have ever seen."
Pages: 24
Date: November 24, 2008