Lesson 70 - unit 14 Flashcards
What were 3 factors that contributed to the 2008 recession?
- debt
- government encouragement of homeownership
- greed
What happened in the housing market during the first decade of the twenty-first century?
Home buying increased, but people who bought homes were not prime candidates for mortgages, so there were subprime mortgages.
What are mortgage backed securities?
Mortgage loans that are bundled into investment instruments.
What problem arose with many mortgages?
People couldn’t pay them, so they defaulted and properties became less valuable.
What is commercial paper?
Short term loans to a business.
What was the response of the Federal government to the economic crisis?
Government rescued investment companies, sent stimulus checks, and bought assets from lenders.
What happened to GM and Chrysler in 2009?
They went into bankruptcy.
What did president Bush say made it easier for Americans to get credit?
- A large influx of money to U.S. banks and financial institutions
- low interest rates
What problems did Bush say developed in the housing industry?
People had mortgages they couldn’t pay and too many houses were built, which lowered the value of houses.
How did Bush propose to use the $700 billion he was asking congress for?
Buying troubled assets so banks could make loans.
