Fannie and Freddie
who were Fannie and Freddie ?
a. was a New York City-based global investment bank and financial company that was founded in 1923 and collapsed during the 2008 financial crisis
b. These are the two government-sponsored entities that were tasked to help implement US housing policy.
c. a global financial services firm whose bankruptcy in 2008 was largely caused by — and accelerated — the subprime mortgage crisis
b. These are the two government-sponsored entities that were tasked to help implement US housing policy.
What are mortgage defaults ?
a. is a financial institution or mortgage bank that offers and underwrites home loans.
b. referring to credit or loan arrangements for borrowers with a poor credit history.
c. occurs when a borrower does not make his or her mortgage loan payment and falls behind.
c. occurs when a borrower does not make his or her mortgage loan payment and falls behind.
What was the financial Crisis?
a. This 11-month recession began in November 1948. It lasted until October 1949, when unemployment reached a peak of 7.9%. It was a mild adjustment as the economy continued adapting to peacetime production.
b. Severe contraction of liquidity in global financial markets that originated in the United States as a result of the collapse of the United States housing market.
c. a long and severe recession in an economy or market.
b. Severe contraction of liquidity in global financial markets that originated in the United States as a result of the collapse of the United States housing market.
What was the Gramm-Rudman Act?
a. This is the practice of reducing investment risk by bundling assets with low risk correlation.
b. This is an aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged.
c. It allowed banks to engage in trading profitable derivatives that they sold to investors. These mortgage-backed securities needed home loans as collateral.
c. It allowed banks to engage in trading profitable derivatives that they sold to investors. These mortgage-backed securities needed home loans as collateral.
Fannie and Freddie mac created the financial Crisis.
a.True
b.False
b.False
They were push towards financial crisis there were many factors towards the financial crisis.
what is credit default swap?
a. This is an insurance contract in which the buyer makes a series of payments to the protection seller and, in exchange, receives a payoff if a security goes into default
b. type of a derivatives
c. All of the above
c. All of the above
This is an insurance contract in which the buyer makes a series of payments to the protection seller and, in exchange, receives a payoff if a security goes into default
considered a type of a derivatives
All of the following happened during the Crisis except.
a. Banks froze
b. All banks became bankrupt
c. Rising of Libor
b. All banks became bankrupt
What happened to the banks during the Financial Crisis?
a. Froze
b. Continued to operate
c. U.S government took over all banks
a. Froze
All the following statements are true about Fannie and Freddie except.
a.were government sponsored enterprises (GSE)
b. The federal government implicitly guaranteed the value of the mortgages they resold on the secondary market.
c. Fannie and Freddie fixed itself with U.S government help.
c. Fannie and Freddie fixed itself with U.S government help.
What is Predatory Lending Practice?
a. Adjustable interest that lead to insane high mortgages
b. Adjustable mortgages that lead to insane high prices
c. Practices that create more interest rates on a mortgage
a. Adjustable interest that lead to insane high mortgages
What was the act that was placed in order to help prevent the financial crisis?
a. The SAFE Mortgage Licensing Act
b. The Dodd Frank Law
c. The Crisis Prevention Act
a. The SAFE Mortgage Licensing Act
All of the following is true except.
a. During the financial Crisis subprime loans were taken by lenders in order to improve from the financial Crisis.
b. During the 08 Crisis Banks were giving subprime loans to basically anyone.
c. Stodgy pension funds bought these risky assets because they thought an insurance product called credit default swaps protected them.
a. During the financial Crisis subprime loans were taken by lenders in order to improve from the financial Crisis.
What did government do with Fannie and Freddie Mac, during the Financial Crisis?
a. shut it down
b. The US government took over these two companies in September 2008.
c. They did nothing, the two companies were frozen.
b. The US government took over these two companies in September 2008.
What is the SAFE Mortgage Licensing Act?
a. Strict regulations on lenders and banks in an effort to protect consumers and prevent another all-out economic recession.
b. Is designed to enhance consumer protection and reduce fraud.
c. Pushed banks to make investments in subprime areas.
b. Is designed to enhance consumer protection and reduce fraud.
In the first video during the presentation, It spoke about the national economic stabilization act of 2008. Which of the following statement is true?
a. Created $700 billion dollars to buy distressed assets.
b. Created $700 billion dollars to bail out all banks.
c. Created $700 billion dollars to help Fannie and Freddie enterprises.
a. Created $700 billion dollars to buy distressed assets.
All of the following is true from the Crisis timeline except.
a. October 6th- Global Market crash
b. February- Bush refuses to signs tax rebate
c. September 15- Lehman Brothers goes bankrupt
b. February- Bush refuses to signs tax rebate
He did sign it
Why did legislation keep Fannie and Freddie? In other words why weren't they shut down?
After the financial crisis legislators thought about shutting down Fannie and Freddie bank, however they owned 90% of all mortgages. Shutting them down will only lead to an unstable housing market.
What was the Community Reinvestment Act?
Community Reinvestment Act Pushed banks to make investments in subprime areas
In the presentation there were four groups/institutions we blamed for the cause of the Financial Crisis. List 2 of those groups/institutions and why we blame them.
-It was the homeowners who couldn’t pay their mortgages.
-It was the Global Investors that wanted more money.
-It was the Government that don't supervise and regulate enough.
-It was the financial institutions that played with the risky assets
What happened to American International Group (AIG) during the Financial Crisis?
American International Group (AIG) sold credit default swaps, and when the derivatives lost value, AIG didn't have enough cash flow to honor all the swaps.