They placed limits on interest rates, prohibited deposit-taking institutions from issuing securities, and, by preventing financial institutions from merging with one another, kept most of them relatively small.
This meant that when panic selling by some troubled institutions to raise capital drove the value of mortgage related securities to virtually zero, all institutions had to change their books to reflect this minimal market value of the securities.
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The company also ran into legal trouble when the State of Washington Dept. of Financial Institutions, Securities Division found that the company was selling unregistered securities and not providing sufficient information about the company to its potential investors.
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But against that the government should balance the fact that the buyers of those securities were almost all sophisticated institutions that presumably had their own analysts.
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The credit crisis has been caused by a collapse of the housing market, which has made trillions of dollars of mortgage-backed securities held by major financial institutions worthless.
Central banks have responded by expanding loans to financial institutions, purchasing private securities and buying government debt.
So far, most of the pain from the downturn has been borne by banks and other institutions that hold debt or securities collateralized by commercial-real-estate loans.
All the more reason for the eyes of Ohioans, and indeed the Nation, to be on Wednesday's hearing in Columbus of the House Financial Institutions, Real Estate and Securities Committee.
Meanwhile, lawsuits continue to fly over the housing meltdown, with Bank of America and others embroiled in litigation with institutions who bet on mortgage securities they claim were inaccurately portrayed as safe investments.
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Government regulations mandated that certain financial institutions, such as insurance companies and money market funds, invest only in securities rated by these specific three agencies as AAA, to protect the institutions from excessive risk.
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Institutions can then price their remaining securities at equal to, or better prices.
Money market funds invest in short-term fixed-income securities or commercial paper from governments, financial institutions and corporations.
Government bailout programs have been primarily available to financial institutions and issuers, not to securities lending pools.
Once-stodgy institutions were dabbling in exotic new securities based on high-risk mortgages, leaving them exposed when the housing bubble collapsed.
While mortgage lenders and financial institutions heavily invested in American mortgage securities have struggled mightily, recent reports from the broader economy have been anything but uniformly negative.
This cartel is further aided by government laws and regulations that require, in various instances, insurance companies, money funds, banks and other institutions to hold only those debt securities rated by these agencies.
Repos increase bank interconnectedness, the thinking goes, because the same securities end up being used as collateral by multiple institutions.
The consumer asset backed securities market is a source of liquidity to financial institutions that provide federally guaranteed small business loans and consumer lending such as auto loans, student loans and credit cards.
Many financial institutions are tottering under the weight of toxic securities.
People are generally familiar with the fact that Wall Street and the largest financial institutions got hurt by toxic mortgage-related securities, but they sometimes forget that Main Street and the smaller regional and local community banks remain stuck with the hard assets of incomplete housing and other community-related construction projects.
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Bernanke enumerated a series of measures including putting upward pressure on short-term interest rates through interest payments on reserves held by financial institutions, ceasing reinvestment of principal payments on securities held by the Fed, and even selling those securities in the open market. (Read Bernanke Put Allows JP Morgan To Post Profits On 96.9% Of 2010 Trading Days).
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Remember, those were the pseudo insurance policies that a lot of financial institutions bought to protect themselves from mortgage-backed securities and other credit instruments in case they went south.
The German banking system has been one of the biggest victims of the subprime crisis, with several large institutions having taken large positions in tainted mortgage-related securities.
Now Fenster is leading the charge to bundle those residential solar leases into securities that can be sold to pension funds, insurance companies and other institutions looking for long-term investments that offer a steady cash flow.
Combine these delays with the phenomenon we have seen the last few years of Treasury granting delays to financial institutions for delivery of Forms 1099 reporting interest, dividends and securities transactions to mid-February or later (then followed by corrected versions of those same documents for several months).
In the current issue of Forbes, I write about moves by solar companies SunRun and SolarCity to bundle leases for residential photovoltaic arrays into asset-backed securities that can be sold to pension funds, insurance companies and other institutions seeking long-term investments that generate steady cash flows.
It purchased unprecedented quantities of mortgage-backed securities and other low-quality assets that threatened the solvency of many financial institutions.
While total Fed earnings include fees for services like check clearing and wire transfers provided to depository institutions, the bulk of the earnings come from interest on loans and securities acquired as a by-product of its monetary policy.
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Gandhi was the head of strategy for Morgan Stanley's institutional securities business from 2001 to 2003, when he was named co-head of its financial institutions practice.
"A large part of the recent boom in litigation has been driven by lawsuits against financial institutions, " says Joseph Grundfest, a Stanford Law professor and director of the Securities Class Action Clearinghouse.
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