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The financial crisis triggered by increasing default rate, real estate devaluation and financial asset depreciation combined with U.S. subprime mortgages brought about the debate over the framework of the U.S. and international financial systems, their potential systemic risks, and their regulatory and supervisory mechanisms. A great variety of financial institutions which were poorly regulated and badly supervised changed into the counterpart of the credit risk transfer from the banking system and started to hold increasing risks. This paper deals with the interaction of these financial institutions, including a description of some features of the major stage in this process -- the so-called over-the-counter (OTC) market -- and the use of financial innovations which amplified the crisis. It also aims to clarify the need for improvements in terms of regulation and supervision considering the complexity and opacity of these institutions and markets. [ABSTRACT FROM AUTHOR]

The US finance underwent deep changes as from the 1980s when market led finance increasingly prevailed. The wealth and credit management forced a specific dynamics upon asset prices and reverberated throughout spending decisions (consumption and investment) of economic agents. This paper deals with the net worth evolution of these agents in the recent three growth cycles of the US economy under the command of asset and credit cycles, the so-called financial-led cycles. [ABSTRACT FROM AUTHOR]