Giant Pool of Money

In the story presented on the thematically. Org describes the go and the bearing patterns of parties involved. microphone Francis, Moody, and Standard and Poor represent the put uping or investors side. When Mike Francis devised the mortgage backed securities which gave birth to Cods Investors jumped onto these securities based on AAA ratings precondition to these securities by rating agencies such as Moody, and Standard and Poor. These rating agencies did assemble lot of data which were barely few years old. They did not view as enough relevant and good quality data and collected data was simply to enough.These rating agencies used their preexisting theory houses dont lose comfort In America to Interpret the evidences that the performance of these securities were AAA (Heath, et al. 1998). Individuals use their preexisting theories to Interpret the evidence (Heath, et al. 1998) is a bias which played a study role here. The investors from the global pool of money jumped in with all guns for these securities. As demand grew more and more these mortgages were bought and more and more securities were created to investors. The entire process showed a confirmation bias.People who took risky adjustable loans to buy houses which they really could not founder were essentially following other concourse. Since most of the people were purchase houses by taking these loans, it made sense for other to replicate the act. transaction explains, In his book Influence Since and Practice (5th edition), this behavior as the regulation of social proof. This principle states that we determine what Is correct by purpose out what other people this Is correct (Lund et al. , 2007). Before 2000 most of people with low Income and low credit score were not able to afford buying the kind f house they bought during the period after 2000.In the receiving set program Giant Pool of Money, case of Clarence Nathan is presented. Clarence works 3 jobs, did not made good income and had bad credit rating. l wouldnt lend to myself said Clarence. Even then he took the loan because everyone else was talking these kinds of loans and in fact the loan was made available to him. Even the behavior of investors, banks, and environ Street followed the same pattern. Early on, investment banks were not interested in risky mortgages but when one bank started buying hose controlling mortgages others Jumped in. It was acceptable to invest in supreme mortgages.