Kathleen Engel is the Associate Dean for Intellectual Life and a Professor of Law at Suffolk University. She is a national authority on mortgage finance and regulation, subprime and predatory lending, and housing discrimination. Her many publications include a 2011 book published by Oxford University Press, The Subprime Virus: Reckless Credit, Regulatory Failure and Next Steps (with Prof. P. McCoy) and articles in Texas Law Review, Fordham Law Review, Washington University Law Quarterly, Connecticut Law Review, The Journal of Economics and Business, Fordham Urban Law Journal, and Housing Policy Debate. Professor Engel presents her research in academic, banking, and policy forums throughout the country and around the world. Her analysis of financial services markets and the laws that regulate them regularly catches the attention of the press; The New York Times, Business Week, The Economist, Newsweek, and The Wall Street Journal have all cited her work. Prof. Engel has advised federal and state agencies on various matters related to financing of loans and served for three years on the Consumer Advisory Council of the Federal Reserve Board.
Complex financial instruments can allocate risk in ways that help borrowers, investors and capital markets. As the financial crisis revealed, this complexity can also undermine economic stability. During the subprime boom, risky loans and the securities they backed were sliced and diced through securitization and resecuritizations. The entities involved in creating the securities had little incentive to police loan originators because they could pass off most of the risk. Those that stood to lose-borrowers and investors-often had the least information to protect themselves. The risks associated with subprime loans grew exponentially as firms developed ever more complex instruments, like collateralized debt obligations (CDOs) and credit default swaps that allowed investors to place bets on the performance of bonds and CDOs. Today, a single loan can be linked to hundreds of financial instruments around the world. Complexity not only impeded informed decision-making when it came to securities and derivatives linked to housing, but it has also restricted the recovery of housing markets. With multiple entities holding pieces of the stream of income from home loans, it is impossible to value the securities and derivatives. As a result, today almost all of the funding for home mortgages comes from the United States government through Fannie Mae and Freddie Mac rather than the private securitization market. In addition, loan modifications, foreclosures, and short sales, all of which would ultimately help stabilize the housing market are fraught with problems because of securitization. This is not to say that securitization is all bad. What we need is a secondary market where complexity adds value without sacrificing transparency or undermining economy recovery.
Alessandro Vespignani . Geoffrey West . Kathleen C. Engel . Ren Y. Cheng . Eric Bonabeau . David Lazer . Adam Price . Hamid Benbrahim . Cesar A. Hidalgo . Marta Gonzalez . Sokol Celo . Michail Bletsas . Greta Meszoely . Stoyan Tanev . Charles Worrell . Kun Zhao . Dany Bahar . Brian Peltonen .
I want to thank you for inviting me to participate in the Business
Complexity conference this week. It was really a great event and you
deserve kudos for pulling it off and making it such a success. I met
several interesting people there and enjoyed many great
hope this will be the start of an ongoing tradition.
ccs2018 CONFERENCE ON COMPLEX SYSTEMS 2018 AGENDA 23-28 September 2018, Vellidio Convention Center, Thessaloniki, Greece