The Big Short Movie Analysis

Executive Summary Lehman Brothers were an investment bank involved in transactions worth billions of dollars and one of the most powerful investment banks in the world. Lehman Brothers collapsed in 2008 following bad investment in the sub-prime mortgage market and used bad accounting practices called Repo 105 transactions to try and cover up the bad assets. This report sets out the use of the fraud triangle when describing the actions which led to the collapse. The pressure applied on the bank, the opportunity due to the lack of regulation to carry out the actions and the ability of the bank to rationalise their decision making.

Others were forced to default on payments attained largely through ill-advised credit, and now find themselves even worse off than before. Someone had to see it coming though, right? Surely one of the largest financial collapses in the modern era, and certainly in the modern financial period, must have been caused by someone, or something. It turns out it was

In Addition to maldistribution stood the credit structure of the economy, some farmers were in deep land mortgage debt, so they lowered their crop prices in order to regain credit, and because the farmers were no longer accountable for what they owed banks. Across the nation the banking system found themselves in constant trouble. In America both small and large bankers were concerned for their survival, so they began investing recklessly in stock markets and granting unwise loans. These unconscious decisions would lead a large consequence, such as families losing their life savings and their deposits became uninsured. “ More than 9,000 American banks either went bankrupt or closed their doors to avoid bankruptcy between 1930 and 1933.”Although

1) Introduction Management and leadership practices are helpful and useful to individual's prosperity and that of our organization. Leadership and management theories concentrate on what qualities recognize and distinguish between leaders and followers in an organisation. Leadership can be characterized as a procedure by which an individual impacts others to accomplish a target and coordinates the organization in a way that makes it more coherent and cohesive. On the off chance that you have the longing and willpower, you can turn into an effective leader. Great leaders are creating and developing through a ceaseless procedure of self-study, experience, training and education.

It would seem the government did not fail to prosecute the executives responsible for the mortgage fiasco. “The Justice Department has an ethical obligation not to bring cases unless they have a better than 50% chance to convict. They argued the merits of each case and always came up short of the evidence necessary for a successful conviction. Greed is not a crime.” (Henning, 2015) The Assistant attorney general Lanny Breuer was not confident in his ability to prove criminal intent and therefore has not filed charges.

The Dodd-Frank Act introduced major American regulatory reform such as the end to protect financial institutions that are too big to fail (Lasher, 2014). During the financial crisis, the government was involved in protecting some institutions (e.g., Washington Mutual, Wachovia, etc) while not protecting others (e.g., Lehman Brothers). Additionally, the Dodd-Frank Act established changes requiring “mortgage lenders to ensure that borrowers have the ability to make payments,” which could have led to penalties if the lenders were not in compliance (Lasher, 2014). This provision of the Act can avoid lenders to offer products (e.g., no documentation loans) that could increase foreclosures. Due to the inconsistency of credit ratings on CDO’s during the financial crisis, the Dodd-Frank Act created a department that oversees rating agencies (Lasher, 2014).

Introduction- The leadership and management are two important pillars of modern day business. “You manage things; you lead people” Grace Hopper (retired Admiral, U.S. Navy). On one hand managers, not only motivate people but they also set the course of direction and organize to achieve the targets.

During the Great Depression new organizations formed from the National Housing Act of 1934. Organizations like HOLC and FHA (Federal Housing Administration) were placed to assist homeowners unable to pay their existing mortgages and boost the overall housing market. Residential Security Maps were created by HOLC and the practice of redlining was implemented by FHA to categorize mortgages and loans according to desirability for investment and promote a ‘systematic place-based appraisal

The mortgage banking business enabled Todd to create connection with First Magnus Corporation-the largest privately owned mortgage companies in the United States. He later increased his access to capital and expand his operations by opening a charter funding in year 2003- a First Magnus subsidiary. Todd Lubar was familiar in his niche market having worked with more than 7,000 clients who had tried to acquire finance from other traditional means but had failed. Through his confidence, understanding and the overall knowledge to analyze risks, he found the need to develop Legendary Financial that was meant to fill that gap.

If there was ever a word to describe the events that led up to the financial crisis of ’08, “Moral Hazard” would fit the bill perfectly. Moral hazard happens in financial terms when the success of a particular transaction is very heavily dependent on the performance of a particular party’s obligations, but where a particular party has no interest or incentive to carry out that obligation diligently. Let’s for instance take the example of a loan worth $720K, which was given to a strawberry picker earning around$14K/year to acquire a certain piece of property in the early 2000’s . In this case moral hazard was there and existed because the loan company intended to sell the loan forward to the credit rating agencies due to the inability of the

Also, Fannie Mae and Freddie Mac draw investors to the secondary mortgage market. These are investors who otherwise might not invest in mortgages. By investing, they help increase the money available for the housing market. That makes the secondary mortgage market more flexible and helps the homeowners and borrowers pay lower the interest rates. Why are Fannie Mae and Freddie Mac in conservatorship?

Americans had lost all trust in the financial institutions that had developed the country thus far. For this reason, a wave of bank runs began to ensue. A bank run is when large amounts of people look to withdraw their money from banks. While it is their money, this creates solvency issues because a bank doesn’t actually hold that much money at a time. They are typically using your money to provide loans and make interest off that money.

Leadership: Definition Leadership is the process of influencing the motive of the employees and so directing, guiding them to the proper completion of the short-term goals and the mission, vision of the firm. Leadership referring to achieve a specific set of goals of the business enterprise by minimizing risk and more advantage of opportunities is also called Entrepreneurial Leadership (Rao, 2015). Today leadership is such an iterative process when the leaders should have a variety of qualities and expertise in different area of management. Here, different theories will be explained which can clearly identify the scope, the responsibilities and the area of expertise required to be successful leader.

This led to bank closures, job loss, and declining

In order to fix the banking crisis and help many families, the Federal Depositors Insurance Corporation examined