Such Risky Mortgages Considered Subprime â€Myassignmenthelp.Com

Question: Discuss About The Risky Mortgages Considered Subprime? Answer: Introducation The Big Short is a drama or comedy movie and it depicts the actual story of the financial crisis with the help of a number of male investors in finance world; they anticipated the housing bubble and credit in becoming filthy rich. During this period, the banks have started to fie bonds consisting of riskier mortgages. Such risky mortgages are considered as subprime mortgages due to which the housing market had popped up on such bad loans. This had been evident in terms of disappearance of $5 trillion related to pension money and value of real estate, $401,000 related to savings. Along with this, 8 million individuals had lost their jobs, while 6 million had lost their houses (Cheng, Raina and Xiong 2014). In this movie, it has been found that the banks had wrapped up along with selling the mortgages, since they had been solid investments. They had assumed that no loan default would take place on the loans provided in buying the houses. At the time of bundling of the bankers and selling of subprime mortgages, they had acted in accordance with their best interest. Thus, this could be adjudged as an ethical egoism, which is an action of increasing self-interest. In this case, acting greedy is good, instead of trying to be balanced or prevent anything (Lewis 2015). In order to prevent such credit crunch and housing bubble in US, it is necessary to depict the actual risk and return without the provision of any governmental support. This would reduce the pressure regarding the fickle regulators lacking ability to stop the growing bubble. This would help the investors and the American individuals to avoid over-excitement about the market. References: Cheng, I.H., Raina, S. and Xiong, W., 2014. Wall Street and the housing bubble.The American Economic Review,104(9), pp.2797-2829. Lewis, M., 2015.The big short: Inside the doomsday machine (movie tie-in). WW Norton Company.