Financial innovation: Wall Street's false utopia

Abstract

Purpose

The purpose of this paper is to connect the dots between subprime mortgage lending and the financial crisis of 2008.

Design/methodology/approach

Descriptive analysis of structured securities.

Findings

The innovation of structured securities was incorrectly implemented in the case of mortgage‐related securities.

Research limitations/implications

There is no centralized source for data connecting mortgages with securities, thereby making a rigorous, statistical analysis impossible.

Practical implications

The US Congress authorized $700 billion to purchase “troubled assets,” defined as “residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages … ” This paper exploits the difference between mortgages and those securities.

Originality/value

The paper extends knowledge on the topic of mortgage related securities.

Citation

Trimbath, S. (2009), "Financial innovation: Wall Street's false utopia", Journal of Accounting & Organizational Change, Vol. 5 No. 1, pp. 108-111. https://doi.org/10.1108/18325910910932232