History 1807 Lecture Notes - Lecture 9: American International Group, Credit Default Swap, Shadow Banking System
13 Feb 2018
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What were the causes of the financial crisis: fannie mae was created for the reserve requirements for the banks, take the debts off of the commercial bank and put it on the government. People believed that investing in property was the safest: axon (oil company) created an oil spill, by accident, and they were in charge of cleaning up the mess. Axon called jp morgan and said we need you to bail us out. Jp morgan agrees but the ideas was that they now have with big debt on their books and now had. The fallout: the shadow banking system, by 1990s a shadow banking system develops that is outside the regulatory reach of the federal government, banks and mortgage companies sell their mortgages to investment banks. In 1999 glass-steagall act (1933), which had split commercial and investment banks, is repealed.
