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What economist believed that regulations did not keep up with financial innovation? | <text>What economist believed that regulations did not keep up with financial innovation?</text><reasoning>Critics such as economist Paul Krugman and U.S. Treasury Secretary Timothy Geithner have argued that the regulatory framework did not keep pace with financial innovation, such as the increasing importance of the shadow banking system, derivatives and off-balance sheet financing. A recent OECD study suggest that bank regulation based on the Basel accords encourage unconventional business practices and contributed to or even reinforced the financial crisis. In other cases, laws were changed or enforcement weakened in parts of the financial system. Key examples include:</reasoning><output>Paul Krugman</output> |
Who was the U.S. Treasury Secretary dealing with the aftermath of the financial crisis of 2007? | <text>Who was the U.S. Treasury Secretary dealing with the aftermath of the financial crisis of 2007?</text><reasoning>Critics such as economist Paul Krugman and U.S. Treasury Secretary Timothy Geithner have argued that the regulatory framework did not keep pace with financial innovation, such as the increasing importance of the shadow banking system, derivatives and off-balance sheet financing. A recent OECD study suggest that bank regulation based on the Basel accords encourage unconventional business practices and contributed to or even reinforced the financial crisis. In other cases, laws were changed or enforcement weakened in parts of the financial system. Key examples include:</reasoning><output>Timothy Geithner</output> |
Which group's study suggested that Basel accords encourage unconventional business practices? | <text>Which group's study suggested that Basel accords encourage unconventional business practices?</text><reasoning>Critics such as economist Paul Krugman and U.S. Treasury Secretary Timothy Geithner have argued that the regulatory framework did not keep pace with financial innovation, such as the increasing importance of the shadow banking system, derivatives and off-balance sheet financing. A recent OECD study suggest that bank regulation based on the Basel accords encourage unconventional business practices and contributed to or even reinforced the financial crisis. In other cases, laws were changed or enforcement weakened in parts of the financial system. Key examples include:</reasoning><output>OECD</output> |
It has been argued that what did not keep up with financial innovation? | <text>It has been argued that what did not keep up with financial innovation?</text><reasoning>Critics such as economist Paul Krugman and U.S. Treasury Secretary Timothy Geithner have argued that the regulatory framework did not keep pace with financial innovation, such as the increasing importance of the shadow banking system, derivatives and off-balance sheet financing. A recent OECD study suggest that bank regulation based on the Basel accords encourage unconventional business practices and contributed to or even reinforced the financial crisis. In other cases, laws were changed or enforcement weakened in parts of the financial system. Key examples include:</reasoning><output>regulatory framework</output> |
What accords possibly contributed to or reinforced the financial crisis? | <text>What accords possibly contributed to or reinforced the financial crisis?</text><reasoning>Critics such as economist Paul Krugman and U.S. Treasury Secretary Timothy Geithner have argued that the regulatory framework did not keep pace with financial innovation, such as the increasing importance of the shadow banking system, derivatives and off-balance sheet financing. A recent OECD study suggest that bank regulation based on the Basel accords encourage unconventional business practices and contributed to or even reinforced the financial crisis. In other cases, laws were changed or enforcement weakened in parts of the financial system. Key examples include:</reasoning><output>Basel</output> |
What is the name of the securities that enabled financial institutions to obtain investor funds to finance subprime? | <text>What is the name of the securities that enabled financial institutions to obtain investor funds to finance subprime?</text><reasoning>The collateralized debt obligation in particular enabled financial institutions to obtain investor funds to finance subprime and other lending, extending or increasing the housing bubble and generating large fees. This essentially places cash payments from multiple mortgages or other debt obligations into a single pool from which specific securities draw in a specific sequence of priority. Those securities first in line received investment-grade ratings from rating agencies. Securities with lower priority had lower credit ratings but theoretically a higher rate of return on the amount invested.</reasoning><output>collateralized debt obligation</output> |
What was the outcome of collateralized debt obligations? | <text>What was the outcome of collateralized debt obligations?</text><reasoning>The collateralized debt obligation in particular enabled financial institutions to obtain investor funds to finance subprime and other lending, extending or increasing the housing bubble and generating large fees. This essentially places cash payments from multiple mortgages or other debt obligations into a single pool from which specific securities draw in a specific sequence of priority. Those securities first in line received investment-grade ratings from rating agencies. Securities with lower priority had lower credit ratings but theoretically a higher rate of return on the amount invested.</reasoning><output>extending or increasing the housing bubble</output> |
What type ratings did securities first in line receive from rating agencies? | <text>What type ratings did securities first in line receive from rating agencies?</text><reasoning>The collateralized debt obligation in particular enabled financial institutions to obtain investor funds to finance subprime and other lending, extending or increasing the housing bubble and generating large fees. This essentially places cash payments from multiple mortgages or other debt obligations into a single pool from which specific securities draw in a specific sequence of priority. Those securities first in line received investment-grade ratings from rating agencies. Securities with lower priority had lower credit ratings but theoretically a higher rate of return on the amount invested.</reasoning><output>investment-grade ratings</output> |
What type pool do collateralized debt obligations place their payments from mortgages into? | <text>What type pool do collateralized debt obligations place their payments from mortgages into?</text><reasoning>The collateralized debt obligation in particular enabled financial institutions to obtain investor funds to finance subprime and other lending, extending or increasing the housing bubble and generating large fees. This essentially places cash payments from multiple mortgages or other debt obligations into a single pool from which specific securities draw in a specific sequence of priority. Those securities first in line received investment-grade ratings from rating agencies. Securities with lower priority had lower credit ratings but theoretically a higher rate of return on the amount invested.</reasoning><output>single pool</output> |
What securities had lower credit ratings but potentially a higher rate of return? | <text>What securities had lower credit ratings but potentially a higher rate of return?</text><reasoning>The collateralized debt obligation in particular enabled financial institutions to obtain investor funds to finance subprime and other lending, extending or increasing the housing bubble and generating large fees. This essentially places cash payments from multiple mortgages or other debt obligations into a single pool from which specific securities draw in a specific sequence of priority. Those securities first in line received investment-grade ratings from rating agencies. Securities with lower priority had lower credit ratings but theoretically a higher rate of return on the amount invested.</reasoning><output>Securities with lower priority</output> |
Was was the federal funds rate target lowered to by the Federal Reserve in 2003? | <text>Was was the federal funds rate target lowered to by the Federal Reserve in 2003?</text><reasoning>Lower interest rates encouraged borrowing. From 2000 to 2003, the Federal Reserve lowered the federal funds rate target from 6.5% to 1.0%. This was done to soften the effects of the collapse of the dot-com bubble and the September 2001 terrorist attacks, as well as to combat a perceived risk of deflation. As early as 2002 it was apparent that credit was fueling housing instead of business investment as some economists went so far as to advocate that the Fed "needs to create a housing bubble to replace the Nasdaq bubble". Moreover, empirical studies using data from advanced countries show that excessive credit growth contributed greatly to the severity of the crisis.</reasoning><output>1.0%</output> |
What is one reason the Federal Reserve lowered the federal funds rate target to 1.0% in 2003? | <text>What is one reason the Federal Reserve lowered the federal funds rate target to 1.0% in 2003?</text><reasoning>Lower interest rates encouraged borrowing. From 2000 to 2003, the Federal Reserve lowered the federal funds rate target from 6.5% to 1.0%. This was done to soften the effects of the collapse of the dot-com bubble and the September 2001 terrorist attacks, as well as to combat a perceived risk of deflation. As early as 2002 it was apparent that credit was fueling housing instead of business investment as some economists went so far as to advocate that the Fed "needs to create a housing bubble to replace the Nasdaq bubble". Moreover, empirical studies using data from advanced countries show that excessive credit growth contributed greatly to the severity of the crisis.</reasoning><output>to combat a perceived risk of deflation</output> |
In the early 2000s, what type bubble did some economists believe the Fed needed to create to replace the Nasdaq bubble? | <text>In the early 2000s, what type bubble did some economists believe the Fed needed to create to replace the Nasdaq bubble?</text><reasoning>Lower interest rates encouraged borrowing. From 2000 to 2003, the Federal Reserve lowered the federal funds rate target from 6.5% to 1.0%. This was done to soften the effects of the collapse of the dot-com bubble and the September 2001 terrorist attacks, as well as to combat a perceived risk of deflation. As early as 2002 it was apparent that credit was fueling housing instead of business investment as some economists went so far as to advocate that the Fed "needs to create a housing bubble to replace the Nasdaq bubble". Moreover, empirical studies using data from advanced countries show that excessive credit growth contributed greatly to the severity of the crisis.</reasoning><output>a housing bubble</output> |
