The Economic Meltdown

In 2008 - 2009, the world experienced one of the worst financial crises in history. As we have come to understand, excessive and unaffordable borrowing, combined with the introduction of exceedingly risky investment vehicles and permissive regulation, all played significant roles. The crisis had no single cause, but losses of confidence in US sub-prime mortgage markets, and in short-term wholesale financial markets throughout much of the western world, were early symptoms of what proved longer-term problems.

In 2007, Canada’s asset-backed commercial paper market (ABCP) also displayed early symptoms, largely because it was then an unregulated market. A funding freeze in the ACBP market placed approximately $32 billion of Canadian short-term investment at risk. It is estimated that investors lost a total of several billion dollars when the short-term investments were replaced by longer-term bonds in attempts to moderate the freeze. Moreover, the prices of some of those bonds have taken until relatively recently to recover from their original, sharply discounted values.

In this webinar, Professor Edwin Neave will examine the following questions.

• How did Canada attempt to mitigate investor risk, and were Canadian policy makers successful in doing so?
• Are there still significant risks in Canada’s marketplace? In other parts of the world?
• What are regulators and policy-makers doing to mitigate a recurrence?
• What lessons should this story provide for today’s investors and borrowers?