Troubled Assets
Troubled assets are financial assets that are in danger of defaulting or have already defaulted. These assets can include mortgages, bonds, loans, and other investments. Troubled assets are typically held by banks, investment firms, and other financial institutions. When these assets are in danger of defaulting, they can cause significant losses for the institution that holds them.
History of Troubled Assets
Troubled assets have been around since the early days of banking and finance. In the early 20th century, banks and other financial institutions began to hold large amounts of mortgages and other loans. As the economy changed, some of these loans became difficult to repay, leading to a rise in troubled assets. This trend continued throughout the 20th century, with the most notable example being the subprime mortgage crisis of the late 2000s.
The subprime mortgage crisis was a major event in the history of troubled assets. During this time, banks and other financial institutions had invested heavily in subprime mortgages, which were mortgages given to borrowers with poor credit histories. When the housing market crashed in 2008, many of these mortgages defaulted, leading to massive losses for the institutions that held them. This event highlighted the risks associated with holding troubled assets and led to stricter regulations on banks and other financial institutions.
Table of Comparisons
| Asset Type | Default Risk |
|---|---|
| Mortgages | High |
| Bonds | Medium |
| Loans | High |
| Investments | Low |
Summary
Troubled assets are financial assets that are in danger of defaulting or have already defaulted. These assets can include mortgages, bonds, loans, and other investments. Troubled assets are typically held by banks, investment firms, and other financial institutions. When these assets are in danger of defaulting, they can cause significant losses for the institution that holds them. For more information on troubled assets, you can visit the websites of the Federal Reserve, the Securities and Exchange Commission, and other financial regulatory bodies.
See Also
- Default Risk
- Subprime Mortgage Crisis
- Financial Regulation
- Mortgage-Backed Securities
- Credit Default Swaps
- Asset-Backed Securities
- Collateralized Debt Obligations
- Credit Risk
- Leverage
- Derivatives
