Essential Lessons from the US Financial Crisis
Spring 2022 Midterm Paper
The midterm paper is an analysis of a financial institution that had significant problems during the Financial Crisis. You can choose to write the paper on any of the financial institutions listed below. The list includes companies from a range of countries.
Late papers will lose a letter grade every day that they are late!
The paper should be a maximum of 1,200 words and should cover the following four topics:
- What is your key lesson from your evaluation of the company? Please begin your paper with the key lesson in the first paragraph of your paper. For example (and this is only an example; it is not meant to be a template): XYZ Company failed because it followed an aggressive growth strategy without building out a robust risk management structure and without timely regulatory oversight. The key lesson is that aggressive strategies need internal and/or external constraints to avoid potentially fatal excesses.
- What was the company’s business model and strategy before the problems arose, e.g., what were the company’s main products? In which geographies did it operate? In which areas was it growing the fastest? Was it growing organically, through acquisitions, or both?
- What went wrong? When thinking about what went wrong, we encourage you to use the framework we presented at the first class and to choose the 2-3 areas that you believe represent the biggest errors by management. You may find that there were problems in all these areas but given the word count limit, you won’t be able to cover all of them, so choose the most important ones.
- Strategy
- Capital allocation
- Risk management
- Corporate culture
- Succession planning
- What happened to the company, i.e., was it bailed out by the government, acquired, filed for bankruptcy, etc.? Please include information on what happened to key stakeholders, i.e., management, shareholders, bondholders, depositors, etc.
We will grade the papers based on the following criteria:
- Addressing all four of the topics listed above
- Quality of analysis of the company’s business model/strategy and what went wrong
- Factual accuracy – please check your facts!
Because the word limit for this paper is 1,200, you will have to be concise in your writing. Focus on the most important points for each topic. You may want to allocate more than 1/4 of the word count to the third topic – what went wrong – as this is the more analytical portion of the paper. The second and forth topics are more factual.
Because this paper will require research, please cite your sources. You can either use footnotes in the body of the paper or list your sources at the end. See the example at the end.
What we are looking for in this paper is your analysis of the company’s business model/strategy and what went wrong. We are not looking for paragraphs that are just cut and paste jobs from the internet.
Your grade on this paper will account for 30% of your overall class grade for the semester.
Please choose one of the following financial institutions for your paper:
- Washington Mutual (US)
- Golden West (US)
- IndyMac (US)
- GE Capital (US)
- Royal Bank of Scotland (UK)
- Northern Rock (UK)
- Glitnir, Kaupthing and Landsbanki (Iceland)*
- ABN Amro (Netherlands)
- Bankia (Spain)
- Monte Dei Paschi di Siena (Italy)
*If you choose the Icelandic banks, you can write about one of them or all of them, as their business models, strategies, problems, and resolution were all similar.
Footnote Example:
The footnote number should be placed in the body of the paper where you refer to the footnote. The footnote itself should be cited either at the bottom of the relevant page or at the end of the paper. Examples (either is ok):
The world’s tallest building is in Dubai.(1) It is 2,700 feet tall.
The world’s tallest building is in Dubai1. It is 2,700 feet tall.
- List of the world’s tallest buildings. https://en.wikipedia.org/wiki/List_of_tallest_buildings Accessed March 7, 2022.
