Document Type
Article
Abstract
The recent U.S. housing bubble was correlated with lax underwriting standards, flawed housing polices, and Wall Street innovation. At the peak of the housing bubble, the Financial Accounting Standards Board issued standard 157, which provided guidance on fair value accounting. Once the housing market deflated, the standard led many to believe that it was the sole reason asset values collapsed, creating a liquidity crunch and prolonging the financial recession. This paper investigates the causes of the housing bubble and Financial Accounting Standard’s relevance in the aftermath. It finds that fair value accounting simply exposed the poor underwriting standards, bad public policy, and Wall Street’s gross underestimation of risk.
Publication Date
Spring 2017
Journal Title
Major Themes in Economics
Volume
19
Issue
1
First Page
77
Last Page
98
Copyright
©2017 by Major Themes in Economics
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Language
en
File Format
application/pdf
Recommended Citation
Hurlburt, Anthony
(2017)
"The 2008 Financial Recession and Fair Value Accounting,"
Major Themes in Economics, 19, 77-98.
Available at:
https://scholarworks.uni.edu/mtie/vol19/iss1/7