Answered: The financial regulations governing the…

The financial regulations governing the banking sector and most importantly mortgage-backed asset, did not prevent or alleviated the financial collapse in 2008/9? Critically discuss?

Contemporary Auditing

11th Edition

ISBN:9781337650380

Author:KNAPP

Publisher:KNAPP

Chapter1: Comprehensive Cases

Section1.11: New Century Financial Corporation

Problem 6Q

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Concept explainers

Regulation of Commercial Banks

The main function of any commercial bank is accepting deposits and lending money to borrowers. Apart from these two activities, commercial banks provide a host of other services to their customers, like discounting bills of exchange, acting as a custodian of a customer's will, and so on. In the absence of a proper regulatory framework or proper regulations in place, the commercial banks would have ended up charging exorbitant or varied rates of interest or service charges on the funds loaned by them or the services performed by them.

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The financial regulations governing the banking sector and most importantly mortgage-backed asset, did not prevent or alleviated the financial collapse in 2008/9? Critically discuss?

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