Вы находитесь на странице: 1из 1

The documentary Inside Job showcases what caused the financial crisis of 2007/2008.

De-
regulation and mal-practice played a significant role that intertwined government, financial
services industry, and millions of innocent lives.
De-regulation of financial services firms started ac! with the "eagan #dministration when they
allowed firms to ma!e ris!y investments with their investors$ deposits. This eventually led to the
financial conglomerates and powerful investment an!s. %y the time it was the %ush
#dministration, the &nited 'tates financial sector was not only significantly more profitale and
concentrated than ever efore, ut also powerful. (t consisted of mainly five investment an!s, 2
financial conglomerates, ) securities insurance companies, and ) rating agencies.
The commonality etween these institutions is mortgages. *ortgages used to e a loan etween
a lender and orrower. #nd since mortgages usually too! many years to pay off, the lender
would rarely ta!e ris!s. The lender has everything to lose in this transaction if the orrower
defaults. 'ince the early 2000$s however, this simple relationship ecame more profitale, ris!y,
and complicated. %orrowers got loans from lenders who then sold these loans to investment
an!s. These investment an!s placed these loans, along with other loans such as car and
education, into +D,$s or +ollaterali-ed Det ,ligations. These could potentially have
thousands of loans in them. +D,$s are now sold from investment an!s to investors. .ow the
orrower pays the investor. %ecause the liaility was asically eing sold off to the ne/t
institution in the process, lenders didn$t care aout giving loans to suprime lenders, and
investment an!s didn$t care aout selling them. 'o why would the investor invest in ris!y
instruments0 %ecause the investment an!s paid off rating agencies to rate these +D,$s as ###
securities, the highest rating. They had no liaility if their ratings were wrong. This not only
caused private investors to ta!e part, ut also retirement funds, as many are regulated to only
ma!e high rated investments.
'ince anyone could get a loan, there was a huge increase in mortgages and price in housing.
1enders got paid y the volume and also the price of asset they sell. 'o 2predatory loans3, or
loans for e/pensive houses to suprime loaners, were favored y firms. This created the iggest
ule in history which created profits in the 400$s of illions. The urst would inevitaly have a
gloal impact.
5hen the 1ehman %rothers collapsed, so did the commercial paper mar!et. This caused a
significant amount of layoffs from firms that relied on commercial paper for operating e/penses.
#merican factory wor!ers and manufacturing and 6os were affected on a gloal asis, which in
turn, had an effect on the gloal economy. This was a case of de-regulation leading to corruption
and malpractice. 1enders and investment an!s too! advantage of deregulation and their profits
s!yroc!eted.