Inside_the_meltdown_PBS_ANGELNotes

Systemicriskariskthataffectsaverybroadsectoroftheecono

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Unformatted text preview: pients. A term that was recently applied to banks that had made bad loans – why bail them out when they have been behaving irresponsibly. Systemic Risk – a risk that affects a very broad sector of the economy. Example – AIG – is a multinational insurance company that provided insurance for property and mortgages. It sold insurance against credit default. AIG faced the most difficult financial crisis in its history when a series of events unfolded in late 2008 beginning with the subprime mortgage crisis. If AIG had collapsed it would have taken a many companies and banks down with it because it was so integrated into the financial system (the systemic risk). In September of 2008 the US Federal Reserve Board bailed out the company to the tune of $85 billion dollars. The following pages are taken from educational material developed by FRONTLINE to use as a study guide for the video. 1 2 ■■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ 2 3 ■■ 3 4 ■■ ■ ■ ■ ■ ■ ■ 4 5 ■■ 5 6 ■■ 6 7 ■■ ■ ■ ■ ■ 7 8 ■ ■ 8...
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