Comparing/Contrasting 2008 vs 2020 Financial Crises Was monetary, fiscal, and direct government lending taken more immediately resulting in a faster recovery?

Securities brokers earn a commission taking on no price risk vs dealers who carry an inventory of securities taking on on price risk/earning a spread between between their bid purchase price and ask sale price

Junk bonds are bonds rated with a higher rate of default risk 

Check (X) which of the following factors CONTRIBUTED to the excessive run up in housing prices from 2002-2006, which helped create a real estate bubble and the subsequent 2008 Financial Crisis, check (O) if the factor did not: Creative, high risk subprime mortgage financing programs Increase in traditional mortgage financing programs Financial “engineering/innovation” of subprime CDO’s (Collateralized Debt Obligations) Speculative investors “flipping” homes Predatory lending practices taking advantage of ill-informed borrowers Greed, dishonesty, conflicts of interest Government mandated affordabl housing program High interest rates Strict underwriting standards Unregulated/unsupervised CDS’s (Credit Default Swaps) A “originate to distribute” fee driven based incentive payment system Informed consumers knowingly using high risk, creative financial programs to buy homes Wall Street Banks reliance on mathematical modeling for predicting the default rate for subprime loans Strict, timely regulatory supervision and enforcement actions Increase in loans to high-risk first time and hard to verify cash flow buyers Lack of due diligence by investors purchasing subprime CDO’s from investment banks FED keeping rates low too long contributing to an asset-driven credit bubble

Banks have an advantage in originating loans, but not in funding loans due to FDIC deposit insurance premiums, loan loss reserve provisions, and meeting minimum capital standards 

After the 2008 financial crisis and the failure/need for bailing out stand-alone investment banks, they chose to be converted to a bank holding company to gain access to FDIC insured deposits, and FED emergency lending facilities 

Investment banking takes on price risk when underwriting a IPO

Match the “Daily Survival Kit” items with the bible verses

Shadow banking has the same liquidity and capital requirements as traditional banks 

According to the math PhD’s hired by the investment banks and credit rating agencies, huge amounts of risk disappeared when risky subprime loans were pooled together in a Collateralized Debt Obligation (CDO). The model showed that although some subprime loans would default at the same time, not all of them would default at the same time with the chances of 2/3 of the subprime loans defaulting at the same time being highly improbable, allowing the  CDO to be split into two tranches, a safer AAA rated 2/3 piece and a risky 1/3 piece, which would bear the first losses if and when loans in the pool defaulted. (a) Was this an innocent mistake, which surprised the banks, rating agencies, and investors or was it an intentional ruse, which generated phantom profits and bonuses as it sowed the seeds of financial destruction?  Why or why not? (b) Do U think the events would have unfolded differently if the financial institutions that made these subprime loans, and the Wall Street IB’s that pooled/securitized them and sold them to their clients, had been required to keep them in their portfolio?  Why or why not?