What contributed greatly to the severity of the financial crisis of 2007? | <text>What contributed greatly to the severity of the financial crisis of 2007?</text><reasoning>Lower interest rates encouraged borrowing. From 2000 to 2003, the Federal Reserve lowered the federal funds rate target from 6.5% to 1.0%. This was done to soften the effects of the collapse of the dot-com bubble and the September 2001 terrorist attacks, as well as to combat a perceived risk of deflation. As early as 2002 it was apparent that credit was fueling housing instead of business investment as some economists went so far as to advocate that the Fed "needs to create a housing bubble to replace the Nasdaq bubble". Moreover, empirical studies using data from advanced countries show that excessive credit growth contributed greatly to the severity of the crisis.</reasoning><output>excessive credit growth</output> |
What encouraged borrowing from 2000 to 2003? | <text>What encouraged borrowing from 2000 to 2003?</text><reasoning>Lower interest rates encouraged borrowing. From 2000 to 2003, the Federal Reserve lowered the federal funds rate target from 6.5% to 1.0%. This was done to soften the effects of the collapse of the dot-com bubble and the September 2001 terrorist attacks, as well as to combat a perceived risk of deflation. As early as 2002 it was apparent that credit was fueling housing instead of business investment as some economists went so far as to advocate that the Fed "needs to create a housing bubble to replace the Nasdaq bubble". Moreover, empirical studies using data from advanced countries show that excessive credit growth contributed greatly to the severity of the crisis.</reasoning><output>Lower interest rates</output> |
Who was the largest residential loan due diligence and securitization surveillance company? | <text>Who was the largest residential loan due diligence and securitization surveillance company?</text><reasoning>In separate testimony to Financial Crisis Inquiry Commission, officers of Clayton Holdings—the largest residential loan due diligence and securitization surveillance company in the United States and Europe—testified that Clayton's review of over 900,000 mortgages issued from January 2006 to June 2007 revealed that scarcely 54% of the loans met their originators’ underwriting standards. The analysis (conducted on behalf of 23 investment and commercial banks, including 7 "too big to fail" banks) additionally showed that 28% of the sampled loans did not meet the minimal standards of any issuer. Clayton's analysis further showed that 39% of these loans (i.e. those not meeting any issuer's minimal underwriting standards) were subsequently securitized and sold to investors.</reasoning><output>Clayton Holdings</output> |
According to Clayton Holdings, how many mortgages issued from January 2006 to June 2007 met underwriting standards? | <text>According to Clayton Holdings, how many mortgages issued from January 2006 to June 2007 met underwriting standards?</text><reasoning>In separate testimony to Financial Crisis Inquiry Commission, officers of Clayton Holdings—the largest residential loan due diligence and securitization surveillance company in the United States and Europe—testified that Clayton's review of over 900,000 mortgages issued from January 2006 to June 2007 revealed that scarcely 54% of the loans met their originators’ underwriting standards. The analysis (conducted on behalf of 23 investment and commercial banks, including 7 "too big to fail" banks) additionally showed that 28% of the sampled loans did not meet the minimal standards of any issuer. Clayton's analysis further showed that 39% of these loans (i.e. those not meeting any issuer's minimal underwriting standards) were subsequently securitized and sold to investors.</reasoning><output>54%</output> |
How many investment and commercial banks were included in Clayton Holdings' analysis of January 2006 to June 2007 loans? | <text>How many investment and commercial banks were included in Clayton Holdings' analysis of January 2006 to June 2007 loans?</text><reasoning>In separate testimony to Financial Crisis Inquiry Commission, officers of Clayton Holdings—the largest residential loan due diligence and securitization surveillance company in the United States and Europe—testified that Clayton's review of over 900,000 mortgages issued from January 2006 to June 2007 revealed that scarcely 54% of the loans met their originators’ underwriting standards. The analysis (conducted on behalf of 23 investment and commercial banks, including 7 "too big to fail" banks) additionally showed that 28% of the sampled loans did not meet the minimal standards of any issuer. Clayton's analysis further showed that 39% of these loans (i.e. those not meeting any issuer's minimal underwriting standards) were subsequently securitized and sold to investors.</reasoning><output>23</output> |
Per Clayton's analysis of loans issued from January 2006 to June 2007, what percent of loans did not meet minimal standards of any issuer? | <text>Per Clayton's analysis of loans issued from January 2006 to June 2007, what percent of loans did not meet minimal standards of any issuer?</text><reasoning>In separate testimony to Financial Crisis Inquiry Commission, officers of Clayton Holdings—the largest residential loan due diligence and securitization surveillance company in the United States and Europe—testified that Clayton's review of over 900,000 mortgages issued from January 2006 to June 2007 revealed that scarcely 54% of the loans met their originators’ underwriting standards. The analysis (conducted on behalf of 23 investment and commercial banks, including 7 "too big to fail" banks) additionally showed that 28% of the sampled loans did not meet the minimal standards of any issuer. Clayton's analysis further showed that 39% of these loans (i.e. those not meeting any issuer's minimal underwriting standards) were subsequently securitized and sold to investors.</reasoning><output>28%</output> |
How many mortgage loans did Clayton Holdings review in their analysis? | <text>How many mortgage loans did Clayton Holdings review in their analysis?</text><reasoning>In separate testimony to Financial Crisis Inquiry Commission, officers of Clayton Holdings—the largest residential loan due diligence and securitization surveillance company in the United States and Europe—testified that Clayton's review of over 900,000 mortgages issued from January 2006 to June 2007 revealed that scarcely 54% of the loans met their originators’ underwriting standards. The analysis (conducted on behalf of 23 investment and commercial banks, including 7 "too big to fail" banks) additionally showed that 28% of the sampled loans did not meet the minimal standards of any issuer. Clayton's analysis further showed that 39% of these loans (i.e. those not meeting any issuer's minimal underwriting standards) were subsequently securitized and sold to investors.</reasoning><output>900,000</output> |
Who sued Countrywide for unfair business practices and false advertising? | <text>Who sued Countrywide for unfair business practices and false advertising?</text><reasoning>Countrywide, sued by California Attorney General Jerry Brown for "unfair business practices" and "false advertising" was making high cost mortgages "to homeowners with weak credit, adjustable rate mortgages (ARMs) that allowed homeowners to make interest-only payments". When housing prices decreased, homeowners in ARMs then had little incentive to pay their monthly payments, since their home equity had disappeared. This caused Countrywide's financial condition to deteriorate, ultimately resulting in a decision by the Office of Thrift Supervision to seize the lender.</reasoning><output>California Attorney General Jerry Brown</output> |
What type mortgages allowed homeowners to make interest-only payments? | <text>What type mortgages allowed homeowners to make interest-only payments?</text><reasoning>Countrywide, sued by California Attorney General Jerry Brown for "unfair business practices" and "false advertising" was making high cost mortgages "to homeowners with weak credit, adjustable rate mortgages (ARMs) that allowed homeowners to make interest-only payments". When housing prices decreased, homeowners in ARMs then had little incentive to pay their monthly payments, since their home equity had disappeared. This caused Countrywide's financial condition to deteriorate, ultimately resulting in a decision by the Office of Thrift Supervision to seize the lender.</reasoning><output>adjustable rate mortgages (ARMs)</output> |
What happened to home equity when housing prices decreased? | <text>What happened to home equity when housing prices decreased?</text><reasoning>Countrywide, sued by California Attorney General Jerry Brown for "unfair business practices" and "false advertising" was making high cost mortgages "to homeowners with weak credit, adjustable rate mortgages (ARMs) that allowed homeowners to make interest-only payments". When housing prices decreased, homeowners in ARMs then had little incentive to pay their monthly payments, since their home equity had disappeared. This caused Countrywide's financial condition to deteriorate, ultimately resulting in a decision by the Office of Thrift Supervision to seize the lender.</reasoning><output>disappeared</output> |
Who made the decision to seize Countrywide after their financial condition deteriorated? | <text>Who made the decision to seize Countrywide after their financial condition deteriorated?</text><reasoning>Countrywide, sued by California Attorney General Jerry Brown for "unfair business practices" and "false advertising" was making high cost mortgages "to homeowners with weak credit, adjustable rate mortgages (ARMs) that allowed homeowners to make interest-only payments". When housing prices decreased, homeowners in ARMs then had little incentive to pay their monthly payments, since their home equity had disappeared. This caused Countrywide's financial condition to deteriorate, ultimately resulting in a decision by the Office of Thrift Supervision to seize the lender.</reasoning><output>Office of Thrift Supervision</output> |
What type credit did borrowers obtaining mortgages from Countrywide have? | <text>What type credit did borrowers obtaining mortgages from Countrywide have?</text><reasoning>Countrywide, sued by California Attorney General Jerry Brown for "unfair business practices" and "false advertising" was making high cost mortgages "to homeowners with weak credit, adjustable rate mortgages (ARMs) that allowed homeowners to make interest-only payments". When housing prices decreased, homeowners in ARMs then had little incentive to pay their monthly payments, since their home equity had disappeared. This caused Countrywide's financial condition to deteriorate, ultimately resulting in a decision by the Office of Thrift Supervision to seize the lender.</reasoning><output>weak credit</output> |
