Powell Says Fed Is Very Attuned to Testing Financial System's Strength

The video discusses the financial crisis, highlighting the system's inability to withstand shocks from subprime mortgage losses. It details the government's emergency response and subsequent reforms to strengthen banks, including increased capitalization and stress testing. The video also addresses market dysfunctions and emphasizes the need for ongoing vigilance and flexibility to handle future challenges like cyber attacks, ensuring the financial system's resilience.

What was one of the main causes of the financial crisis discussed in the video?

• Subprime mortgage losses

• High unemployment rates

• Decreasing interest rates

• Rising inflation

What was a key strategy used to stabilize the financial system after the crisis?

• Increasing government spending

• Lowering interest rates

• Increasing bank capital

• Reducing taxes

What is the purpose of stress tests for banks?

• To measure employee performance

• To determine loan interest rates

• To assess banks' ability to handle financial shocks

• To evaluate customer satisfaction

Which market was mentioned as having become dysfunctional during the crisis?

• Stock market

• Repo market

• Commodity market

• Foreign exchange market

What future challenge is highlighted as a potential threat to the financial system?

• Natural disasters

• Technological advancements

• Political elections

• Cyber attacks