Jill M. Hendrickson - Financial Crisis: The United States in the Early Twenty-First Century

Palgrave Macmillan Studies in Banking and Financial Institutions

Series Editor: Professor Philip Molyneux

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Steffen E. Andersen

THE EVOLUTION OF NORDIC FINANCE

Seth Apati

THE NIGERIAN BANKING SECTOR REFORMS

Power and Politics

Caner Bakir

BANK BEHAVIOUR AND RESILIENCE

The Effect of Structures, Institutions and Agents

Dimitris N. Chorafas

BASEL III, THE DEVIL AND GLOBAL BANKING

Dimitris N. Chorafas

SOVEREIGN DEBT CRISIS

The New Normal and the Newly Poor

Stefano Cosma and Elisabetta Gualandri (editors)

THE ITALIAN BANKING SYSTEM

Impact of the Crisis and Future Perspectives

Violaine Cousin

BANKING IN CHINA

Peter Falush and Robert L. Carter OBE

THE BRITISH INSURANCE INDUSTRY SINCE 1900

The Era of Transformation

Juan Fernndez de Guevara Radoselovics and Jos Pastor Monslvez (editors)

CRISIS, RISK AND STABILITY IN FINANCIAL MARKETS

Juan Fernndez de Guevara Radoselovics and Jos Pastor Monslvez (editors)

MODERN BANK BEHAVIOUR

Franco Fiordelisi and Ornella Ricci (editors)

BANCASSURANCE IN EUROPE

Past, Present and Future

Franco Fiordelisi, Philip Molyneux and Daniele Previati (editors)

NEW ISSUES IN FINANCIAL AND CREDIT MARKETS

Franco Fiordelisi, Philip Molyneux and Daniele Previati (editors)

NEW ISSUES IN FINANCIAL INSTITUTIONS MANAGEMENT

Kim Hawtrey

AFFORDABLE HOUSING FINANCE

Jill M. Hendrickson

FINANCIAL CRISIS

The United States in the Early Twenty-First Century

Jill M. Hendrickson

REGULATION AND INSTABILITY IN U.S. COMMERCIAL BANKING

A History of Crises

Paola Leone and Gianfranco A. Vento (editors)

CREDIT GUARANTEE INSTITUTIONS AND SME FINANCE

Caterina Lucarelli and Gianni Brighetti (editors)

RISK TOLERANCE IN FINANCIAL DECISION MAKING

Roman Matousek (editor)

MONEY, BANKING AND FINANCIAL MARKETS IN CENTRAL AND EASTERN EUROPE

20 Years of Transition

Philip Molyneux (editor)

BANK PERFORMANCE, RISK AND FIRM FINANCING

Philip Molyneux (editor)

BANK STRATEGY, GOVERNANCE AND RATINGS

Imad A. Moosa

THE MYTH OF TOO BIG TO FAIL

Simon Mouatt and Carl Adams (editors)

CORPORATE AND SOCIAL TRANSFORMATION OF MONEY AND BANKING

Breaking the Serfdom

Victor Murinde (editor)

BANK REGULATORY REFORMS IN AFRICA

Anders gren (editor)

THE SWEDISH FINANCIAL REVOLUTION

zlem Olgu

EUROPEAN BANKING

Enlargement, Structural Changes and Recent Developments

Fotios Pasiouras

GREEK BANKING

From the Pre-Euro Reforms to the Financial Crisis and Beyond

Daniela Prvu

CORPORATE INCOME TAX HARMONIZATION IN THE EUROPEAN UNION

Ramkishen S. Rajan

EMERGING ASIA

Essays on Crises, Capital Flows, FDI and Exchange Rate

Allesandro Roselli

FINANCIAL STRUCTURES AND REGULATION: A COMPARISON OF CRISES IN THE UK, USA AND ITALY

Yasushi Suzuki

JAPANS FINANCIAL SLUMP

Collapse of the Monitoring System under Institutional and Transition Failures

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EU PAYMENTS INTEGRATION

The Tale of SEPA, PSD and Other Milestones Along the Road

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Financial Crisis

The United States in the Early Twenty-First Century

Jill M. Hendrickson

Associate Professor of Economics, University of St. Thomas, USA

Jill M. Hendrickson 2013

All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission.

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To my family

Contents

List of Figures and Tables

Figures

Tables

The first financial crisis of the twenty-first century hit the United States and the world with great surprise and force. Indeed, the crisis blindsided governments, economists, policy-makers, businesses and households alike. Once the dust had settled, we wanted to know how this happened and why we did not see it coming. One obvious place to look for an answer are analyzed relative to one another and their similarities and differences are identified. This framework for understanding how the theories overlap and how they are unique is important when, later in the book, the theories are put to the test with the most recent financial crisis.