Crisis of collaterals

A term that emerged in 2007 in connection with the subprime crisis. – In the USA, a considerable number of mortgage loans (covenant-light credits) granted to homeowners with a low credit rating (sub-prime addresses) – became non-performing. Because – these loans were securitized in the portfolios of many institutions worldwide, – doubts arose about the creditworthiness of business partners. Even – on the interbank money market, business faltered because – it was unknown which claims from securitizations (and here from papers of all tranches) would accrue to the individual institution. – As a result, there was a general liquidity bottleneck, which – the central banks tried to break up by providing ample liquidity. – When these measures alone failed to achieve the desired success, the German government intervened in the fall of 2008 with the German Financial Markets Stabilization Act to restore and safeguard financial market stability. – See contagion effects, bank money market, Elisabeth question, EURIBOR, guarantee fund, liquidity risk, mark-to-model approach, procyclicality, emergency liquidity assistance, originate-to-distribute strategy, quantitative easing, reintermediation, kickback effect, subprime lending, submarine effect, securitization structure, full allotment, interest rate tender. – Cf. ECB Monthly Report of September 2007, p. 33 f.(chronology of events and ECB measures in great detail), ECB Monthly Report of November 2007, p. 18 ff. (impact of the subprime crisis on individual sectors of the financial market), BaFin Annual Report 2008, p. 56 (liquidity risk management rules).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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