Title

Markets, Systemic Risk, and the Subprime Mortgage Crisis

Document Type

Article

Comments

The most up-to-date version of this piece can be found in the Duke Law Scholarship

Abstract

The subprime mortgage crisis is undermining financial market stability and has the potential to cause a true systemic breakdown. This short and accessible essay, which is based on the author's 2008 Roy R. Ray Lecture at SMU Law School, uses this crisis to demonstrate that existing protections against systemic risk, which focus on banks and largely ignore financial markets, are misguided. Because companies increasingly access financial markets without going through banks, an effective framework for containing systemic risk must focus on markets.

Date of Authorship for this Version

March 2008