The securities back by sub prime loans a aaa rating

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the securities back by sub-prime loans a AAA rating The banks and others took out insurance, called credit default swaps, that got them off the hook if the investment went bad
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Bailout Flags were raised as early as 2004 Since nearly every bank was involved in this in some way, it was not possible to allow failure “Too big to fail” came into being during the S&L crisis, and was even more true now In 2008, $70 billion spent on a bailout Wasn’t able to prevent collapse and recession
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The 2008 Financial Crisis Millions lost their jobs By 2010, 6 million foreclosures Business began exporting jobs overseas as the stock market tanked Accountability has been minimal Many of those responsible got government jobs or other lucrative positions
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Wells Fargo Phony Accounts Scandal
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Well Fargo Commercial/investment bank 1.5 million deposit accounts and 0.5 million credit card accounts opened in customers names without authorization Generated $2.6 million in fees since 2009 Possibly ongoing well before then as well Discovered in 2013
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Law Suit Law suit brought against Wells Fargo in 2015 Federal regulators got involved as well September 2016, Well Fargo agreed to pay $185 million dollars to settle it i.e., make it go away Led to a senate investigation
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Other Issues Firing or penalizing employees for reporting these practices to company ethics Obviously meant to quell dissent, and illegal under federal law Bank managers were warned about surprised audits allowing for cover up Manipulated deadlines to purpose causes customers to suffer late fees Unrelated to the scandal
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Causes Commercial bankers had quotas “Sales goals” Management expected their employees to open a certain number of accounts It is not clear what would happen if they failed to do so, but we can guess “Eight is great” W.F. saying—where each customer should be sold all of services Wells Fargo offers
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Fallout for Well Fargo The story became big news, and met with a lot of public outrage W.F. fired 5,300 people between 2009 and when the story became very public Many called for the CEO to resign, he did Criminal penalties are still possible The bank is apparently still struggling
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Insider Trading and the Stock Market
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The Stock Market Often, the New York Stock Exchange One of many markets where investors buy and sell stock in publically traded companies and other commodities Buying stock is basically buying piece of a business, entitling one to share in the profits and losses
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The Modern Stock Market The vast majority of trading is via computer Not using a computer a tool, but literally the computers are initiating the trades 70% to 90% of trades are done by computer with minimal human involvement Some have suggested that the market is rigged by HFT, or that the market is manipulated by computers trading with themselves This will likely be a major topic in the future
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Insider Trading
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  • Spring '14
  • AidaY.Hass
  • Subprime mortgage crisis, financial crimes

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