Subprime mortgage crisis, the legal thinking &quot;Subprime crisis&quot; has been a familiar term in the world community, its full name is &quot;sub-prime mortgage crisis&quot;, from the U.S. subprime mortgage market turmoil caused by the financial crisis. In August 2007 in a bankruptcy due to subprime mortgage lenders, investment funds were forced to close, the stock market turbulence caused by severe storms hit the United States, the European Union and Japan, the world&#39;s major financial markets, the situation now with the spread of financial turmoil have been the local Following the evolution of the swept the world since the thirties of last century the most serious financial crisis. As we all know, in the United States, loans are very common phenomenon, from house to car, from credit card to the phone bill, credit everywhere, local people rarely buy a house full paragraph, almost all achieved through loans. As the U.S. unemployment and re-employment is widespread, there is a lot of credit in society with less or lower income borrowers, in order to meet the needs of different classes of loans, the U.S. mortgage market to the borrower&#39;s credit terms as the demarcation line, the mortgage loan market is divided into &quot;sub&quot; and &quot;Economy Class&quot; two levels. According to the level of credit, lending institutions discriminate against borrowers, people with low credit loans are not eligible for benefits, only in the secondary market for loans. U.S. subprime mortgage market is usually a fixed interest rate and floating rate repayment methods combined, ie: buyers in the purchase during the first few years to repay the loan a fixed rate, floating rate thereafter to repay the loan. Although the two levels of market clients are home buyers, but the secondary market lending rate mortgages are usually higher than the Bulk 2% ~ 3%. Lending institution will then sell the bank claims, the claim will be labeled by the bank package, divided into &quot;shares&quot; sold to investors and ultimately the formation of sub-prime mortgage-backed securities (commonly known as &quot;subprime&quot;). Subprime mortgages have good market prospects. Because it discriminated against or for those who do not meet standards of the mortgage market to provide mortgage loan services, so a high concentration of ethnic minorities and the economically underdeveloped areas are very popular. In 2006, 5 years before, as the U.S. housing market continued to boom, coupled with lower interest rates a few years ago the United States, the United States subprime mortgage market has developed rapidly. Subprime mortgage lender is on a high return business, lending institutions that, while lending to the sub-credit borrowers, but if the borrowers can not repay the loan, you can also use mortgage housing to end the sale by auction or means of repayment. However, as subprime lending requirements on the borrower&#39;s credit grade loans at preferential low, lenders poor credit history, so the risk subprime mortgage sector is also naturally more: International UBS (UBS) research data shows that As of the end of 2006, the U.S. subprime mortgage market, the repayment default rate as high as 10.5%, is the preferential loan market level 7 times. As of June 2006 in two years time, the U.S. Federal Reserve raised interest rates 17 consecutive times, the federal funds rate from 1% to 5.25%. Sharp rise in interest rates increased the repayment burden on home buyers. Moreover, since the second quarter of 2007, the U.S. housing market began to cool down significantly. With the rise in U.S. interest rates and falling house prices, the housing market prompted the temperature plunged, and many borrowers unable to repay on schedule, lending institutions can not be scheduled back buyers of mortgage loans. Quality of credit assets, then quickly transfer the exposure to capital markets. First of all, the subprime crisis led directly to the mortgage loans underlying the securities of various types of bonds, depreciation, and because a number of high-quality bond market was generally bearish and this penalty, while a similar number of corporate bonds and subordinated debt investments were also were sold. Second, the investment in subordinated debt and other high-risk bond funds were selling and redemption, and real estate-related stocks also suffered heavy losses, coupled with adverse market expectations to guide the United States stock indexes fell significantly recently. The interests of the chain of many commercial banks, investment banks, mutual funds and hedge funds were bring disaster and brought the money market and stock market volatility, financial market liquidity, thereby causing a serious threat. In 2007, the sub-prime crisis and gradually spread from Europe to the world, many world-renowned banks, fund companies and other enterprises that involved in the subprime mortgage crisis and claimed losses, more like New Century Financial and other lending institutions and banks endangered bankruptcy. Into 2008, the United States has more than 30 subprime lenders closed down. In China, the Bank of China, Construction Bank, ICBC, Bank of Communications, China Merchants Bank and CITIC Bank, six Chinese banks has been confirmed the involvement of U.S. subprime crisis, although one after another statement, the affected slightly, but the management of foreign exchange reserves of the country SAFE&#39;s investment in subordinated debt even more attention. U.S. report says China to buy 12 months before the subprime securities to 95 billion. In the context of economic globalization, Chinese enterprises have not been spared. Wall Street went through in September in the history of the darkest end of the week, the U.S. Treasury Secretary Henry Paulson presented to Congress a 700 billion U.S. dollars of the rescue program. The initial version of the program by the U.S. Congress simply check out a huge, free from the U.S. Treasury and the Fed decision, for the purchase of financial institutions experienced difficulties on the balance sheets of bad assets. Therefore, the program called &quot;Troubled Asset Relief Program.