). Investment banks bundled mortgages with other loans and debts into collateralized debt obligations (CDOs), which they sold to investors. Rating agencies gave many CDOs AAA ratings . Subprime loans led to predatory lending. Many home owners were given loans they could never repay. 5 . What happened to the banking industry in the 90 ’ s and 2000 ’ s, consolidation or expansion? Give examples .
Consolidation Investment banks promoting internet banks, small banks collectively becoming one large banking firm, etc 6 . Does the video say derivatives make markets safer or more unstable? Why ? Unstable because no one could regulate them. 7 . What did bankers do with derivatives ? They use them to increase. The value or safety of a loan that way rating agencies can give that loan a AAA rating. 8 . Who is Barney Frank and was his role/title in the movie ? A congressman that allowed the banks to act the way they did. 9 . Explain the difference from today and years ago with home loans. What is the problem with this ? During the bubble, some high credit borrowers used multiple loans to afford more expensive homes, but today the vast majority of homebuyers take out a single mortgage. 10 . Explain the title of Elliot Spitzer and his role in the film : He was the governor of New York at the time of the crisis 11 . What are the riskiest loans called? Why did investment bankers prefer them ? Subprime and they are preferred because they cost less
12 . What financial institution was the largest lender of sub prime loans ? Countrywide financial corporation was the largest subprime lender. Subprime loans refer to the debtors who have weak credit records. They are at a greater risk than prime debtors offered on conventional loans. In the U.S, as per the center for public integrity, Countrywide financial corporation
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- Winter '13
- Subprime mortgage crisis, Collateralized debt obligation, JPMorgan Chase