2008 Financial Crisis

Who said the 2008 Financial Crisis could have resulted in a 1930s style global financial and economic meltdown?

• Ben Bernanke

• Jacob Clifford

• Adrienne Hill

• Alan Greenspan

What financial instrument is created by securitizing mortgages?

• Credit default swaps

• Treasury Bonds

• Mortgage backed-securities

• Collateralized debt obligations

What term is used to describe loans made to people with low income and poor credit in the 2000s?

• Adjustable rate mortgages

• Secured loans

• Sub-prime mortgages

• Prime mortgages

What was the name of the program that the government enacted to help bail out the banks?

• The Economic Stimulus Act

• TARP

• The Housing Relief Fund

• The Federal Reserve Program

In what year did Congress pass a financial reform called the Dodd-Frank law?

• 2010

• 2009

• 2008

• 2011

What does the term 'moral hazard' refer to in the context of the 2008 financial crisis?

• The government's responsibility to bail out failing banks

• The ethical standards of financial institutions

• The risk of lending to sub-prime borrowers

• One person taking on more risk because someone else bears the burden

What was a major cause of the 2008 financial crisis according to the text?

• Over-regulation of the financial industry

• Perverse incentives and moral hazard

• A sudden increase in the price of oil

• A global shortage of housing

What did the financial crisis inquiry commission report blame for the crisis?

• The stability of mortgage backed-securities

• The failure to regulate and supervise the financial system

• The effectiveness of the Dodd-Frank law

• The resilience of the housing market

What kind of practices did some institutions start using to generate mortgages?

• Interest-only lending practices

• Government-backed lending practices

• Predatory lending practices

• Ethical lending practices

What did the government's stress tests on Wall Street banks aim to eliminate?

• The use of credit default swaps

• Some of the uncertainties that had paralyzed lending

• The need for future bailouts

• Financial fraud