Two large hedge funds were shut down as a result of exposure to the sub-prime market. Thereafter, some large sub-prime lenders collapsed, while holders of sub-prime residential mortgage backed securities also suffered losses. These events resulted in a tightening in underwriting standards, with fewer households qualifying for subprime loans.
Though the multiple indicators approach is subject to criticism for the absence of a clearly defined anchor, in the wake of the recent global financial crisis there is recognition of the usefulness of a broad indicators-based assessment of monetary policy. 27.