plainly sell the loans in the secondary financial market and accumulate the originating charges. This untied up additional resources for still new lending positions, which amplified liquidity sources even added. The financial Institutions such as Bear Stearns and Lehman
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derivatives were thwarted by the Commodity Futures Modernization Act of 2000, backed by several key officials. In the 2000s, the industry was dominated by five investment banks (Goldman Sachs, Morgan Stanley, Lehman Brothers, Merrill Lynch, and Bear Stearns), two financial conglomerates (Citigroup, JPMorgan Chase), three securitized insurance companies (AIG,MBIA, AMBAC) and the three rating agencies (Moody’s, Standard & Poors, Fitch). Investment banks bundled mortgages with other loans and debts
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Introduction to the Financial Crisis The near-collapse of the financial system in the United States was the most substantial economic crisis in the U.S. since the Great Depression of the 1920s and 1930s. Since the crisis began in late-2007, more than 6 million Americans have lost their jobs, large and important financial institutions have failed, and trillions of dollars in savings and retirement accounts have been lost. It is generally accepted that problems in the United States housing market
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CitiGroup afloat in the belief that they were ‘too big to fail’. However, this did not stem the unfolding disaster. Later, Bear Stearns was the first to crack. The primary reason was that they were big in mortgages and big in packaging them and creating securities out of them, buying them. However, it then went spiraling out of control (David Faber). Fortunately, Bear Stearns was bailed out to prevent a chain reaction. Yet, it eventually hit. The world’s fourth largest investment bank, Lehman Brothers
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because it neglected to act responsibly or seek solutions to the crisis, but because of a decision, based on flawed information, not to provide Lehman with the support given to each of its competitors. (Lewis, 2010) Zakaria (2010) believes that the collapse of Lehman Brothers
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global access to the individuals involved, the interested reader can expand his or her knowledge about the events behind the events. Too Big To Fail begins in riveting fashion at J.P. Morgan CEO Jamie Dimon's Park Avenue apartment the day before the collapse of Lehman Brothers. Having spent part of the previous evening at the New York Fed, Dimon knew better than most what was ahead, and in a conference call with his top lieutenants, Dimon dismissed the view - one held by Lehman CEO Richard Fuld no less
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documentary Business, Ethics and Governance 18 September 2011 Submitted by: Suzanne M. Chevalier Inside Job is a documentary written and directed by Charles Ferguson, and narrated by Matt Damon. The film chronicles the economic collapse of 2008 and the events which led up to it. The film is divided into five parts; 1) How We Got Here, 2) The Bubble, 3) The Crisis, 4) Accountability, and 5) Where We Are Now. The parts of the film come together to uncover the corruption of government
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Average On October 9, 2007, the Dow closed at its pre-recession all-time high of more than $14,000 per share. However, fourth quarter GDP growth was -1%, signaling the beginning of the recession. The Dow started falling slowly. After the failure of Bear Stearns in April 2008, and a negative GDP report in Q2 2008, the Dow plummeted to 11,000. Many analysts felt that this 20% decline was the market bottom. 2008 was a historic year for the Dow Jones Industrial Average and the overall Stock Market. 2008
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Moral Hazard and the Mortgage Industry Moral hazard describes behavior when the party responsible for the interests of another party has an incentive to put its interests first (Dowd, 2009). The possibility of it increases when the party does not necessarily suffer the consequences of its actions and thus becomes susceptible to taking more risk because it knows it would be protected. An example of moral hazard is the subprime mortgage crisis, which preceded and “triggered” (Bernanke, 2012) the
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The 1907 Panic and the ensuing response led by J. Pierpont Morgan made one thing clear: it was necessary to move beyond personality cults of individuals to tackle future financial crisis. Different plans to create an independent organization representing diverse financial institutions started to gain traction but the debate over the inherent subjugation of public interest in this arrangement raged on as well. Woodrow Wilson, as the winner of 1912 presidential elections, eventually started to shape
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