August 2007, due to US government’s financial supervision organization’s lack of knowledge of financial innovative products and over laissez-faire regulatory system, resulting in the Subprime Mortgage Crisis triggered the global financial crisis, forcing the United States, Europe, Japan and other major central banks work together to save financial institutions, supplement market liquidity and avoid the liquidity shortage caused credit crunch, the impact of global economic development. This incident has highlighted lax standard mortgage and asset securitization of credit risk to spread the innovative products, this credit was over-development tool, has seriously affected the financial market stability and sound development. The problems caused by the incident, also present serious challenges to financial institutions in the self-regulatory code of practice, the accounting framework and financial supervision norms.
Financial liberalization and internationalization of the development of legal institutions based on the purpose of trade or hedge the demand and the Basel Capital Accord for banks own capital adequacy ratio requirement of the asset securitization and derivative securities market to flourish. However derivative of niche products also brought along with risk to market participants and more speculative transactions for the purpose of improper operation of domestic and foreign industry or traders defects caused by lack of self-discipline,coupled with the financial leverage of commodity multiplier effect that in huge losses from time to time.
The study focused on the U.S. subprime mortgage crisis story and derivative securities risk control and regulatory framework problems. To learn the lessons from U.S. subprime mortgage crisis and its derivative securities development experience for our future deployment of mortgage and derivative securities market. Furthermore, to expand the market scale and to development financial institutions to play a decentralized operational risk function. This study''s recommendations: First, strengthen the credit market and economic norms of observation; Second, strengthen financial institutions, risk management and prudent management principles; Third, to improve market discipline; Fourth, strengthen financial supervision, and the financial early-warning system; Fifth, ,the strengthen of International cooperation ; Sixth, actively nurture talents