• Preface


• 1. Introduction: The Financial Crisis of Our Time


• Before the Great Depression


• From the Great Depression to Financial Deregulation


• From Financial Deregulation to the Savings and Loan Crisis


• 2. From Securitization to Subprime


• The Development of Securitization


• The Process of Securitization: An Overview


• Credit Enhancement


• The Subprime Difference


• 3. Before the Deluge


• Subprime Lending: To the Peak


• The Height of Subprime Lending


• 4. From the Subprime Crisis to Financial Disaster: An Overview


• The Housing Peak to Hints of Something Wrong


• The Slide Accelerates


• Mortgage-Backed Securities and Foreclosures


• No Relief in 2008


• The Climax?


• Back From the Brink


• 5. Extinctions


• Among the Ruins


• From Countrywide to IndyMac


• IndyMac


• Washington Mutual


• Wachovia


• Bank Extinctions, Banking Consolidation, and Too-Big-to-Fail


• 6. The End of Investment Banking


• Big Brains, Big Egos, and Big Pay


• Bear Stearns


• The Bankruptcy of Lehman Brothers


• Merrill Lynch: The Herd Goes to the Abattoir


• Goldman Sachs, Morgan Stanley and the Week that Remade Wall Street


• 7. When Zombies Walk The Earth


• Fannie Mae and Freddie Mac


• AIG


• Citigroup: The Biggest Zombie of Them All


• Zombies and the Future


• 8. Policy Responses and The Beginnings of Recovery


• Unfurling the TARP


• The Market Reacts


• The TARP Evolves


• Introduction of the TALF


• Instituting More Programs: The Public-Private Investment Program


• Support for the Auto Industry


• Support for Homeowners


• Green Shoots in the Financial Sector


• Initial Cost Assessment


• 9. Causes of the Financial Crisis: Macroeconomic Developments and Federal Policy


• The Basic Story


• Major Asset Price Collapse


• Concentrated Exposure to the Failing Asset Class


• Lack of Transparency and Freezing of the Financial System


• Macroeconomic Developments


• Federal Stimulative Policy and Legislation


• Attempts to Combat Mortgage Lending Discrimination and to Expand Home Ownership to Minorities


• National Homeownership Strategy


• The Causal Role of the GSEs


• 10. Causes of the Financial Crisis: The Failure of Prudential Regulation


• Regulation of Depository Institutions


• Regulation of Lines of Business


• Capital Requirements


• Interaction Between Capital Regulation and Credit Derivatives


• Regulation of Size and Scope- "Too Big to Fail "


• Restrictions on Concentration of Risk


• Regulation of Securities Markets and Supporting Institutions


• Capital Regulations


• Off-Balance Sheet Corporate Entities


• Credit-Rating Agencies


• Mark-to-Market Accounting Rules


• Complex Financial Derivatives


• The Regulation of AIG


• Poor Regulation of Mortgage Industry


• Defects in Regulatory Architecture


• 11. Causes of the Financial Crisis: From Aspiring Homeowner to Mortgage Lender


• The Borrower


• The Lender


• The Appraiser


• The Mortgage Broker


• The Mortgage Frenzy, the Originator, and Underwriting Standards


• 12. Causes of the Financial Crisis: From Securitizer to Ultimate Investor


• Purchasing Mortgages


• Creating Securities and Obtaining Ratings


• To the Ultimate Investor


• Incentives from Securitizer to Ultimate Investors


• 13. Causes of the Financial Crisis: Financial Innovation, Poor Risk Management, and Excessive Leverage


• Financial Innovation and the Creation of Complex Instruments


• Poor Risk Management


• Excessive Leverage


• 14. Causes of the Financial Crisis: Executive Compensation and Poor Corporate Governance


• Pay at Financial Firms


• Risk-Taking and Executive Compensation in the Financial Crisis


• Incentives, Risk-Taking and Compensation at Fannie Mae


• Executive Compensation and Lehman Brothers


• Incentive Conflicts


• Corporate Governance in the Financial Crisis


• 15. Consequences of the Financial Crisis and the Future It Leaves Us


• Measuring the Damage: A Warning


• The Bailout and Its Costs


• From 2006 to 2009: Our Economic World and How it Has Changed


• Reduced Circumstances: Our Economic Future


• Beyond the Merely Economic-American Recessional or American Renewal?


• Perfecting the Fatally Flawed Regulatory Regimes of the Past


• The Financial Crisis, the Great Recession, and Institutional Failures


• Fundamental Reform?


• "Too-Big-to-Fail "


• Corporate Governance, Executive Compensation, and Firms' Risk-Taking


• Conclusion: Dopes, Genius, Saints, Scoundrels, and Ordinary People

Robert W. Kolb is Professor of Finance and Frank W. Considine Chair of Applied Ethics at Loyola University Chicago. He has been professor of finance at the University of Florida, Emory University, the University of Miami, and the University of Colorado, and has published more than 20 books, including Lessons from the Financial Crisis: Causes, Consequences, and Our Economic Future and Futures, Options, and Swaps.

The Financial Crisis of Our Time investigates the mechanism by which the housing industry came into crisis beginning in 2006, and the system of incentives that led to financial disaster.