Research Article Open Access

Banking, Mortgage and the Credit Industry in the USA

Abstract

Banks fail because of inadequate capital base, mismanagement of funds, over extension of credit, lack of regulation and control, and unfair competition from foreign banks. Banks face the problem of persistent illiquidity, unprofitable lending, and poor asset base. Although the Federal Reserve (Fed) did not eliminate bank crises, it reduced the frequency. The presence of Fed to lend to illiquid banks and the capital markets in times of stress enhanced financial stability and reduced the frequency of bank crises. The financial crisis resulted in a call onto the government for increased supervision and improved regulation of the financial industry. Although there are new regulations and government intervention, a complete turnaround of the world’s economy may take a long time.

Bakare S

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