Money classes emulate financial world

David Lapham
Critic Staff

Rachel Siegel’s Money and Capital Markets class students have a rare opportunity to watch financial history as it unfolds.

“The class couldn't have been timed better, given the fact that there is so much excitement in the markets,” Sam Utz, junior business major said. “Being able to study the material real time and watch it as it happens is a luxury we are fortunate to have.”

Joel Flores, junior Business Management majors believes, “The class has benefited in an educational standpoint, the topics we have covered we get to see in real life,” Flores said. “How about instead of the professor giving a lecture, you are the one giving the lecture? This is the case in Money and Capital Market; you do a presentation each week on a specific topic shown by professor Siegel.”

A major concern for many students in the Money and Capital Markets class is the credit crisis. According to some of the class members the credit crisis has been caused by careless mortgage lending and is the root of numerous bank failures. In the midst of financial decay students are able to watch the markets fluctuate each day.

The class “gives a lot of perspectives on the economy,” Nate Taylor, senior business administration major, said. “It’s great to be informed through a class on everything that’s currently happening and taking that information as a group and trying to figure it all out.”

The United States financial mess cannot be pinpointed to a single factor; however, one factor in particular, the burst of the housing bubble, has been criticized as being a leading cause.

“So when the housing bubble burst people couldn’t sell their houses for anywhere near the price they bought them for, or owed on the house,” Taylor said.

People became trapped trying to pay for houses they could not afford; as a result people eventually defaulted on their loans. “The bank now has lent someone 500k to buy a house and since the housing bubble has burst that house may only be worth 200k,” Taylor said.

Joel Flores has experienced firsthand how banks have lent irresponsibly. “In 2004-2006 I worked for Washington Mutual. When you apply for a mortgage if you had higher than a 680 credit score [good credit] the bank would not verify your income. By not verifying your income they wouldn’t know if a customer had a means to pay back their mortgages,” Flores said.

Watching the financial world collapse before the class has caused some students to theorize what might happen to the future of banking systems, Sam Utz, junior business major contends that, "The balance of power is changing because banks have less capital, and other companies, such as Tesco, are considering entering the mortgage market to take advantage of the situation and use their capital."