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Too Big to Fail Guided Notes 57:00-1:05:00


You will be expect to write a summary of this financial crisis (this week and on your

Lehman exacerbated ______ simultaneously by pay outs of

CDO and Credit Default Swaps and that put catastrophic
pressure on ______.
Wall ______started __________ ________ loans together as
mortgage backed securities and started selling slices of that to
investors making big money and in turn said to lenders we need
more loans.
Lenders are already lending to good credit borrowers so they
started going _______________ ________________.
Before this a ____________ needed a score of ______and a
____% down payment; now ______ credit score and ____
money down.
Buyer assumes the _____ know what they are doing if the bank
is willing to give them money they must be_____ ___ _______
___ and then the buyer reaches for the American Dream
and______ _____ ___________.
Banks knew that these securities based on faulty mortgages
were _______so to control their down side, banks started
buying _________on these loans. If the mortgage defaults the
insurance company_____, a default swap. The banks move
their risk ___ their books so they can _______more and make
more money.
AIG took on this ______ because of the hundreds of millions
they were to receive in _____. AIG figured that the housing
marking would continue to go____.
The guy who bought his dream house sees his initial teaser rate increase
tremendously and he _________on the _______. The mortgage backed
securities are to be insured by AIG and has to pay on _____of them
_____over the world at the ______ time. AIG cant pay and so AIG

Every __________ books massive losses as a result on the same day and
they all go under. It all comes down, the _________ _________

No one wanted to _________this business because they were making too

much money.
The _________ Reserve negotiates with AIG to make an $85 _________
bailout out temporary loan to AIG to stave off collapse.

This affects everyone who has a _________.

_________markets are still frozen and the federal government keeps

dumping money hoping that it will stabilize and nothing helps.

Federal government rescued _______ ________and AIG without


2 months before an _________ congress will not vote yes on a

_________for fear they wont get re-elected.

Federal ___________is running out of options.

There is ____ enough money in any bank in the world to pay its
depositors, it's all based on_________.

The banks close and and if they pull back on interbank lending, its all over
within hours from there.

It goes too fast to stop. Average people wonder if their money is safe.
They start _______ ____ cash. Lines around the block and smashed ATM
Machines. After a few weeks, theres no milk in the stores.