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The global financial crisis (GFC) of 2007–2008 had far-reaching consequences for the global economy, triggering widespread economic turmoil. We use the event-study method to investigate whether investors priced the effect of significant events before the Lehman Brothers' bankruptcy in European and Asia-Pacific banks. Abnormal returns on the event days range from −4.32% to 5.03% in Europe and −5.13% to 6.57% in Asia-Pacific countries. When Lehman Brothers went bankrupt on September 15, 2008, abnormal returns averaged the lowest at −4.32% in Europe and −5.13% in Asia-Pacific countries. The significant abnormal returns show that Lehman Brothers' collapse was a turning point, and investors paid attention to the precrisis events as warning signs of the oncoming crisis.

This research chapter argues lawyers, not just bankers, for good and bad have been involved in all aspects of the current financial crisis. Indeed after examining and assessing various civil causes of action related to the “Mortgage Meltdown” and its aftermath, it appears if lawyers had been less involved or had raised warnings about legal risks as well as economic ones, whether the financial impact would have been so disastrous and widespread. Indeed by raising cautionary flags earlier, lawyers might have better served both the clients’ and the public's long-term interests. This view thus complements issues related to criminally prosecuting mortgage fraud that has also seen explosive growth and where lawyers have again played central roles. Lawyers have been involved at the back end too in terms of legislation or resolving issues such as bankruptcies and foreclosures.

The chapter examines several causes of action the media have reported being raised by various parties and how they illustrate the role lawyers, regulations, and legislation have played in the origins and evolution of the current crisis. The cases explored involve individual parties and class actions. The chapter also analyzes in detail a case representing opposite ends of the origination and foreclosure closure spectrum by describing a derivative shareholder suit against corporate officers and directors actively involved in creating the subprime mess, who were then sued for covering up the inevitable results from failed loans in the reports to shareholders. It thus illustrates the legal complexities emerging from the abuse of complex financial and organizational structures impacting many investors. Finally the chapter concludes by arguing there is a public policy need not only for financial regulatory reform but also for a tightening in the professional standards and regulatory penalties imposed on lawyers involved in such transactions.

The following is an introductory profile of the fastest growing firms over the three-year period of the study listed by corporate reputation ranking order. The business activities in which the firms are engaged are outlined to provide background information for the reader.

In the aftermath of the Great Recession, over 500,000 families have been evicted from their homes since Spain’s property market crashed in 2008. The response of Spanish local communities has been the emergence of a networked social movement, Plataforma de Afectados por la Hipoteca (PAH), endeavouring to build a more sustainable future through upholding the right to housing. This chapter examines the ability of the PAH social movement to uphold the right to housing and prompt social and institutional change in Spain.

This is a single-case study of the PAH social movement in Spain. The data are of three types: texts, photos, and films disseminated via the mass media, social networks, and PAH websites; informal conversations with PAH participants from Barcelona and Madrid; and observations and personal interviews held in two local PAH groups, that is, Móstoles and Elche.

In this chapter, first we explore the birth of PAH and its later spread from Barcelona to hundreds of cities in Spain and beyond, as a social reaction to the economic recession and decisions made by political, administrative, and financial institutions in response to the economic crisis. Then, by analysing the internal dynamics of two PAH groups, we discuss how networked social movements such as PAH can create spaces of citizenship that challenge taken-for-granted principles of capitalism, prompting social change. Finally, we uncover how, due to PAH’s advocacy work addressing a structural lack of emergency and social housing, the Spanish public administration is developing new roles and allocating new resources to guarantee the right to housing, a social policy area historically neglected in Spain.

New social housing offices are being established in municipalities in Spain as a result of PAH’s advocacy work.

The strengthening of social capital and movements in the aftermath of the economic crisis has the ability to prompt investment in social areas such as housing.

Purpose – This chapter asks whether the current economic crisis, precipitated by defaults in subprime mortgages, could have been postponed or perhaps even avoided?

Design/methodology/approach – I begin by exploring an aspect of American culture that I call the moral philosophy of “just deserts.” The term “just deserts” is derived from the title of Alperovitz and Daly's (2008) book, Unjust Deserts: How the Rich Are Taking Our Common Inheritance and Why We Should Take It Back. To argue for greater equity in the distribution of wealth, the authors return to the 17th century writings of John Locke who helped establish the rules of property ownership that determine who is entitled to get what in the way of material goods. Locke's writings, infused with Protestant theology, became the basis of Western law and morality. Economic theory, on which the policies that led up to the latest crash and the responses to it, draws heavily on Locke's ideas.

Findings – Holders of subprime mortgages who have lost their homes, according to this thinking that has become intrinsic to our culture, did not deserve to be given mortgages or to obtain homes. Paying these mortgages for them might have postponed or even prevented the crash and the collapse of the financial system. Rational as this seems, it was not even proposed, because it would have given people something they had not earned and hence were not believed to deserve.

Research limitations/implications – The chapter is based on cultural and historical analysis. It cannot be tested empirically since this would require policy makers to change the assumptions on which its economic programs rest.

Practical implications – The practical implications of the chapter are to stimulate examination and discussion of the cultural value of just deserts and the assumptions on which it is based.

Originality/value – The reintroduction of culture and its assumptions into debates over public policy will improve understanding and enable us to avoid repeating social practices that have had negative effects.

Both consumer and corporate credit ratings agencies played a major role in the US subprime mortgage crisis. Equifax, Experian, and TransUnion deployed a formalized scoring system to assess individuals in mortgage origination, mortgage pools then were assessed for securitization by Moody's, S&P, and Fitch relying on expert judgment aided by formal models. What can we learn about the limits of formalization from the crisis? We discuss five problems responsible for the rating failures – reactivity, endogeneity, learning, correlated outcomes, and conflict of interest – and compare the way consumer and corporate rating agencies tackled these difficulties. We conclude with some policy lessons.

The Bureau of Economics in the Federal Trade Commission has a three-part role in the Agency and the strength of its functions changed over time depending on the preferences and ideology of the FTC’s leaders, developments in the field of economics, and the tenor of the times. The over-riding current role is to provide well considered, unbiased economic advice regarding antitrust and consumer protection law enforcement cases to the legal staff and the Commission. The second role, which long ago was primary, is to provide reports on investigations of various industries to the public and public officials. This role was more recently called research or “policy R&D”. A third role is to advocate for competition and markets both domestically and internationally. As a practical matter, the provision of economic advice to the FTC and to the legal staff has required that the economists wear “two hats,” helping the legal staff investigate cases and provide evidence to support law enforcement cases while also providing advice to the legal bureaus and to the Commission on which cases to pursue (thus providing “a second set of eyes” to evaluate cases). There is sometimes a tension in those functions because building a case is not the same as evaluating a case. Economists and the Bureau of Economics have provided such services to the FTC for over 100 years proving that a sub-organization can survive while playing roles that sometimes conflict. Such a life is not, however, always easy or fun.