Richard M. Bowen III testified to the Financial Crisis Inquiry Commission regarding his tenure at which financial institution? | <text>Richard M. Bowen III testified to the Financial Crisis Inquiry Commission regarding his tenure at which financial institution?</text><reasoning>Testimony given to the Financial Crisis Inquiry Commission by Richard M. Bowen III on events during his tenure as the Business Chief Underwriter for Correspondent Lending in the Consumer Lending Group for Citigroup (where he was responsible for over 220 professional underwriters) suggests that by the final years of the U.S. housing bubble (2006–2007), the collapse of mortgage underwriting standards was endemic. His testimony stated that by 2006, 60% of mortgages purchased by Citi from some 1,600 mortgage companies were "defective" (were not underwritten to policy, or did not contain all policy-required documents) – this, despite the fact that each of these 1,600 originators was contractually responsible (certified via representations and warrantees) that its mortgage originations met Citi's standards. Moreover, during 2007, "defective mortgages (from mortgage originators contractually bound to perform underwriting to Citi's standards) increased... to over 80% of production".</reasoning><output>Citigroup</output> |
How many underwriters was Richard M. Bowen III responsible for at Citigroup? | <text>How many underwriters was Richard M. Bowen III responsible for at Citigroup?</text><reasoning>Testimony given to the Financial Crisis Inquiry Commission by Richard M. Bowen III on events during his tenure as the Business Chief Underwriter for Correspondent Lending in the Consumer Lending Group for Citigroup (where he was responsible for over 220 professional underwriters) suggests that by the final years of the U.S. housing bubble (2006–2007), the collapse of mortgage underwriting standards was endemic. His testimony stated that by 2006, 60% of mortgages purchased by Citi from some 1,600 mortgage companies were "defective" (were not underwritten to policy, or did not contain all policy-required documents) – this, despite the fact that each of these 1,600 originators was contractually responsible (certified via representations and warrantees) that its mortgage originations met Citi's standards. Moreover, during 2007, "defective mortgages (from mortgage originators contractually bound to perform underwriting to Citi's standards) increased... to over 80% of production".</reasoning><output>220</output> |
What percent of mortgages purchased by Citigroup in 2006 were defective? | <text>What percent of mortgages purchased by Citigroup in 2006 were defective?</text><reasoning>Testimony given to the Financial Crisis Inquiry Commission by Richard M. Bowen III on events during his tenure as the Business Chief Underwriter for Correspondent Lending in the Consumer Lending Group for Citigroup (where he was responsible for over 220 professional underwriters) suggests that by the final years of the U.S. housing bubble (2006–2007), the collapse of mortgage underwriting standards was endemic. His testimony stated that by 2006, 60% of mortgages purchased by Citi from some 1,600 mortgage companies were "defective" (were not underwritten to policy, or did not contain all policy-required documents) – this, despite the fact that each of these 1,600 originators was contractually responsible (certified via representations and warrantees) that its mortgage originations met Citi's standards. Moreover, during 2007, "defective mortgages (from mortgage originators contractually bound to perform underwriting to Citi's standards) increased... to over 80% of production".</reasoning><output>60%</output> |
In 2006, how many mortgage companies were contractually responsible to meet Citi's standards? | <text>In 2006, how many mortgage companies were contractually responsible to meet Citi's standards?</text><reasoning>Testimony given to the Financial Crisis Inquiry Commission by Richard M. Bowen III on events during his tenure as the Business Chief Underwriter for Correspondent Lending in the Consumer Lending Group for Citigroup (where he was responsible for over 220 professional underwriters) suggests that by the final years of the U.S. housing bubble (2006–2007), the collapse of mortgage underwriting standards was endemic. His testimony stated that by 2006, 60% of mortgages purchased by Citi from some 1,600 mortgage companies were "defective" (were not underwritten to policy, or did not contain all policy-required documents) – this, despite the fact that each of these 1,600 originators was contractually responsible (certified via representations and warrantees) that its mortgage originations met Citi's standards. Moreover, during 2007, "defective mortgages (from mortgage originators contractually bound to perform underwriting to Citi's standards) increased... to over 80% of production".</reasoning><output>1,600</output> |
During 2007, what was the percent of defective mortgages not underwritten to Citi's standards? | <text>During 2007, what was the percent of defective mortgages not underwritten to Citi's standards?</text><reasoning>Testimony given to the Financial Crisis Inquiry Commission by Richard M. Bowen III on events during his tenure as the Business Chief Underwriter for Correspondent Lending in the Consumer Lending Group for Citigroup (where he was responsible for over 220 professional underwriters) suggests that by the final years of the U.S. housing bubble (2006–2007), the collapse of mortgage underwriting standards was endemic. His testimony stated that by 2006, 60% of mortgages purchased by Citi from some 1,600 mortgage companies were "defective" (were not underwritten to policy, or did not contain all policy-required documents) – this, despite the fact that each of these 1,600 originators was contractually responsible (certified via representations and warrantees) that its mortgage originations met Citi's standards. Moreover, during 2007, "defective mortgages (from mortgage originators contractually bound to perform underwriting to Citi's standards) increased... to over 80% of production".</reasoning><output>over 80%</output> |
What is one investment assigned safe ratings by the credit rating agencies? | <text>What is one investment assigned safe ratings by the credit rating agencies?</text><reasoning>In a Peabody Award winning program, NPR correspondents argued that a "Giant Pool of Money" (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. This pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with products such as the mortgage-backed security and the collateralized debt obligation that were assigned safe ratings by the credit rating agencies.</reasoning><output>collateralized debt obligation</output> |
How much was invested worldwide in fixed income investments? | <text>How much was invested worldwide in fixed income investments?</text><reasoning>In a Peabody Award winning program, NPR correspondents argued that a "Giant Pool of Money" (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. This pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with products such as the mortgage-backed security and the collateralized debt obligation that were assigned safe ratings by the credit rating agencies.</reasoning><output>$70 trillion</output> |
How much did the pool of money invested worldwide in fixed income investments grow in size from 2000 to 2007? | <text>How much did the pool of money invested worldwide in fixed income investments grow in size from 2000 to 2007?</text><reasoning>In a Peabody Award winning program, NPR correspondents argued that a "Giant Pool of Money" (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. This pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with products such as the mortgage-backed security and the collateralized debt obligation that were assigned safe ratings by the credit rating agencies.</reasoning><output>roughly doubled in size</output> |
What is an example of a product Wall Street invented to answer the demand for income generating investments? | <text>What is an example of a product Wall Street invented to answer the demand for income generating investments?</text><reasoning>In a Peabody Award winning program, NPR correspondents argued that a "Giant Pool of Money" (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. This pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with products such as the mortgage-backed security and the collateralized debt obligation that were assigned safe ratings by the credit rating agencies.</reasoning><output>mortgage-backed security</output> |
In the 2000s, investors were seeking higher yields than those offered by this investment? | <text>In the 2000s, investors were seeking higher yields than those offered by this investment?</text><reasoning>In a Peabody Award winning program, NPR correspondents argued that a "Giant Pool of Money" (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. This pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with products such as the mortgage-backed security and the collateralized debt obligation that were assigned safe ratings by the credit rating agencies.</reasoning><output>U.S. Treasury bonds</output> |
Where was Alfred North Whitehead born? | <text>Where was Alfred North Whitehead born?</text><reasoning>Alfred North Whitehead was born in Ramsgate, Kent, England, in 1861. His father, Alfred Whitehead, was a minister and schoolmaster of Chatham House Academy, a successful school for boys established by Thomas Whitehead, Alfred North's grandfather. Whitehead himself recalled both of them as being very successful schoolmasters, but that his grandfather was the more extraordinary man. Whitehead's mother was Maria Sarah Whitehead, formerly Maria Sarah Buckmaster. Whitehead was apparently not particularly close with his mother, as he never mentioned her in any of his writings, and there is evidence that Whitehead's wife, Evelyn, had a low opinion of her.</reasoning><output>Ramsgate, Kent, England</output> |
In what year was Whitehead born? | <text>In what year was Whitehead born?</text><reasoning>Alfred North Whitehead was born in Ramsgate, Kent, England, in 1861. His father, Alfred Whitehead, was a minister and schoolmaster of Chatham House Academy, a successful school for boys established by Thomas Whitehead, Alfred North's grandfather. Whitehead himself recalled both of them as being very successful schoolmasters, but that his grandfather was the more extraordinary man. Whitehead's mother was Maria Sarah Whitehead, formerly Maria Sarah Buckmaster. Whitehead was apparently not particularly close with his mother, as he never mentioned her in any of his writings, and there is evidence that Whitehead's wife, Evelyn, had a low opinion of her.</reasoning><output>1861</output> |
Who founded Chatham House Academy? | <text>Who founded Chatham House Academy?</text><reasoning>Alfred North Whitehead was born in Ramsgate, Kent, England, in 1861. His father, Alfred Whitehead, was a minister and schoolmaster of Chatham House Academy, a successful school for boys established by Thomas Whitehead, Alfred North's grandfather. Whitehead himself recalled both of them as being very successful schoolmasters, but that his grandfather was the more extraordinary man. Whitehead's mother was Maria Sarah Whitehead, formerly Maria Sarah Buckmaster. Whitehead was apparently not particularly close with his mother, as he never mentioned her in any of his writings, and there is evidence that Whitehead's wife, Evelyn, had a low opinion of her.</reasoning><output>Thomas Whitehead, Alfred North's grandfather</output> |
