The Reasons And Influences Of American Subprime Mortgage Crisis And The Inspiration For Chinese Asset Securitization

Assets securitization raised in the United States in 1970s, which could transform the assets of originators to better fluid securities through the means of the recombination of assets and the improvement of credit, and will also take the stable income to the investors in the next future. Based on this situation that participants can benefit from assets securitization, it developed universally and quickly all over the world. Junior bond was based on the subprime mortgage securitization. Since 2001 the real estate market of United States began to heat up, and the subprime mortgage market grew fast. However, the real estate market continuously dropped because the Federal Reserve interest rate had increased for 17 times between 2004 and 2006, which caused the problem of Subprime mortgage initially. When the New Century Financial Corporation declared bankruptcy in March 2007, junior bond crisis appeared. In the subsequent year the risk of junior bond was exposed; mortgage companies were all on the verge of bankruptcy; hedging funds were forced to wind up; investment bank announced deficit; commercial banks and insurance agencies have also suffered heavy losses; global stock markets were all fell, all of which resulted in the outbreak of the global financial crisis. The asset securitization has already been carried out in China, so we should summarize the lessons learned from this junior bond crisis, which have great significance to improve the asset securitization development and increase risk control in the asset securitization.The article first introduced the correlative theories of the asset securitization, and indicated that how asset securitization applied in the junior bond through analyzing the development, the characteristics and the basic flow of the asset securitization. The reasons of subprime mortgage were as the following: excessively competition of the commercial banks, the continuous dropping of the real estate market, the immoderate abuse of asset securitization, the asymmetry of the information of credit rating and the lack of supervision, which deeply influenced the real economy and fictitious economy of American. Finally, combining the problem and the influence occurred in issuing and using of the junior bond, we should analyze and summarize the questions when we use the products of asset securitization and revelation from this crisis to avoid repeating the mistakes of the United States, which could make asset securitization market of our country runs efficient and moderate.