Question: Who was the largest residential loan due diligence and securitization surveillance company?
Answer: Clayton Holdings

Question: According to Clayton Holdings, how many mortgages issued from January 2006 to June 2007 met underwriting standards?
Answer: 54%

Question: How many investment and commercial banks were included in Clayton Holdings' analysis of January 2006 to June 2007 loans? 
Answer: 23

Question: 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?
Answer: 28%

Question: How many mortgage loans did Clayton Holdings review in their analysis?
Answer: 900,000

Question: What is the name for lending that entices borrowers to enter into unsafe secured loans?
Answer: Predatory lending

Question: What company used a classic bait-and-switch method by advertising low interest rates?
Answer: Countrywide Financial

Question: Which type loan would the consumer be put into instead of the 1% or 1.5% interest rate loan as advertised?
Answer: adjustable rate mortgage (ARM)

Question: What was created when the interest charged was greater than the amount of interest paid?
Answer: negative amortization

Question: What type predatory lending method did Countrywide Financial use?
Answer: classic bait-and-switch

Question: Who sued Countrywide for unfair business practices and false advertising?
Answer: California Attorney General Jerry Brown

Question: What type mortgages allowed homeowners to make interest-only payments?
Answer: adjustable rate mortgages (ARMs)

Question: What happened to home equity when housing prices decreased?
Answer: disappeared

Question: Who made the decision to seize Countrywide after their financial condition deteriorated?
Answer: Office of Thrift Supervision

Question: What type credit did borrowers obtaining mortgages from Countrywide have?
Answer: weak credit

Question: What economist believed that regulations did not keep up with financial innovation?
Answer: Paul Krugman

Question: Who was the U.S. Treasury Secretary dealing with the aftermath of the financial crisis of 2007?
Answer: Timothy Geithner

Question: Which group's study suggested that Basel accords encourage unconventional business practices?
Answer: OECD

Question: It has been argued that what did not keep up with financial innovation?
Answer: regulatory framework

Question: What accords possibly contributed to or reinforced the financial crisis?
Answer: Basel

Question: What did financial institutions do prior to the crisis?
Answer: became highly leveraged

Question: What type financial instruments are off-balance sheet securitization and derivatives?
Answer: complex

Question: Who bailed out financial institutions?
Answer: government

Question: Which option was nearly impossible for financial institutions to reorganize under?
Answer: bankruptcy

Question: What are the type financial instruments that were difficult for creditors and regulators to monitor?
Answer: complex financial instruments

Question: How many U.S. investment banks significantly increased their financial leverage from 2004 to 2007?
Answer: five

Question: U.S. investment banks Increased their financial leverage and also increased their vulnerability to what?
Answer: financial shock

Question: Changes in what intended to keep U.S. banks competitive with their European counterparts?
Answer: capital requirements

Question: How much debt did the top five U.S. investment banks report in fiscal year 2007?
Answer: over $4.1 trillion

Question: What financial institution went bankrupt and was liquidated in 2007?
Answer: Lehman Brothers

Question: What is an example of something that can be detrimental if too many individuals pursue the same behavior?
Answer: saving more during adverse economic conditions

Question: What is it called when too many consumers attempt to save or pay down debt at the same time?
Answer: paradox of thrift

Question: What will happen if too many consumers save or pay down debt simultaneously?
Answer: can cause or deepen a recession

Question: Who is the economist who described a "paradox of deleveraging"?
Answer: Hyman Minsky

Question: Financial institutions cannot all de-leverage simultaneously without a decline in the value of this?
Answer: their assets

Question: Who was the U.S. Federal Reserve vice-chair in April 2009?
Answer: Janet Yellen

Question: What happened soon after the massive credit crunch hit?
Answer: we were in a recession

Question: What deepened the credit crunch when demand and employment fell?
Answer: recession

Question: What was one of the actions businesses took to preserve cash?
Answer: cancelling planned investments

Question: What occurred in nearly every corner of the economy after the financial crisis of 2007?
Answer: balance sheet deleveraging

Question: What term refers to the ongoing development of financial products?
Answer: financial innovation

Question: What is an example of financial innovation pertinent to the financial crisis?
Answer: adjustable-rate mortgage

Question: What is the abbreviation for a form of credit insurance called credit default swaps?
Answer: CDS

Question: What is the financial innovation that bundles subprime mortgages?
Answer: mortgage-backed securities (MBS)

Question: What happened to the usage of financial innovation products in the years leading up the financial crisis?
Answer: expanded dramatically

Question: When did the issuance of CDO peak?
Answer: Q1 2007

Question: What was the estimated value of CDO issuance in Q1 2004?
Answer: $20 billion

Question: What was the estimated value of CDO issuance at it's peak in Q1 2007?
Answer: over $180 billion

Question: What percent of CDO assets were subprime and other non-prime mortgage debt in 2007?
Answer: 36%

Question: What was the estimated value of CDO issuance in Q1 2008?
Answer: under $20 billion

Question: Which products created more complexity in the financial markets?
Answer: innovative financial products

Question: What effect did the introduction of innovative financial products have on a single mortgage?
Answer: multiplied the number of actors connected

Question: What did institutions rely more on as increasing distance from underlying assets occurred?
Answer: indirect information

Question: What is a type of indirect information that financial institutions and investors used to judge the risk?
Answer: computer models of rating agencies

Question: In what year did a group of computer scientists build a model for ratings produced by rating agencies that turned out to be accurate for what happened in 2006-2008?
Answer: 2005

Question: What is a measurement of pricing of risk?
Answer: interest rates or fees

Question: What is the incremental compensation required by investors for taking on addition risk called?
Answer: pricing of risk

Question: According to several scholars, what prevented markets from correctly pricing risk before the crisis?
Answer: lack of transparency about banks' risk exposures

Question: How should risk levels have been disclosed according to several scholars?
Answer: straightforward, readily understandable format

Question: What was the outcome of the financial crisis since risk levels were not adequately disclosed?
Answer: far more disruptive

Question: What did market participants fail to measure accurately?
Answer: risk inherent with financial innovation

Question: What are the reasons market participants did not understand the impact financial innovation products would have?
Answer: a variety of reasons

Question: How much did JPMorgan estimate was the average recovery rate for high quality CDOs that had been liquidated?
Answer: approximately 32 cents on the dollar

Question: How much did JPMorgan estimate was the average recovery rate for mezzanine CDOs that had been liquidated?
Answer: approximately five cents for every dollar