What was Whitehead's father's profession? | <text>What was Whitehead's father's profession?</text><reasoning>Alfred North Whitehead was born in Ramsgate, Kent, England, in 1861. His father, Alfred Whitehead, was a minister and schoolmaster of Chatham House Academy, a successful school for boys established by Thomas Whitehead, Alfred North's grandfather. Whitehead himself recalled both of them as being very successful schoolmasters, but that his grandfather was the more extraordinary man. Whitehead's mother was Maria Sarah Whitehead, formerly Maria Sarah Buckmaster. Whitehead was apparently not particularly close with his mother, as he never mentioned her in any of his writings, and there is evidence that Whitehead's wife, Evelyn, had a low opinion of her.</reasoning><output>minister and schoolmaster of Chatham House Academy</output> |
Who was Whitehead's mother? | <text>Who was Whitehead's mother?</text><reasoning>Alfred North Whitehead was born in Ramsgate, Kent, England, in 1861. His father, Alfred Whitehead, was a minister and schoolmaster of Chatham House Academy, a successful school for boys established by Thomas Whitehead, Alfred North's grandfather. Whitehead himself recalled both of them as being very successful schoolmasters, but that his grandfather was the more extraordinary man. Whitehead's mother was Maria Sarah Whitehead, formerly Maria Sarah Buckmaster. Whitehead was apparently not particularly close with his mother, as he never mentioned her in any of his writings, and there is evidence that Whitehead's wife, Evelyn, had a low opinion of her.</reasoning><output>Maria Sarah Whitehead, formerly Maria Sarah Buckmaster</output> |
Where was Alfred North Whitehead born? | <text>Where was Alfred North Whitehead born?</text><reasoning>Alfred North Whitehead was born in Ramsgate, Kent, England, in 1861. His father, Alfred Whitehead, was a minister and schoolmaster of Chatham House Academy, a successful school for boys established by Thomas Whitehead, Alfred North's grandfather. Whitehead himself recalled both of them as being very successful schoolmasters, but that his grandfather was the more extraordinary man. Whitehead's mother was Maria Sarah Whitehead, formerly Maria Sarah Buckmaster. Whitehead was apparently not particularly close with his mother, as he never mentioned her in any of his writings, and there is evidence that Whitehead's wife, Evelyn, had a low opinion of her.</reasoning><output>Ramsgate, Kent, England</output> |
What year was Whitehead born? | <text>What year was Whitehead born?</text><reasoning>Alfred North Whitehead was born in Ramsgate, Kent, England, in 1861. His father, Alfred Whitehead, was a minister and schoolmaster of Chatham House Academy, a successful school for boys established by Thomas Whitehead, Alfred North's grandfather. Whitehead himself recalled both of them as being very successful schoolmasters, but that his grandfather was the more extraordinary man. Whitehead's mother was Maria Sarah Whitehead, formerly Maria Sarah Buckmaster. Whitehead was apparently not particularly close with his mother, as he never mentioned her in any of his writings, and there is evidence that Whitehead's wife, Evelyn, had a low opinion of her.</reasoning><output>1861</output> |
What was Whitehead's father's profession? | <text>What was Whitehead's father's profession?</text><reasoning>Alfred North Whitehead was born in Ramsgate, Kent, England, in 1861. His father, Alfred Whitehead, was a minister and schoolmaster of Chatham House Academy, a successful school for boys established by Thomas Whitehead, Alfred North's grandfather. Whitehead himself recalled both of them as being very successful schoolmasters, but that his grandfather was the more extraordinary man. Whitehead's mother was Maria Sarah Whitehead, formerly Maria Sarah Buckmaster. Whitehead was apparently not particularly close with his mother, as he never mentioned her in any of his writings, and there is evidence that Whitehead's wife, Evelyn, had a low opinion of her.</reasoning><output>minister and schoolmaster</output> |
What was Whitehead's mother's name? | <text>What was Whitehead's mother's name?</text><reasoning>Alfred North Whitehead was born in Ramsgate, Kent, England, in 1861. His father, Alfred Whitehead, was a minister and schoolmaster of Chatham House Academy, a successful school for boys established by Thomas Whitehead, Alfred North's grandfather. Whitehead himself recalled both of them as being very successful schoolmasters, but that his grandfather was the more extraordinary man. Whitehead's mother was Maria Sarah Whitehead, formerly Maria Sarah Buckmaster. Whitehead was apparently not particularly close with his mother, as he never mentioned her in any of his writings, and there is evidence that Whitehead's wife, Evelyn, had a low opinion of her.</reasoning><output>Maria Sarah Whitehead,</output> |
What was Whitehead's wife's name? | <text>What was Whitehead's wife's name?</text><reasoning>Alfred North Whitehead was born in Ramsgate, Kent, England, in 1861. His father, Alfred Whitehead, was a minister and schoolmaster of Chatham House Academy, a successful school for boys established by Thomas Whitehead, Alfred North's grandfather. Whitehead himself recalled both of them as being very successful schoolmasters, but that his grandfather was the more extraordinary man. Whitehead's mother was Maria Sarah Whitehead, formerly Maria Sarah Buckmaster. Whitehead was apparently not particularly close with his mother, as he never mentioned her in any of his writings, and there is evidence that Whitehead's wife, Evelyn, had a low opinion of her.</reasoning><output>Evelyn</output> |
In 2008, what type collapse was feared? | <text>In 2008, what type collapse was feared?</text><reasoning>Several commentators have suggested that if the liquidity crisis continues, an extended recession or worse could occur. The continuing development of the crisis has prompted fears of a global economic collapse although there are now many cautiously optimistic forecasters in addition to some prominent sources who remain negative. The financial crisis is likely to yield the biggest banking shakeout since the savings-and-loan meltdown. Investment bank UBS stated on October 6 that 2008 would see a clear global recession, with recovery unlikely for at least two years. Three days later UBS economists announced that the "beginning of the end" of the crisis had begun, with the world starting to make the necessary actions to fix the crisis: capital injection by governments; injection made systemically; interest rate cuts to help borrowers. The United Kingdom had started systemic injection, and the world's central banks were now cutting interest rates. UBS emphasized the United States needed to implement systemic injection. UBS further emphasized that this fixes only the financial crisis, but that in economic terms "the worst is still to come". UBS quantified their expected recession durations on October 16: the Eurozone's would last two quarters, the United States' would last three quarters, and the United Kingdom's would last four quarters. The economic crisis in Iceland involved all three of the country's major banks. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history.</reasoning><output>global economic collapse</output> |
What investment bank stated on October 6 that 2008 would see a global recession lasting for at least two years? | <text>What investment bank stated on October 6 that 2008 would see a global recession lasting for at least two years?</text><reasoning>Several commentators have suggested that if the liquidity crisis continues, an extended recession or worse could occur. The continuing development of the crisis has prompted fears of a global economic collapse although there are now many cautiously optimistic forecasters in addition to some prominent sources who remain negative. The financial crisis is likely to yield the biggest banking shakeout since the savings-and-loan meltdown. Investment bank UBS stated on October 6 that 2008 would see a clear global recession, with recovery unlikely for at least two years. Three days later UBS economists announced that the "beginning of the end" of the crisis had begun, with the world starting to make the necessary actions to fix the crisis: capital injection by governments; injection made systemically; interest rate cuts to help borrowers. The United Kingdom had started systemic injection, and the world's central banks were now cutting interest rates. UBS emphasized the United States needed to implement systemic injection. UBS further emphasized that this fixes only the financial crisis, but that in economic terms "the worst is still to come". UBS quantified their expected recession durations on October 16: the Eurozone's would last two quarters, the United States' would last three quarters, and the United Kingdom's would last four quarters. The economic crisis in Iceland involved all three of the country's major banks. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history.</reasoning><output>UBS</output> |
On October 16, 2008, how long did UBS predict the United States' recession would last? | <text>On October 16, 2008, how long did UBS predict the United States' recession would last?</text><reasoning>Several commentators have suggested that if the liquidity crisis continues, an extended recession or worse could occur. The continuing development of the crisis has prompted fears of a global economic collapse although there are now many cautiously optimistic forecasters in addition to some prominent sources who remain negative. The financial crisis is likely to yield the biggest banking shakeout since the savings-and-loan meltdown. Investment bank UBS stated on October 6 that 2008 would see a clear global recession, with recovery unlikely for at least two years. Three days later UBS economists announced that the "beginning of the end" of the crisis had begun, with the world starting to make the necessary actions to fix the crisis: capital injection by governments; injection made systemically; interest rate cuts to help borrowers. The United Kingdom had started systemic injection, and the world's central banks were now cutting interest rates. UBS emphasized the United States needed to implement systemic injection. UBS further emphasized that this fixes only the financial crisis, but that in economic terms "the worst is still to come". UBS quantified their expected recession durations on October 16: the Eurozone's would last two quarters, the United States' would last three quarters, and the United Kingdom's would last four quarters. The economic crisis in Iceland involved all three of the country's major banks. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history.</reasoning><output>three quarters</output> |
