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    Too Big To Fail Guided Notes 57

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    1) Lehman Brothers' collapse exacerbated the financial crisis by forcing payment on large amounts of credit default swaps and mortgage-backed securities, putting catastrophic pressure on other institutions. 2) To make more money, banks lowered lending standards and sold risky subprime mortgages to be packaged into securities. However, the securities were based on faulty mortgages. 3) When borrowers began to default, it triggered AIG's credit default swap obligations and the company's inability to pay led to its collapse, along with other major institutions, precipitating a systemic crisis.

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    Too Big To Fail Guided Notes 57

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    1) Lehman Brothers' collapse exacerbated the financial crisis by forcing payment on large amounts of credit default swaps and mortgage-backed securities, putting catastrophic pressure on other institutions. 2) To make more money, banks lowered lending standards and sold risky subprime mortgages to be packaged into securities. However, the securities were based on faulty mortgages. 3) When borrowers began to default, it triggered AIG's credit default swap obligations and the company's inability to pay led to its collapse, along with other major institutions, precipitating a systemic crisis.

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    1) Lehman Brothers' collapse exacerbated the financial crisis by forcing payment on large amounts of credit default swaps and mortgage-backed securities, putting catastrophic pressure on other institutions. 2) To make more money, banks lowered lending standards and sold risky subprime mortgages to be packaged into securities. However, the securities were based on faulty mortgages. 3) When borrowers began to default, it triggered AIG's credit default swap obligations and the company's inability to pay led to its collapse, along with other major institutions, precipitating a systemic crisis.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    264 views2 pages

    Too Big To Fail Guided Notes 57

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    1) Lehman Brothers' collapse exacerbated the financial crisis by forcing payment on large amounts of credit default swaps and mortgage-backed securities, putting catastrophic pressure on other institutions. 2) To make more money, banks lowered lending standards and sold risky subprime mortgages to be packaged into securities. However, the securities were based on faulty mortgages. 3) When borrowers began to default, it triggered AIG's credit default swap obligations and the company's inability to pay led to its collapse, along with other major institutions, precipitating a systemic crisis.

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    Too Big to Fail Guided Notes 57:00-1:05:00

    Name:

    You will be expect to write a summary of this financial crisis (this week and on your
    final).

    Lehman exacerbated ______ simultaneously by pay outs of


    CDO and Credit Default Swaps and that put catastrophic
    pressure on ______.
    Wall ______started __________ ________ loans together as
    mortgage backed securities and started selling slices of that to
    investors making big money and in turn said to lenders we need
    more loans.
    Lenders are already lending to good credit borrowers so they
    started going _______________ ________________.
    Before this a ____________ needed a score of ______and a
    ____% down payment; now ______ credit score and ____
    money down.
    Buyer assumes the _____ know what they are doing if the bank
    is willing to give them money they must be_____ ___ _______
    ___ and then the buyer reaches for the American Dream
    and______ _____ ___________.
    Banks knew that these securities based on faulty mortgages
    were _______so to control their down side, banks started
    buying _________on these loans. If the mortgage defaults the
    insurance company_____, a default swap. The banks move
    their risk ___ their books so they can _______more and make
    more money.
    AIG took on this ______ because of the hundreds of millions
    they were to receive in _____. AIG figured that the housing
    marking would continue to go____.
    The guy who bought his dream house sees his initial teaser rate increase
    tremendously and he _________on the _______. The mortgage backed
    securities are to be insured by AIG and has to pay on _____of them
    _____over the world at the ______ time. AIG cant pay and so AIG
    goes_____.

    Every __________ books massive losses as a result on the same day and
    they all go under. It all comes down, the _________ _________
    ________.

    No one wanted to _________this business because they were making too


    much money.
    The _________ Reserve negotiates with AIG to make an $85 _________
    bailout out temporary loan to AIG to stave off collapse.

    This affects everyone who has a _________.

    _________markets are still frozen and the federal government keeps


    dumping money hoping that it will stabilize and nothing helps.

    Federal government rescued _______ ________and AIG without


    regulation.

    2 months before an _________ congress will not vote yes on a


    _________for fear they wont get re-elected.

    Federal ___________is running out of options.

    There is ____ enough money in any bank in the world to pay its
    depositors, it's all based on_________.

    The banks close and and if they pull back on interbank lending, its all over
    within hours from there.

    It goes too fast to stop. Average people wonder if their money is safe.
    They start _______ ____ cash. Lines around the block and smashed ATM
    Machines. After a few weeks, theres no milk in the stores.

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