Australian Capital Territory

Lessons for Australia from the Collapse of Lehman Brothers


From: Monday October 13, 2014, 5:30 pm

To: Monday October 13, 2014, 7:30 pm

The Modern Economics of Mortgage Lending - Professor Rohan Pitchford 5:30pm - networking drinks and finger food 6pm - Seminar and Q&A 7pm - networking drinks and finger food 7:30pm - close In Australia, as elsewhere, the role of securitization in mortgage lending trended upwards, and strongly in some cases. But international studies of the period prior to the GFC show securitized financing is associated with significantly higher default rates than loans originated and held by the same institution (ie banks). Why should it matter which party holds foreclosure rights? Why were low-quality securities not recognised as lemons and rejected by the market?   A popular answer to these questions is that originators sold low quality loans for the purpose of securitization, and investors bought them because they underestimated their riskiness. Yet most mortgage-backed securities were held by sophisticated financial institutions that stood to lose a significant amount of money in buying lemons. Can economics shed a light on these arrangements - and what might it mean for regulation of the mortgage market?
  Professor Rohan Pitchford is a graduate of ANU and MIT.  He is currently an ARC Professorial Fellow at ANU and has previously held Chairs at the University of Sydney and the University of Queensland. His research interests include sovereign debt negotiations (through considering the economics of the holdout problem); mortgage financing arrangements before and after the GFC and the rise of securitization; and the liability of firms. In addition to publishing on those topics in international journals, he has also published in a wide area of Australian policy issues including valuing Sydney airport land for the purposes for setting landing charges and other fees and improved arrangements for assessing public vs private ownership roles for certain services. RSVP by 10th October 2014


University House, Drawing Room

1 Balmain Cres, Acton ACT

Share this with your friends

Add to My Calendar

Australian Capital Territory

map Queensland New South Wales Australian Capital Territory Victoria Tasmania South Australia Western Australia