Relative to the size of its economy, what country's banking collapse was the largest experienced by any country in economic history? | <text>Relative to the size of its economy, what country's banking collapse was the largest experienced by any country in economic history?</text><reasoning>Several commentators have suggested that if the liquidity crisis continues, an extended recession or worse could occur. The continuing development of the crisis has prompted fears of a global economic collapse although there are now many cautiously optimistic forecasters in addition to some prominent sources who remain negative. The financial crisis is likely to yield the biggest banking shakeout since the savings-and-loan meltdown. Investment bank UBS stated on October 6 that 2008 would see a clear global recession, with recovery unlikely for at least two years. Three days later UBS economists announced that the "beginning of the end" of the crisis had begun, with the world starting to make the necessary actions to fix the crisis: capital injection by governments; injection made systemically; interest rate cuts to help borrowers. The United Kingdom had started systemic injection, and the world's central banks were now cutting interest rates. UBS emphasized the United States needed to implement systemic injection. UBS further emphasized that this fixes only the financial crisis, but that in economic terms "the worst is still to come". UBS quantified their expected recession durations on October 16: the Eurozone's would last two quarters, the United States' would last three quarters, and the United Kingdom's would last four quarters. The economic crisis in Iceland involved all three of the country's major banks. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history.</reasoning><output>Iceland</output> |
What was one of the actions taken by government to fix the financial crisis? | <text>What was one of the actions taken by government to fix the financial crisis?</text><reasoning>Several commentators have suggested that if the liquidity crisis continues, an extended recession or worse could occur. The continuing development of the crisis has prompted fears of a global economic collapse although there are now many cautiously optimistic forecasters in addition to some prominent sources who remain negative. The financial crisis is likely to yield the biggest banking shakeout since the savings-and-loan meltdown. Investment bank UBS stated on October 6 that 2008 would see a clear global recession, with recovery unlikely for at least two years. Three days later UBS economists announced that the "beginning of the end" of the crisis had begun, with the world starting to make the necessary actions to fix the crisis: capital injection by governments; injection made systemically; interest rate cuts to help borrowers. The United Kingdom had started systemic injection, and the world's central banks were now cutting interest rates. UBS emphasized the United States needed to implement systemic injection. UBS further emphasized that this fixes only the financial crisis, but that in economic terms "the worst is still to come". UBS quantified their expected recession durations on October 16: the Eurozone's would last two quarters, the United States' would last three quarters, and the United Kingdom's would last four quarters. The economic crisis in Iceland involved all three of the country's major banks. Relative to the size of its economy, Iceland’s banking collapse is the largest suffered by any country in economic history.</reasoning><output>capital injection</output> |
What is the name for lending that entices borrowers to enter into unsafe secured loans? | <text>What is the name for lending that entices borrowers to enter into unsafe secured loans?</text><reasoning>Predatory lending refers to the practice of unscrupulous lenders, enticing borrowers to enter into "unsafe" or "unsound" secured loans for inappropriate purposes. A classic bait-and-switch method was used by Countrywide Financial, advertising low interest rates for home refinancing. Such loans were written into extensively detailed contracts, and swapped for more expensive loan products on the day of closing. Whereas the advertisement might state that 1% or 1.5% interest would be charged, the consumer would be put into an adjustable rate mortgage (ARM) in which the interest charged would be greater than the amount of interest paid. This created negative amortization, which the credit consumer might not notice until long after the loan transaction had been consummated.</reasoning><output>Predatory lending</output> |
What company used a classic bait-and-switch method by advertising low interest rates? | <text>What company used a classic bait-and-switch method by advertising low interest rates?</text><reasoning>Predatory lending refers to the practice of unscrupulous lenders, enticing borrowers to enter into "unsafe" or "unsound" secured loans for inappropriate purposes. A classic bait-and-switch method was used by Countrywide Financial, advertising low interest rates for home refinancing. Such loans were written into extensively detailed contracts, and swapped for more expensive loan products on the day of closing. Whereas the advertisement might state that 1% or 1.5% interest would be charged, the consumer would be put into an adjustable rate mortgage (ARM) in which the interest charged would be greater than the amount of interest paid. This created negative amortization, which the credit consumer might not notice until long after the loan transaction had been consummated.</reasoning><output>Countrywide Financial</output> |
Which type loan would the consumer be put into instead of the 1% or 1.5% interest rate loan as advertised? | <text>Which type loan would the consumer be put into instead of the 1% or 1.5% interest rate loan as advertised?</text><reasoning>Predatory lending refers to the practice of unscrupulous lenders, enticing borrowers to enter into "unsafe" or "unsound" secured loans for inappropriate purposes. A classic bait-and-switch method was used by Countrywide Financial, advertising low interest rates for home refinancing. Such loans were written into extensively detailed contracts, and swapped for more expensive loan products on the day of closing. Whereas the advertisement might state that 1% or 1.5% interest would be charged, the consumer would be put into an adjustable rate mortgage (ARM) in which the interest charged would be greater than the amount of interest paid. This created negative amortization, which the credit consumer might not notice until long after the loan transaction had been consummated.</reasoning><output>adjustable rate mortgage (ARM)</output> |
What was created when the interest charged was greater than the amount of interest paid? | <text>What was created when the interest charged was greater than the amount of interest paid?</text><reasoning>Predatory lending refers to the practice of unscrupulous lenders, enticing borrowers to enter into "unsafe" or "unsound" secured loans for inappropriate purposes. A classic bait-and-switch method was used by Countrywide Financial, advertising low interest rates for home refinancing. Such loans were written into extensively detailed contracts, and swapped for more expensive loan products on the day of closing. Whereas the advertisement might state that 1% or 1.5% interest would be charged, the consumer would be put into an adjustable rate mortgage (ARM) in which the interest charged would be greater than the amount of interest paid. This created negative amortization, which the credit consumer might not notice until long after the loan transaction had been consummated.</reasoning><output>negative amortization</output> |
What type predatory lending method did Countrywide Financial use? | <text>What type predatory lending method did Countrywide Financial use?</text><reasoning>Predatory lending refers to the practice of unscrupulous lenders, enticing borrowers to enter into "unsafe" or "unsound" secured loans for inappropriate purposes. A classic bait-and-switch method was used by Countrywide Financial, advertising low interest rates for home refinancing. Such loans were written into extensively detailed contracts, and swapped for more expensive loan products on the day of closing. Whereas the advertisement might state that 1% or 1.5% interest would be charged, the consumer would be put into an adjustable rate mortgage (ARM) in which the interest charged would be greater than the amount of interest paid. This created negative amortization, which the credit consumer might not notice until long after the loan transaction had been consummated.</reasoning><output>classic bait-and-switch</output> |
What did financial institutions do prior to the crisis? | <text>What did financial institutions do prior to the crisis?</text><reasoning>Prior to the crisis, financial institutions became highly leveraged, increasing their appetite for risky investments and reducing their resilience in case of losses. Much of this leverage was achieved using complex financial instruments such as off-balance sheet securitization and derivatives, which made it difficult for creditors and regulators to monitor and try to reduce financial institution risk levels. These instruments also made it virtually impossible to reorganize financial institutions in bankruptcy, and contributed to the need for government bailouts.</reasoning><output>became highly leveraged</output> |
What type financial instruments are off-balance sheet securitization and derivatives? | <text>What type financial instruments are off-balance sheet securitization and derivatives?</text><reasoning>Prior to the crisis, financial institutions became highly leveraged, increasing their appetite for risky investments and reducing their resilience in case of losses. Much of this leverage was achieved using complex financial instruments such as off-balance sheet securitization and derivatives, which made it difficult for creditors and regulators to monitor and try to reduce financial institution risk levels. These instruments also made it virtually impossible to reorganize financial institutions in bankruptcy, and contributed to the need for government bailouts.</reasoning><output>complex</output> |
Who bailed out financial institutions? | <text>Who bailed out financial institutions?</text><reasoning>Prior to the crisis, financial institutions became highly leveraged, increasing their appetite for risky investments and reducing their resilience in case of losses. Much of this leverage was achieved using complex financial instruments such as off-balance sheet securitization and derivatives, which made it difficult for creditors and regulators to monitor and try to reduce financial institution risk levels. These instruments also made it virtually impossible to reorganize financial institutions in bankruptcy, and contributed to the need for government bailouts.</reasoning><output>government</output> |
Which option was nearly impossible for financial institutions to reorganize under? | <text>Which option was nearly impossible for financial institutions to reorganize under?</text><reasoning>Prior to the crisis, financial institutions became highly leveraged, increasing their appetite for risky investments and reducing their resilience in case of losses. Much of this leverage was achieved using complex financial instruments such as off-balance sheet securitization and derivatives, which made it difficult for creditors and regulators to monitor and try to reduce financial institution risk levels. These instruments also made it virtually impossible to reorganize financial institutions in bankruptcy, and contributed to the need for government bailouts.</reasoning><output>bankruptcy</output> |
