Katelyn Wells was reading recently for her University of Baltimore business class about how well mortgage-backed securities worked.
Then, she turned on the television and got a different picture.
The securities are primarily responsible for one of the worst economic downturns in U.S. history after they had been overvalued for a soaring housing market, and as the economic crisis digs deeper into the country, it is rewriting business students’ textbooks with events that have not happened in the past.
“The books basically explained how mortgage-backed securities worked, and it talked about how these investments were relatively safe,” said Wells, 20, a senior at the University of Baltimore Merrick School of Business. “It is very strange to learn about how well something works in a textbook, and then turn on the news to see that the ‘near-perfect’ system that you just learned about no longer works.”
For professors, the economy’s breakdown has provided teaching material they could only dream of in the past.
Elinda Kiss, a professor at the University of Maryland’s Robert H. Smith School of Business, brings The Wall Street Journal to each class and has discussed the recent developments in class.
The Federal Reserve has created four new policies in the past year that her textbooks do not cover: Term Auction Facility, Primary Dealer Credit Facility, Term Securities Lending Facility and Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility.
“For me, as an academic, it’s a fascinating time,” Kiss said, “but I’m not trying to get a job right now.”
From students to professors and administrators, the struggling economy continues to be the talk of many area business schools.
“We’re all watching the fiscal storm cloud circling the United States at this moment,” said William “Brit” Kirwan, chancellor of the University System of Maryland, which oversees 11 state universities. “You can’t help but be concerned at what’s going on across the country with the nation’s economy.”
