Quick Answer: What Are Riskier Loans Called?

What financial institution was the largest lender of subprime?

CountrywiseThe CEO of Countrywise, the biggest subprime mortgage lender in the USA managed to walk away with nearly half a billion dollars in the year preceding its downfall..

Who are the two companies mentioned that led to the collapse of the financial market?

Who are the two companies mentioned that led to the collapse of the financial market? JPMorgan Chase and Citigroup 3. Explain Part I in “how we got there,” (min.

What happened to the savings and loan companies inside job?

What happened to the savings and loan companies? the Reagan administration deregulated savings and loan companies, allowing them to make risky investments with their depositors’ money. By the end of the decade, hundreds of savings and loan companies had failed.

What is inside job about?

The global financial meltdown that took place in Fall 2008 caused millions of job and home losses and plunged the United States into a deep economic recession. Matt Damon narrates a documentary that provides a detailed examination of the elements that led to the collapse and identifies keys financial and political players. Director Charles Ferguson conducts a wide range of interviews and traces the story from the United States to China to Iceland to several other global financial hot spots.Inside Job/Film synopsis

Who took over AIG inside job?

Henry Paulson and Timothy Geithner decided that Lehman must go into bankruptcy, which resulted in a collapse of the commercial paper market. On September 17, the insolvent AIG was taken over by the government. The next day, Paulson and Fed chairman Ben Bernanke asked Congress for $700 billion to bail out the banks.

Why is it called subprime?

The term subprime gets its name from the prime rate, which is the rate at which people and businesses with an excellent credit history are allowed to borrow money.

Why did banks give subprime mortgages?

Hedge funds, banks, and insurance companies caused the subprime mortgage crisis. Hedge funds and banks created mortgage-backed securities. … That caused the 2007 banking crisis, the 2008 financial crisis, and the Great Recession. It created the worst recession since the Great Depression.

What are the riskiest loans called inside job?

But it meant bankers made much riskier loans. Thousands of subprime loans were combined into a group called CDOs.

Who were the biggest subprime lenders?

Some of the nation’s largest banks have subprime lending units, including Wells Fargo & Co., which ranked No. 8, JPMorgan Chase & Co. at No. 12, and Citigroup Inc.

Who is Barney Frank and was his role title in the movie?

-At the time of the movie (2008) Barney Frank was in the U.S. House of Representatives and he held the title of “Chairman, Financial Services Committee. If you remember, he was the one who explained how home loans worked back then and how they work today.

What did bankers do with derivatives?

Banks use derivatives to hedge, to reduce the risks involved in the bank’s operations. For example, a bank’s financial profile might make it vulnerable to losses from changes in interest rates. The bank could purchase interest rate futures to protect itself. Or a pension fund can protect itself against credit default.

Does the video say derivatives make markets safer or more unstable Why?

Does this video say derivatives make markets safer or more unstable? Why? Unstable because it is a financial product that allowed people to bet on anything.

What is subprime crisis in simple terms?

The subprime mortgage crisis occurred when banks sold too many mortgages to feed the demand for mortgage-backed securities sold through the secondary market. When home prices fell in 2006, it triggered defaults. 1 The risk spread into mutual funds, pension funds, and corporations who owned these derivatives.

What caused the 2008 recession?

The financial crisis was primarily caused by deregulation in the financial industry. That permitted banks to engage in hedge fund trading with derivatives. … When the values of the derivatives crumbled, banks stopped lending to each other. That created the financial crisis that led to the Great Recession.

Who was the interviewer in inside job?

Glenn HubbardIn the scene, the director, Charles Ferguson, is interviewing Glenn Hubbard, who used to be the chief economic adviser to George Bush and is now the dean of Columbia Business School.

What role did Wall Street have in the financial crisis of 2008?

Wall Street designed increasingly complex financial products that produced AAA ratings for high-risk products that flooded the financial system. As long as home prices kept rising, the high risk mortgages posed few problems.