What are the type financial instruments that were difficult for creditors and regulators to monitor? | <text>What are the type financial instruments that were difficult for creditors and regulators to monitor?</text><reasoning>Prior to the crisis, financial institutions became highly leveraged, increasing their appetite for risky investments and reducing their resilience in case of losses. Much of this leverage was achieved using complex financial instruments such as off-balance sheet securitization and derivatives, which made it difficult for creditors and regulators to monitor and try to reduce financial institution risk levels. These instruments also made it virtually impossible to reorganize financial institutions in bankruptcy, and contributed to the need for government bailouts.</reasoning><output>complex financial instruments</output> |
What firm insured obligations of various financial institutions using credit default swaps? | <text>What firm insured obligations of various financial institutions using credit default swaps?</text><reasoning>Another example relates to AIG, which insured obligations of various financial institutions through the usage of credit default swaps. The basic CDS transaction involved AIG receiving a premium in exchange for a promise to pay money to party A in the event party B defaulted. However, AIG did not have the financial strength to support its many CDS commitments as the crisis progressed and was taken over by the government in September 2008. U.S. taxpayers provided over $180 billion in government support to AIG during 2008 and early 2009, through which the money flowed to various counterparties to CDS transactions, including many large global financial institutions.</reasoning><output>AIG</output> |
What does the abbreviation CDS stand for? | <text>What does the abbreviation CDS stand for?</text><reasoning>Another example relates to AIG, which insured obligations of various financial institutions through the usage of credit default swaps. The basic CDS transaction involved AIG receiving a premium in exchange for a promise to pay money to party A in the event party B defaulted. However, AIG did not have the financial strength to support its many CDS commitments as the crisis progressed and was taken over by the government in September 2008. U.S. taxpayers provided over $180 billion in government support to AIG during 2008 and early 2009, through which the money flowed to various counterparties to CDS transactions, including many large global financial institutions.</reasoning><output>credit default swaps</output> |
When did the government take over AIG? | <text>When did the government take over AIG?</text><reasoning>Another example relates to AIG, which insured obligations of various financial institutions through the usage of credit default swaps. The basic CDS transaction involved AIG receiving a premium in exchange for a promise to pay money to party A in the event party B defaulted. However, AIG did not have the financial strength to support its many CDS commitments as the crisis progressed and was taken over by the government in September 2008. U.S. taxpayers provided over $180 billion in government support to AIG during 2008 and early 2009, through which the money flowed to various counterparties to CDS transactions, including many large global financial institutions.</reasoning><output>September 2008</output> |
How much money did taxpayers provide in government support to AIG during 2008 and early 2009? | <text>How much money did taxpayers provide in government support to AIG during 2008 and early 2009?</text><reasoning>Another example relates to AIG, which insured obligations of various financial institutions through the usage of credit default swaps. The basic CDS transaction involved AIG receiving a premium in exchange for a promise to pay money to party A in the event party B defaulted. However, AIG did not have the financial strength to support its many CDS commitments as the crisis progressed and was taken over by the government in September 2008. U.S. taxpayers provided over $180 billion in government support to AIG during 2008 and early 2009, through which the money flowed to various counterparties to CDS transactions, including many large global financial institutions.</reasoning><output>over $180 billion</output> |
What did AIG receive for promising to pay Party A in the event that Party B defaulted? | <text>What did AIG receive for promising to pay Party A in the event that Party B defaulted?</text><reasoning>Another example relates to AIG, which insured obligations of various financial institutions through the usage of credit default swaps. The basic CDS transaction involved AIG receiving a premium in exchange for a promise to pay money to party A in the event party B defaulted. However, AIG did not have the financial strength to support its many CDS commitments as the crisis progressed and was taken over by the government in September 2008. U.S. taxpayers provided over $180 billion in government support to AIG during 2008 and early 2009, through which the money flowed to various counterparties to CDS transactions, including many large global financial institutions.</reasoning><output>a premium</output> |
What is an example of something that can be detrimental if too many individuals pursue the same behavior? | <text>What is an example of something that can be detrimental if too many individuals pursue the same behavior?</text><reasoning>Behavior that may be optimal for an individual (e.g., saving more during adverse economic conditions) can be detrimental if too many individuals pursue the same behavior, as ultimately one person's consumption is another person's income. Too many consumers attempting to save (or pay down debt) simultaneously is called the paradox of thrift and can cause or deepen a recession. Economist Hyman Minsky also described a "paradox of deleveraging" as financial institutions that have too much leverage (debt relative to equity) cannot all de-leverage simultaneously without significant declines in the value of their assets.</reasoning><output>saving more during adverse economic conditions</output> |
What is it called when too many consumers attempt to save or pay down debt at the same time? | <text>What is it called when too many consumers attempt to save or pay down debt at the same time?</text><reasoning>Behavior that may be optimal for an individual (e.g., saving more during adverse economic conditions) can be detrimental if too many individuals pursue the same behavior, as ultimately one person's consumption is another person's income. Too many consumers attempting to save (or pay down debt) simultaneously is called the paradox of thrift and can cause or deepen a recession. Economist Hyman Minsky also described a "paradox of deleveraging" as financial institutions that have too much leverage (debt relative to equity) cannot all de-leverage simultaneously without significant declines in the value of their assets.</reasoning><output>paradox of thrift</output> |
What will happen if too many consumers save or pay down debt simultaneously? | <text>What will happen if too many consumers save or pay down debt simultaneously?</text><reasoning>Behavior that may be optimal for an individual (e.g., saving more during adverse economic conditions) can be detrimental if too many individuals pursue the same behavior, as ultimately one person's consumption is another person's income. Too many consumers attempting to save (or pay down debt) simultaneously is called the paradox of thrift and can cause or deepen a recession. Economist Hyman Minsky also described a "paradox of deleveraging" as financial institutions that have too much leverage (debt relative to equity) cannot all de-leverage simultaneously without significant declines in the value of their assets.</reasoning><output>can cause or deepen a recession</output> |
Who is the economist who described a "paradox of deleveraging"? | <text>Who is the economist who described a "paradox of deleveraging"?</text><reasoning>Behavior that may be optimal for an individual (e.g., saving more during adverse economic conditions) can be detrimental if too many individuals pursue the same behavior, as ultimately one person's consumption is another person's income. Too many consumers attempting to save (or pay down debt) simultaneously is called the paradox of thrift and can cause or deepen a recession. Economist Hyman Minsky also described a "paradox of deleveraging" as financial institutions that have too much leverage (debt relative to equity) cannot all de-leverage simultaneously without significant declines in the value of their assets.</reasoning><output>Hyman Minsky</output> |
Financial institutions cannot all de-leverage simultaneously without a decline in the value of this? | <text>Financial institutions cannot all de-leverage simultaneously without a decline in the value of this?</text><reasoning>Behavior that may be optimal for an individual (e.g., saving more during adverse economic conditions) can be detrimental if too many individuals pursue the same behavior, as ultimately one person's consumption is another person's income. Too many consumers attempting to save (or pay down debt) simultaneously is called the paradox of thrift and can cause or deepen a recession. Economist Hyman Minsky also described a "paradox of deleveraging" as financial institutions that have too much leverage (debt relative to equity) cannot all de-leverage simultaneously without significant declines in the value of their assets.</reasoning><output>their assets</output> |
Who was the U.S. Federal Reserve vice-chair in April 2009? | <text>Who was the U.S. Federal Reserve vice-chair in April 2009?</text><reasoning>During April 2009, U.S. Federal Reserve vice-chair Janet Yellen discussed these paradoxes: "Once this massive credit crunch hit, it didn’t take long before we were in a recession. The recession, in turn, deepened the credit crunch as demand and employment fell, and credit losses of financial institutions surged. Indeed, we have been in the grips of precisely this adverse feedback loop for more than a year. A process of balance sheet deleveraging has spread to nearly every corner of the economy. Consumers are pulling back on purchases, especially on durable goods, to build their savings. Businesses are cancelling planned investments and laying off workers to preserve cash. And, financial institutions are shrinking assets to bolster capital and improve their chances of weathering the current storm. Once again, Minsky understood this dynamic. He spoke of the paradox of deleveraging, in which precautions that may be smart for individuals and firms—and indeed essential to return the economy to a normal state—nevertheless magnify the distress of the economy as a whole."</reasoning><output>Janet Yellen</output> |
