Malina Kindt KAPLAN UNIVERSITY SIX SIGMA Instructor Discussion MACRO DATA ANALYSIS OF THE FINANCIAL CRISIS & MORTGAGE INDUSTRY
SYSTEMIC RISK ANALYSIS
SIX SIGMA DMAIC METHODOLOGY
SYSTEMIC RISK ANALYSIS
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Malina Kindt KAPLAN UNIVERSITY SIX SIGMA Instructor Discussion
SYSTEMIC RISK ANALYSIS
SYSTEMIC RISK ANALYSIS
â?š "Systemic financial risk is the risk that an event will trigger a loss of economic value or confidence in, and attendant increases in uncertainly [sic] about, a substantial portion of the financial system that is serious enough to quite probably have significant adverse effects on the real economy." G20 Report on Consolidation in the Economic Sector
introduction The burst of the housing bubble is the catalyst to the financial crisis that has been compared to the Great Depression. As a project for the Kaplan University Six Sigma accreditation course, 20 executive and project management advisors have been brought together to explore the roles of many key players, the extent of damage and the implications to the homeowner, lender, non-bank institutions, local and federal government. Ultimately a Reality Tree will be constructed and a thorough analysis will be underway. This data will serve the purpose of building a DMAIC project for a 3rd party consulting firm in the services industry. This firm is the go-between for regulatory and compliance of lending practices. The systemic risks apparent in the crisis will be examined in this analysis and the effects will be thoroughly explored. Systemic risk is the widespread harm to financial institutions, the associated spillovers on the real economy and to those who are dependent on the institutions on both a direct and indirect level. This analysis will assess the roles of the federal & local government, mortgage lenders & servicers, homeowner and other organizations that are on the periphery of the crisis. Generally speaking, the definition of systemic risk varies depending on the persons writing about the issue. For the purpose of this analysis, the definition from the United Nation G20 forum and IMF will be used. In layman's terms, systemic risk is realized in the financial crisis because a high level of verbal and nonverbal contracts written and acted upon in all levels of the financial sector were made. These "contracts" basically transferred the risk from one establishment to the next leaving the other to hold the bag. As the contracts began to collapse they took down each contract along the way.
Understanding the crisis is crucial, however, the health of a prosperous country depends on the recognition that risks need to be taken in order for financial progress to be made. Therefore, there is a fine line as to what is open to dispute by all standards. And although the housing bubble burst is the catalyst, it is not the primary responsibility of the lending and servicing industry to resolve. Therefore, the Treasury Department's most recent request stating the financial industry should "open their books" to permanent refinance activity is a first step but the crux of the issue lies in the fact that there are not enough jobs. The government deferring the responsibility versus addressing the apparent issues with the bailout will also be reviewed. It goes without saying that a resolution to the financial crisis and recommendations will not be attempted in this analysis, however, a basic understanding of the barriers (even if they are not always obvious) is the most crucial part of the DMAIC process. The DMAIC model will be transferred to the 3rd party firm. The most attention will lie in examining the causes, impact on foreclosures and delinquent payments, the bailout and the spillover effect on all budgetary establishments.
Malina Kindt KAPLAN UNIVERSITY SIX SIGMA Instructor Discussion
SYSTEMIC RISK ANALYSIS
MACRO DATA ANALYSIS OF THE FINANCIAL CRISIS & MORTGAGE INDUSTRY
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SYSTEMIC RISK ANALYSIS
SIX SIGMA DMAIC METHODOLOGY
Contents
Systemic Risk Analysis Impact on Economic Outputs Unemployment Rate Dictates Housing The Rates: Unemployment, Delinquent Loans & Foreclosures The Rates: Unemployment, Delinquent Loans & Foreclosures Impact Analysis causes of the financial crisis Etiam sit amet est Lorem ipsum dolor sit amet, ligula Aenean iaculis laoreet arcu Meeting Minutes Date: December 7, 2009 2:32 PM Title of Meeting: Assign team tasks Location: Anytown, State Dapibus neque lacus vel elit Ut vehicula nunc mattis pede Action Items Budget Ut vehicula nunc mattis pede Schedule Augue sit fugiat hasellus est, fusce lectus proin Augue sit fugiat hasellus est, fusce lectus proin Appendix Median Home Pricing Dapibus neque lacus vel elit Praesent consectetuer, enim aliquam Feugiat quis mi Bibendum quis, dapibus ut Etiam enim diam Contact Information Feugiat quis mi
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