The Enlightenment Of U.S. Sub-prime Mortgage Crisis To Banking Supervision In China

2007 and 2008 saw the biggest financial crisis since the 1930s.In April 2007 New Century Financial Corporation, the second-largest subordinated debt financial institutions filed for bankruptcy, the sub-prime mortgage crisis has gradually surfaced. After that the loan crisis fully exposed and the effect expanded continuously. The credit crisis triggered by the secondary mortgage eventually evolved into the global financial crisis. Impact and the affected scope of the crisis are rarely seen after the great depression of the 1930s. And even some scholars believe the influence of this crisis should be worse than the Great Depression of the 1930s.It seems clear that the causes of the crisis were not simply management failure at some banks but also commensurate failures in regulation and supervision, together with shortcomings on the part of the ratings agencies. The causes of the sub-prime crisis can be summarized as follow. First, the United States serious credit consumption and liabilities of economic growth mode is the underlying causes of the outbreak of the crisis. The long-term double deficit policy of the US government and the public's credit spending habits pose risks for the finance. Second, the Fed implemented low interest rate policy before 2006, but after that there's been a rapid rise in interest rates. This substantial adjustment of the currency policy is the fuse of the financial crisis. Third, the large issuance of sub-prime loans by financial institutions is the direct reason of the crisis. Fourth, excessive innovation of financial instruments is also the cause for the financial crisis. Fifth, due to lack of independence improper assessment results offered by Financial rating agencies is also one reason for the crisis. Sixth, failures in regulation and supervision causes the attention of many people, even some scholars believe this financial crisis is a regulation crisis.A series of problems in the American financial supervision have appeared during the financial crisis. The problems include overlap and lack of supervision, higher regulation costs, regulatory arbitrage and regulatory inefficiency. So the United States is going to carry out a comprehensive reform of the regulatory system. At the same time, the EU also proposed a new blueprint for financial supervision.Although the impact of the crisis for our nation's economy is limited, banking supervision is not adjusted. But the lessons of the crisis are being digested around the world. We also should pay attention to our bank regulation in order to prevent and solve the financial crisis. China's banking regulatory departments should work hard in the following several aspects. First, improve and perfect the legal system. Second, encourage financial innovation and strengthen financial supervision of innovative products, establish a unified, comprehensive and coordinated financial regulatory system. Third, raise the supervision level of the supervisor. Fourth, further improve the information disclosure system, establish explicit deposit insurance system and improve the market exit mechanism. Fifth, strengthen the crisis management ability of the supervision department. Sixth, strengthen the international cooperation of the bank supervision, etc.