What happened soon after the massive credit crunch hit? | <text>What happened soon after the massive credit crunch hit?</text><reasoning>During April 2009, U.S. Federal Reserve vice-chair Janet Yellen discussed these paradoxes: "Once this massive credit crunch hit, it didn’t take long before we were in a recession. The recession, in turn, deepened the credit crunch as demand and employment fell, and credit losses of financial institutions surged. Indeed, we have been in the grips of precisely this adverse feedback loop for more than a year. A process of balance sheet deleveraging has spread to nearly every corner of the economy. Consumers are pulling back on purchases, especially on durable goods, to build their savings. Businesses are cancelling planned investments and laying off workers to preserve cash. And, financial institutions are shrinking assets to bolster capital and improve their chances of weathering the current storm. Once again, Minsky understood this dynamic. He spoke of the paradox of deleveraging, in which precautions that may be smart for individuals and firms—and indeed essential to return the economy to a normal state—nevertheless magnify the distress of the economy as a whole."</reasoning><output>we were in a recession</output> |
What deepened the credit crunch when demand and employment fell? | <text>What deepened the credit crunch when demand and employment fell?</text><reasoning>During April 2009, U.S. Federal Reserve vice-chair Janet Yellen discussed these paradoxes: "Once this massive credit crunch hit, it didn’t take long before we were in a recession. The recession, in turn, deepened the credit crunch as demand and employment fell, and credit losses of financial institutions surged. Indeed, we have been in the grips of precisely this adverse feedback loop for more than a year. A process of balance sheet deleveraging has spread to nearly every corner of the economy. Consumers are pulling back on purchases, especially on durable goods, to build their savings. Businesses are cancelling planned investments and laying off workers to preserve cash. And, financial institutions are shrinking assets to bolster capital and improve their chances of weathering the current storm. Once again, Minsky understood this dynamic. He spoke of the paradox of deleveraging, in which precautions that may be smart for individuals and firms—and indeed essential to return the economy to a normal state—nevertheless magnify the distress of the economy as a whole."</reasoning><output>recession</output> |
What was one of the actions businesses took to preserve cash? | <text>What was one of the actions businesses took to preserve cash?</text><reasoning>During April 2009, U.S. Federal Reserve vice-chair Janet Yellen discussed these paradoxes: "Once this massive credit crunch hit, it didn’t take long before we were in a recession. The recession, in turn, deepened the credit crunch as demand and employment fell, and credit losses of financial institutions surged. Indeed, we have been in the grips of precisely this adverse feedback loop for more than a year. A process of balance sheet deleveraging has spread to nearly every corner of the economy. Consumers are pulling back on purchases, especially on durable goods, to build their savings. Businesses are cancelling planned investments and laying off workers to preserve cash. And, financial institutions are shrinking assets to bolster capital and improve their chances of weathering the current storm. Once again, Minsky understood this dynamic. He spoke of the paradox of deleveraging, in which precautions that may be smart for individuals and firms—and indeed essential to return the economy to a normal state—nevertheless magnify the distress of the economy as a whole."</reasoning><output>cancelling planned investments</output> |
What occurred in nearly every corner of the economy after the financial crisis of 2007? | <text>What occurred in nearly every corner of the economy after the financial crisis of 2007?</text><reasoning>During April 2009, U.S. Federal Reserve vice-chair Janet Yellen discussed these paradoxes: "Once this massive credit crunch hit, it didn’t take long before we were in a recession. The recession, in turn, deepened the credit crunch as demand and employment fell, and credit losses of financial institutions surged. Indeed, we have been in the grips of precisely this adverse feedback loop for more than a year. A process of balance sheet deleveraging has spread to nearly every corner of the economy. Consumers are pulling back on purchases, especially on durable goods, to build their savings. Businesses are cancelling planned investments and laying off workers to preserve cash. And, financial institutions are shrinking assets to bolster capital and improve their chances of weathering the current storm. Once again, Minsky understood this dynamic. He spoke of the paradox of deleveraging, in which precautions that may be smart for individuals and firms—and indeed essential to return the economy to a normal state—nevertheless magnify the distress of the economy as a whole."</reasoning><output>balance sheet deleveraging</output> |
Who published "Credit Correlation: Life After Copulas" in 2007? | <text>Who published "Credit Correlation: Life After Copulas" in 2007?</text><reasoning>Despite the dominance of the above formula, there are documented attempts of the financial industry, occurring before the crisis, to address the formula limitations, specifically the lack of dependence dynamics and the poor representation of extreme events. The volume "Credit Correlation: Life After Copulas", published in 2007 by World Scientific, summarizes a 2006 conference held by Merrill Lynch in London where several practitioners attempted to propose models rectifying some of the copula limitations. See also the article by Donnelly and Embrechts and the book by Brigo, Pallavicini and Torresetti, that reports relevant warnings and research on CDOs appeared in 2006.</reasoning><output>World Scientific</output> |
When did relevant warnings and research on CDOs appear in an article by Donnelly and Embrechts? | <text>When did relevant warnings and research on CDOs appear in an article by Donnelly and Embrechts?</text><reasoning>Despite the dominance of the above formula, there are documented attempts of the financial industry, occurring before the crisis, to address the formula limitations, specifically the lack of dependence dynamics and the poor representation of extreme events. The volume "Credit Correlation: Life After Copulas", published in 2007 by World Scientific, summarizes a 2006 conference held by Merrill Lynch in London where several practitioners attempted to propose models rectifying some of the copula limitations. See also the article by Donnelly and Embrechts and the book by Brigo, Pallavicini and Torresetti, that reports relevant warnings and research on CDOs appeared in 2006.</reasoning><output>2006</output> |
The volume "Credit Correlation: Life After Copulas" summarizes a 2006 conference held by what firm in London? | <text>The volume "Credit Correlation: Life After Copulas" summarizes a 2006 conference held by what firm in London?</text><reasoning>Despite the dominance of the above formula, there are documented attempts of the financial industry, occurring before the crisis, to address the formula limitations, specifically the lack of dependence dynamics and the poor representation of extreme events. The volume "Credit Correlation: Life After Copulas", published in 2007 by World Scientific, summarizes a 2006 conference held by Merrill Lynch in London where several practitioners attempted to propose models rectifying some of the copula limitations. See also the article by Donnelly and Embrechts and the book by Brigo, Pallavicini and Torresetti, that reports relevant warnings and research on CDOs appeared in 2006.</reasoning><output>Merrill Lynch</output> |
What did the volume "Credit Correlation: Life After Copulas" propose models to rectify? | <text>What did the volume "Credit Correlation: Life After Copulas" propose models to rectify?</text><reasoning>Despite the dominance of the above formula, there are documented attempts of the financial industry, occurring before the crisis, to address the formula limitations, specifically the lack of dependence dynamics and the poor representation of extreme events. The volume "Credit Correlation: Life After Copulas", published in 2007 by World Scientific, summarizes a 2006 conference held by Merrill Lynch in London where several practitioners attempted to propose models rectifying some of the copula limitations. See also the article by Donnelly and Embrechts and the book by Brigo, Pallavicini and Torresetti, that reports relevant warnings and research on CDOs appeared in 2006.</reasoning><output>some of the copula limitations</output> |
What year did the book by Brigo, Pallavicini and Torresetti report warnings and research on CDOs? | <text>What year did the book by Brigo, Pallavicini and Torresetti report warnings and research on CDOs?</text><reasoning>Despite the dominance of the above formula, there are documented attempts of the financial industry, occurring before the crisis, to address the formula limitations, specifically the lack of dependence dynamics and the poor representation of extreme events. The volume "Credit Correlation: Life After Copulas", published in 2007 by World Scientific, summarizes a 2006 conference held by Merrill Lynch in London where several practitioners attempted to propose models rectifying some of the copula limitations. See also the article by Donnelly and Embrechts and the book by Brigo, Pallavicini and Torresetti, that reports relevant warnings and research on CDOs appeared in 2006.</reasoning><output>2006</output> |
What did market participants fail to measure accurately? | <text>What did market participants fail to measure accurately?</text><reasoning>For a variety of reasons, market participants did not accurately measure the risk inherent with financial innovation such as MBS and CDOs or understand its impact on the overall stability of the financial system. For example, the pricing model for CDOs clearly did not reflect the level of risk they introduced into the system. Banks estimated that $450bn of CDO were sold between "late 2005 to the middle of 2007"; among the $102bn of those that had been liquidated, JPMorgan estimated that the average recovery rate for "high quality" CDOs was approximately 32 cents on the dollar, while the recovery rate for mezzanine CDO was approximately five cents for every dollar.</reasoning><output>risk inherent with financial innovation</output> |
What are the reasons market participants did not understand the impact financial innovation products would have? | <text>What are the reasons market participants did not understand the impact financial innovation products would have?</text><reasoning>For a variety of reasons, market participants did not accurately measure the risk inherent with financial innovation such as MBS and CDOs or understand its impact on the overall stability of the financial system. For example, the pricing model for CDOs clearly did not reflect the level of risk they introduced into the system. Banks estimated that $450bn of CDO were sold between "late 2005 to the middle of 2007"; among the $102bn of those that had been liquidated, JPMorgan estimated that the average recovery rate for "high quality" CDOs was approximately 32 cents on the dollar, while the recovery rate for mezzanine CDO was approximately five cents for every dollar.</reasoning><output>a variety of reasons</output> |
