Deregulation of financial industry and uncontrolled

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Question: The assignment for the day is a two-page report about the financial crisis: causes, consequences, lessons learned, etc. Below is an outline to get you started.

Recession of 2007-2009:
Prompted by global financial crisis*
Worst economic downturn since Great Depression of 1930s (recent pandemic excluded)
GDP fell sharply and unemployment rate rose above 10 percent in the U.S.

*Causes of global financial crisis
1. Deregulation of financial industry and uncontrolled financial innovation
Repeal of Glass-Steagall Act
Excessive risk taking by financial institutions (moral hazard problem)
2. Misrepresentation of credit risk by rating agencies
Conflicts of interest faced by rating agencies
3. Burst of housing bubble in 2007
Mortgage default crisis
Breakdown of securitization chain

Reference no: EM133416133

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