&quot; The program of the 1980s the U.S. government for relief for the savings and loan associations is quite similar to the reorganization of the Trust Fund. To understand the &quot;problem assets relief program&quot;, we must first understand the bad assets. In general, non-performing assets are classified into two categories, non-performing assets of enterprises and banks of bad assets. Business enterprise non-performing assets is not dealt with the net losses and hidden assets (funds) unpaid debts, and according to the financial accounting system shall provide for impairment of assets not to mention all kinds of problem assets, the amount of expected losses. Non-performing assets of banks mainly refers to non-performing loans, commonly known as bad debts. In other words, bank loans can not be at a pre agreed time limit, the interest rate to recover the principal and interest, which include overdue loans (loans to the loan periods have not yet), doubtful loans (loans overdue for more than two years) and doubtful loans ( need not justify writing off the loans) three conditions, but also includes real estate property portfolio. In China, since 1998, our assets are divided into &quot;normal&quot;, &quot;concern&quot; and &quot;substandard&quot;, &quot;suspect&quot;, &quot;loss&quot; or &quot;five categories.&quot; July 1999, the central bank issued a &quot;full implementation of the PBC on the work of loan classification notice&quot; and &quot;loan risk classification guidelines (for trial implementation).&quot; In accordance with the provisions of the People&#39;s Bank, now usually earmarked reserves extraction ratio: 2% interest, sub-25%, suspicious 50%, 100% loss. After the three categories as non-performing assets. It is clear that the U.S. subprime mortgage crisis caused a large number of subprime loans can not be repaid on the part of bad assets, that is, the United States &quot;in Asset Relief Program,&quot; the protagonist. Both developing and developed countries, the banking industry exists or ever existed, in varying degrees of asset deterioration, in some countries the proportion of non-performing assets of banks and even shocking, the international community in recent years the problem of bad assets on the banking industry is also very concerned about &quot;Wall Street Journal&quot; as early as May 1997 on the published article, described the banking crisis threatening world prosperity, world economic crisis caused by the &quot;time bomb.&quot; For this reason, take various measures to address non-performing assets, to avoid the bad assets on the financial crisis has been induced by all countries attach great importance to financial institutions, the primary issue. Some countries and banking institutions and practice has fully proved that the concern is certainly important to monitor non-performing assets, but, once the bad assets, how effectively, as soon as possible disposal are the most crucial. As countries and the causes of non-performing assets of different asset condition and economic environment is different, so different countries to take on the disposal of bad assets model (including the loss of commitment to the way) and focus are different. But in the past, the specific operation, the disposal of bad assets and methods of the main measures generally include the following: 1, strengthening the system of bad debt reserve, bad debt write-offs and optimize assets. If the United States on various bad assets (loans classified in the following five categories) were 20%, 50%, 100% loan loss provisions, and clear and strict provisions of the loss reserve account to offset losses, prompted the banks to solve non-performing assets. Singapore, South Korea, India and Indonesia Waldo higher provisions for doubtful debts, and some can even keep additional. Indonesian government in 1997 to shield state-owned bank&#39;s bad debt write-off 460 million to make state-owned banks non-performing loans to total outstanding loans increased from 6% to 3%. 2, eliminating bad assets by the specialized agencies. Full clean up bad assets, the bank&#39;s bad assets out of the specialized agencies to operate. United States, Sweden and Japan have had this operation. Established in 1989, the United States savings and loan institution crisis, rtc solution, rtc on receiving 399 billion U.S. dollars of assets were sold or recycled, the actual recovery of 358 billion U.S. dollars. 3, asset restructuring. Cultivate qualified to meet the market economy, has rich experience in intermediary capital operation, established its own market-oriented corporate governance structure and reasonable supervision, and incentive mechanisms to prevent the administrative factors on the market, the irrational behavior of asset restructuring intervention; cultivate professional managers class professional families from the private sector and select the best elements bankers handling non-performing assets, which prohibits government officials as the major enterprise management personnel. 4, and asset securitization. Full use of the financial market, especially the stock market will discount the sale of bank assets or a part of the securitization, shrink the size of bad assets. After the occurrence of non-performing assets will be directly discounted high-quality bank carefully Jing Ying Chu Shou Ji, Sui Ran Hui Chengshouyiding up the losses, Dantaibufen fact that it was preservation of assets, Daikuanfengxian be Huajie Huozhuan Yi. 5, debt-equity swap. As early as the 1929 financial crisis, the stock market crash and economic depression and in order to avoid the business can not repay bank loans, which led to bank failures, Italy, once the company could not repay the bank loan into equity business. Ilya after the Italian Government has set up holding companies, bank holding companies by buying shares of these corporate restructuring, reorganization is successful, then sold to private enterprise. 