Watch the video answer questions
- How much money did Hank Paulsen and Ben Bernanke think was needed to unclog the credit markets?
- What was the rumor that caused Bear Sterns stock to fall?
- What investment caused Bear Sterns so much trouble?
- What did rising house prices create?
- Where was Bear’s CEO when the firm was crashing?
- How often did Bear rollover their loans? What are the risks of doing this?
- What was the last chance for Bear?
- What is a credit default swap?
- Why was Bear Stern’s failure so critical?
- What do bankers fear most?
- Should tax payers provide loans for investment banks? Why or why not?
- What is moral hazard? How many bailouts has the US government done in the last 20 years?
- Should bailouts be painful or beneficial to bailed out firms?
- What was the purpose of Fannie Mae and Freddie Mac? Are they examples of profit maximizing firms or government run bureaucracies?
- If you knew the government would bail you out if you took on too much credit, would you take on more or less debt?
- If the government bailed out Lehman brothers, would more or less firms need bailouts?
- What happened to Lehman Brothers?
- What investment did AIG make regarding Lehman Brothers?
- Now that we are almost 2 years from the crisis, did government action really save anything or just prolong the pain?
- Was this the first time the Federal Reserve has recommended a bailout from taxpayers?
- What is capital injection?
- Now that we are two years from the crisis, do you think the economy slowdown caused the banking crisis or did the banking crisis cause the economic slowdown?
- Do you think the US will bailout firms in the future ‘to restore confidence’? Will the bailouts be larger or smaller in the future?
- Does the government still own private firms? Is this good or bad? Why?
Sample Solution