The savings and loan crisis began under the volatile

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The Savings and Loan Crisis began under the volatile interest rate climate, when vast numbers or depositors removed their money from the S&L institutions and deposited it inmoney market funds. this allowed for higher interest rates, because the funds were no longer governed by Regulation Q-Once regulations were loosened, S&Ls began engaging in risky activities to cover losses-Depositors continued to funnel money into S&Ls because their deposits were insured by the Federal Savings and Loan Insurance Corporationbank-like institutions that were originally highly regulatedlimited to deposits, with ceiling on interest; and loans for mortgagesin 1970s, general interest rates rose to double digits, oil prices doubled, depositorsturned elsewherein 1980s.....- deregulation (Carter and Reagan)- S&Ls allowed more speculative ventures, commercial real estate, etc.- reduced net worth requirement- relaxed accounting practices- federal insurance increased for depositsbankruptcies of over 1000 S&Lscost and bailout of $153 billion; government/US taxpayers covered $123.8 billionGlobal Economic & Recession, 2007-2012:general shift of economy: manufacturing sector to financial services sectorderegulation of financial services in 1999Securitization:
Is the process of taking an illiquid asset, or group of assets, and through financial engineering, transforming them into a securityex., MBS (mortgage-backed security)debts/loans with collateral based on equipment/homes/equityderivatives: especially "credit default swaps"forms of insurance on abovecan be traded separately without owning underlying mortgagesHedge Funds: are alternative investments using pooled funds that employ numerous different strategies to earn active return for their investorslinked to subprime mortgagesPrivate Equity Firms:an investment management company that provides financial backing and makes investment in the private equity of start-up or operating companies through a variety of loosely affiliated investment strategies including leveraged buyout, venture capital, and growth capitalGlobal Economic Crisis... PHASES:1.Housing Sector (subprime mortgages, collapse of housing market)2.Financial Sector (securitization of mortgages, bankruptcies, bailouts)3.Manufacturing Sector (from Wall Street to Main Street: GM, Chrysler)4.Governments/Countries at risk (Europe, the "sovereign debt crisis"North American Government Action (2007/2008 Recession):TARP (Troubled Assets Relief Program) by US GovernmentOriginally $780 billion authorized then cut to $414 billion paid out$800 billion in 2009the after-effects are still going onConstitutionality of setting up federal regulatory agency for stock markets:
- decided that law and agency were unconstitutional, and overstepped provincial jurisdictionnew concerns about stock markets: regarding fairness, protection for investorsBUT constitution act of 1867remaining matters to provincial authorityregulation of competition is a federal matter IF it affects trade as a wholeInsider Trading:

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