6, a direct capital injection. Capital injection of government funding and private investment to fund. In fact, in addition to direct government capital injection, to encourage banks to merge is also a capital injection approach. South Korea, Indonesia, India and Hong Kong have adopted such measures. 7 bankruptcy liquidation. Liquidation is the final form of non-performing assets to solve. For those who are bankrupt and no future business, bankruptcy debt may be the only means of In the scope of asset disposal form the asset can be divided into: equity asset classes, debt asset class and in-kind asset classes; asset disposition ultimate disposition of the assets into cash and short-term disposal. Ultimate disposal include liquidation, auction, tender, negotiated transfer, cash discounts, etc., periodically disposed of mainly debt-equity swap, debt restructuring, litigation and litigation preservation, are provided for debt, asset replacement, corporate restructuring, re-investment in physical assets improved physical asset rental, investment in physical assets, etc.. But for our country, it is clear that preventive measures than remedial and therefore, experts suggest should be the following aspects: (A) is highly concerned about the economic cycle fluctuations to the risks, take precautions, the risk of a comprehensive concept of building a solid. Since 2002, China entered a new round of economic growth cycle has been strong domestic commercial banks in profit due to loan demand impulse and excess liquidity caused by the dual pressures driven by profit, loan growth, particularly the high rate of growth of personal loans, the balance in the profit and risk, most banks tend to the former. But the subprime crisis on the biggest lesson is that commercial banks in the upward phase of economic growth will lead to economic growth ignore the downside risk level risk even crisis. China&#39;s economy has experienced a nearly six-year period of rapid economic growth, whether it is economic to run itself from the cyclical characteristics of macro-control situation or point of view, the next few years China&#39;s economy likely to slow the momentum of high growth. Once the occurrence of cyclical fluctuations of economic, commercial banks will bear the brunt of loan quality. (B) is highly concerned about the personal housing loans and personal housing mortgage loan risk. In recent years, for strategic and operational restructuring to adjust the needs of domestic commercial banks generally will credit as a major business and revenue growth. However, after the above analysis, in the current asset prices quickly rising, the future against the background of increasing pressure correction, and not simply a personal loan or a consumer loan as a low-risk loans and not indiscriminately to develop. Data show that individual long-term housing loans growth this year was to accelerate the trend, the first 5 months of additional personal and long-term housing loans reached 225.3 billion yuan, up 267.7 billion yuan more than the increase; July-funded commercial banks Shanghai individual housing loans 6 surge again on a substantial increase in lending, new mortgage month 5.87 billion yuan, increasing 1.32 billion yuan more than last month, equivalent to the second quarter, all incremental. Rapid growth of consumer credit strengthened the momentum of a long-term bank credit, banks increased the risks of bad assets to increase. Therefore, the subprime crisis on the second revelation of commercial banks is that, should be highly concerned about the risk of personal loans. To do this, commercial banks should strengthen the credit system construction, improve risk prevention. (C) is to be effective to prevent the credit funds into the stock market. Subordinated debt from the credit market crisis quickly passed to the capital market, but also caused great damage on the credit markets shows that product innovation is accelerating in the modern financial system, the risk of inter-market spread has accelerated noticeably than before. Bank funds into the stock market in recent years, the fact that commercial banks will finance the security challenge. Recently, regulators, credit funds have been diverted to the company&#39;s eight bank branches have received administrative punishment. Is from a commercial bank itself, conscious attention should be credit funds into the stock market triggered the credit risk, from the strengthening of credit review, post-loan management and other aspects to prevent to prevent the credit funds into the stock market. In short, the current defense of national economies has just kicked off the global economic situation is not optimistic about the subprime crisis is just the fuse. In addition to subprime loans, the U.S. lending institutions have no credit to the extent and have no income borrowers who borrowed heavily. These loans generally approved within five years without paying any interest, but the loan by the borrower to pay after 5 years of high interest, so far, the sub-sub-loans are still interest-free period, that is, sub- subprime mortgage crisis has not yet emerged. Address the current increasingly grim global economic crisis, while non-performing assets acquired bank can effectively curb the spread of financial crisis, but the Government after the acquisition and holding of bad assets and how to ensure the safety of bank deposits to financial institutions, high-quality collateral to provide liquidity ; how to adjust the capital structure of financial systems, promote the issuance of new loans; how to survive the financial crisis, be in the hands of non-performing assets Anquan of Chuzhi is Geguo financial sector Zuizhong need to be resolved.
Pages to are hidden for
"Subprime mortgage crisis_ the legal thinking"Please download to view full document