How much did JPMorgan estimate was the average recovery rate for high quality CDOs that had been liquidated? | <text>How much did JPMorgan estimate was the average recovery rate for high quality CDOs that had been liquidated?</text><reasoning>For a variety of reasons, market participants did not accurately measure the risk inherent with financial innovation such as MBS and CDOs or understand its impact on the overall stability of the financial system. For example, the pricing model for CDOs clearly did not reflect the level of risk they introduced into the system. Banks estimated that $450bn of CDO were sold between "late 2005 to the middle of 2007"; among the $102bn of those that had been liquidated, JPMorgan estimated that the average recovery rate for "high quality" CDOs was approximately 32 cents on the dollar, while the recovery rate for mezzanine CDO was approximately five cents for every dollar.</reasoning><output>approximately 32 cents on the dollar</output> |
How much did JPMorgan estimate was the average recovery rate for mezzanine CDOs that had been liquidated? | <text>How much did JPMorgan estimate was the average recovery rate for mezzanine CDOs that had been liquidated?</text><reasoning>For a variety of reasons, market participants did not accurately measure the risk inherent with financial innovation such as MBS and CDOs or understand its impact on the overall stability of the financial system. For example, the pricing model for CDOs clearly did not reflect the level of risk they introduced into the system. Banks estimated that $450bn of CDO were sold between "late 2005 to the middle of 2007"; among the $102bn of those that had been liquidated, JPMorgan estimated that the average recovery rate for "high quality" CDOs was approximately 32 cents on the dollar, while the recovery rate for mezzanine CDO was approximately five cents for every dollar.</reasoning><output>approximately five cents for every dollar</output> |
How much did banks estimate was the value of CDOs sold between late 2005 to the middle of 2007? | <text>How much did banks estimate was the value of CDOs sold between late 2005 to the middle of 2007?</text><reasoning>For a variety of reasons, market participants did not accurately measure the risk inherent with financial innovation such as MBS and CDOs or understand its impact on the overall stability of the financial system. For example, the pricing model for CDOs clearly did not reflect the level of risk they introduced into the system. Banks estimated that $450bn of CDO were sold between "late 2005 to the middle of 2007"; among the $102bn of those that had been liquidated, JPMorgan estimated that the average recovery rate for "high quality" CDOs was approximately 32 cents on the dollar, while the recovery rate for mezzanine CDO was approximately five cents for every dollar.</reasoning><output>$450bn</output> |
When did the issuance of CDO peak? | <text>When did the issuance of CDO peak?</text><reasoning>CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets. As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.</reasoning><output>Q1 2007</output> |
What was the estimated value of CDO issuance in Q1 2004? | <text>What was the estimated value of CDO issuance in Q1 2004?</text><reasoning>CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets. As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.</reasoning><output>$20 billion</output> |
What was the estimated value of CDO issuance at it's peak in Q1 2007? | <text>What was the estimated value of CDO issuance at it's peak in Q1 2007?</text><reasoning>CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets. As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.</reasoning><output>over $180 billion</output> |
What percent of CDO assets were subprime and other non-prime mortgage debt in 2007? | <text>What percent of CDO assets were subprime and other non-prime mortgage debt in 2007?</text><reasoning>CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets. As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.</reasoning><output>36%</output> |
What was the estimated value of CDO issuance in Q1 2008? | <text>What was the estimated value of CDO issuance in Q1 2008?</text><reasoning>CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets. As described in the section on subprime lending, the CDS and portfolio of CDS called synthetic CDO enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.</reasoning><output>under $20 billion</output> |
When did the securitization markets supported by the shadow banking systems start to close down? | <text>When did the securitization markets supported by the shadow banking systems start to close down?</text><reasoning>The securitization markets supported by the shadow banking system started to close down in the spring of 2007 and nearly shut-down in the fall of 2008. More than a third of the private credit markets thus became unavailable as a source of funds. According to the Brookings Institution, the traditional banking system does not have the capital to close this gap as of June 2009: "It would take a number of years of strong profits to generate sufficient capital to support that additional lending volume." The authors also indicate that some forms of securitization are "likely to vanish forever, having been an artifact of excessively loose credit conditions."</reasoning><output>spring of 2007</output> |
When did the securitization markets supported by the shadow banking system nearly shut-down completely? | <text>When did the securitization markets supported by the shadow banking system nearly shut-down completely?</text><reasoning>The securitization markets supported by the shadow banking system started to close down in the spring of 2007 and nearly shut-down in the fall of 2008. More than a third of the private credit markets thus became unavailable as a source of funds. According to the Brookings Institution, the traditional banking system does not have the capital to close this gap as of June 2009: "It would take a number of years of strong profits to generate sufficient capital to support that additional lending volume." The authors also indicate that some forms of securitization are "likely to vanish forever, having been an artifact of excessively loose credit conditions."</reasoning><output>fall of 2008</output> |
How much of the private credit markets become unavailable as a source of funds? | <text>How much of the private credit markets become unavailable as a source of funds?</text><reasoning>The securitization markets supported by the shadow banking system started to close down in the spring of 2007 and nearly shut-down in the fall of 2008. More than a third of the private credit markets thus became unavailable as a source of funds. According to the Brookings Institution, the traditional banking system does not have the capital to close this gap as of June 2009: "It would take a number of years of strong profits to generate sufficient capital to support that additional lending volume." The authors also indicate that some forms of securitization are "likely to vanish forever, having been an artifact of excessively loose credit conditions."</reasoning><output>More than a third</output> |
What is the firm who reported that the traditional banking system does not have capital to close the gap as of June 2009? | <text>What is the firm who reported that the traditional banking system does not have capital to close the gap as of June 2009?</text><reasoning>The securitization markets supported by the shadow banking system started to close down in the spring of 2007 and nearly shut-down in the fall of 2008. More than a third of the private credit markets thus became unavailable as a source of funds. According to the Brookings Institution, the traditional banking system does not have the capital to close this gap as of June 2009: "It would take a number of years of strong profits to generate sufficient capital to support that additional lending volume." The authors also indicate that some forms of securitization are "likely to vanish forever, having been an artifact of excessively loose credit conditions."</reasoning><output>Brookings Institution</output> |
How many years would of strong profit would it take to generate enough capital to support additional lending? | <text>How many years would of strong profit would it take to generate enough capital to support additional lending?</text><reasoning>The securitization markets supported by the shadow banking system started to close down in the spring of 2007 and nearly shut-down in the fall of 2008. More than a third of the private credit markets thus became unavailable as a source of funds. According to the Brookings Institution, the traditional banking system does not have the capital to close this gap as of June 2009: "It would take a number of years of strong profits to generate sufficient capital to support that additional lending volume." The authors also indicate that some forms of securitization are "likely to vanish forever, having been an artifact of excessively loose credit conditions."</reasoning><output>a number of years</output> |
What term refers to the ongoing development of financial products? | <text>What term refers to the ongoing development of financial products?</text><reasoning>The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.</reasoning><output>financial innovation</output> |
What is an example of financial innovation pertinent to the financial crisis? | <text>What is an example of financial innovation pertinent to the financial crisis?</text><reasoning>The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.</reasoning><output>adjustable-rate mortgage</output> |
What is the abbreviation for a form of credit insurance called credit default swaps? | <text>What is the abbreviation for a form of credit insurance called credit default swaps?</text><reasoning>The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.</reasoning><output>CDS</output> |
What is the financial innovation that bundles subprime mortgages? | <text>What is the financial innovation that bundles subprime mortgages?</text><reasoning>The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.</reasoning><output>mortgage-backed securities (MBS)</output> |
What happened to the usage of financial innovation products in the years leading up the financial crisis? | <text>What happened to the usage of financial innovation products in the years leading up the financial crisis?</text><reasoning>The term financial innovation refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the adjustable-rate mortgage; the bundling of subprime mortgages into mortgage-backed securities (MBS) or collateralized debt obligations (CDO) for sale to investors, a type of securitization; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.</reasoning><output>expanded dramatically</output> |
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