Nithinram2006/squad huggingface dataset:
Financial crisis of 2007–08

From 2004 to 2007, the top five U.S. investment banks each significantly increased their financial leverage (see diagram), which increased their vulnerability to a financial shock. Changes in capital requirements, intended to keep U.S. banks competitive with their European counterparts, allowed lower risk weightings for AAA securities. The shift from first-loss tranches to AAA tranches was seen by regulators as a risk reduction that compensated the higher leverage. These five institutions reported over $4.1 trillion in debt for fiscal year 2007, about 30% of USA nominal GDP for 2007. Lehman Brothers went bankrupt and was liquidated, Bear Stearns and Merrill Lynch were sold at fire-sale prices, and Goldman Sachs and Morgan Stanley became commercial banks, subjecting themselves to more stringent regulation. With the exception of Lehman, these companies required or received government support. Lehman reported that it had been in talks with Bank of America and Barclays for the company's possible sale. However, both Barclays and Bank of America ultimately declined to purchase the entire company.

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
Financial crisis of 2007–08

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.

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
Financial crisis of 2007–08

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."

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
Financial crisis of 2007–08

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.

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
Financial crisis of 2007–08

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.

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
Financial crisis of 2007–08

This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse. In 2005 a group of computer scientists built a computational model for the mechanism of biased ratings produced by rating agencies, which turned out to be adequate to what actually happened in 2006–2008.[citation needed]

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
Financial crisis of 2007–08

The pricing of risk refers to the incremental compensation required by investors for taking on additional risk, which may be measured by interest rates or fees. Several scholars have argued that a lack of transparency about banks' risk exposures prevented markets from correctly pricing risk before the crisis, enabled the mortgage market to grow larger than it otherwise would have, and made the financial crisis far more disruptive than it would have been if risk levels had been disclosed in a straightforward, readily understandable format.

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
Financial crisis of 2007–08

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.

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

Question: How much did banks estimate was the value of CDOs sold between late 2005 to the middle of 2007?
Answer: $450bn
Financial crisis of 2007–08

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.

Question: What firm insured obligations of various financial institutions using credit default swaps?
Answer: AIG

Question: What does the abbreviation CDS stand for?
Answer: credit default swaps

Question: When did the government take over AIG?
Answer: September 2008

Question: How much money did taxpayers provide in government support to AIG during 2008 and early 2009?
Answer: over $180 billion

Question: What did AIG receive for promising to pay Party A in the event that Party B defaulted?
Answer: a premium
Financial crisis of 2007–08

As financial assets became more and more complex, and harder and harder to value, investors were reassured by the fact that both the international bond rating agencies and bank regulators, who came to rely on them, accepted as valid some complex mathematical models which theoretically showed the risks were much smaller than they actually proved to be. George Soros commented that "The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility."

Question: Who commented that the super-boom got out of hand when products became so complicated that risk could not be accurately calculated?
Answer: George Soros

Question: What happened to financial assets that made them harder to value?
Answer: more complex

Question: Who did rating agencies rely on for information to rate financial innovation products?
Answer: the originators of synthetic products

Question: When authorities could no longer calculate the risks of complex financial innovation products, who did they rely on for information?
Answer: the banks

Question: Who reassured investors by showing the risk of complex financial innovation products was actually less than they proved to be?
Answer: international bond rating agencies
Financial crisis of 2007–08

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.

Question: Who published "Credit Correlation: Life After Copulas" in 2007?
Answer: World Scientific

Question: When did relevant warnings and research on CDOs appear in an article by Donnelly and Embrechts?
Answer: 2006

Question: The volume "Credit Correlation: Life After Copulas" summarizes a 2006 conference held by what firm in London?
Answer: Merrill Lynch

Question: What did the volume "Credit Correlation: Life After Copulas" propose models to rectify?
Answer: some of the copula limitations

Question: What year did the book by Brigo, Pallavicini and Torresetti report warnings and research on CDOs?
Answer: 2006
Financial crisis of 2007–08

In a June 2008 speech, President and CEO of the New York Federal Reserve Bank Timothy Geithner—who in 2009 became Secretary of the United States Treasury—placed significant blame for the freezing of credit markets on a "run" on the entities in the "parallel" banking system, also called the shadow banking system. These entities became critical to the credit markets underpinning the financial system, but were not subject to the same regulatory controls. Further, these entities were vulnerable because of maturity mismatch, meaning that they borrowed short-term in liquid markets to purchase long-term, illiquid and risky assets. This meant that disruptions in credit markets would make them subject to rapid deleveraging, selling their long-term assets at depressed prices. He described the significance of these entities:

Question: Who was President and CEO of the New York Federal Reserve Bank in June 2008?
Answer: Timothy Geithner

Question: What year did Timothy Geithner become U.S. Treasury Secretary?
Answer: 2009

Question: In a June 2008 speech, Timoty Geithner placed blame for credit market freezing on which system?
Answer: "parallel" banking system

Question: What is the "parallel" banking system also called?
Answer: shadow banking system

Question: What is the term defined as being vulnerable by borrowing short-term in liquid markets to purchase long-term illiquid and risky assets?
Answer: maturity mismatch
Financial crisis of 2007–08

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."

Question: When did the securitization markets supported by the shadow banking systems start to close down?
Answer: spring of 2007

Question: When did the securitization markets supported by the shadow banking system nearly shut-down completely?
Answer: fall of 2008

Question: How much of the private credit markets become unavailable as a source of funds?
Answer: More than a third

Question: What is the firm who reported that the traditional banking system does not have capital to close the gap as of June 2009?
Answer: Brookings Institution

Question: How many years would of strong profit would it take to generate enough capital to support additional lending?
Answer: a number of years
Financial crisis of 2007–08

Economist Mark Zandi testified to the Financial Crisis Inquiry Commission in January 2010: "The securitization markets also remain impaired, as investors anticipate more loan losses. Investors are also uncertain about coming legal and accounting rule changes and regulatory reforms. Private bond issuance of residential and commercial mortgage-backed securities, asset-backed securities, and CDOs peaked in 2006 at close to $2 trillion...In 2009, private issuance was less than $150 billion, and almost all of it was asset-backed issuance supported by the Federal Reserve's TALF program to aid credit card, auto and small-business lenders. Issuance of residential and commercial mortgage-backed securities and CDOs remains dormant."

Question: What economist testified to the Financial Crisis Inquiry Commission in January 2010?
Answer: Mark Zandi

Question: In January 2010, what markets did Mark Zandi testify about that remain impaired and investors anticipate more loan losses?
Answer: securitization markets

Question: What was the value of CDOs at their peak in 2006?
Answer: close to $2 trillion

Question: What was the private issuance of CDOs in 2009?
Answer: less than $150 billion

Question: Almost all of the asset-backed issuance in 2009 was supported by what Federal Reserve program?
Answer: TALF
Financial crisis of 2007–08

Rapid increases in a number of commodity prices followed the collapse in the housing bubble. The price of oil nearly tripled from $50 to $147 from early 2007 to 2008, before plunging as the financial crisis began to take hold in late 2008. Experts debate the causes, with some attributing it to speculative flow of money from housing and other investments into commodities, some to monetary policy, and some to the increasing feeling of raw materials scarcity in a fast-growing world, leading to long positions taken on those markets, such as Chinese increasing presence in Africa. An increase in oil prices tends to divert a larger share of consumer spending into gasoline, which creates downward pressure on economic growth in oil importing countries, as wealth flows to oil-producing states. A pattern of spiking instability in the price of oil over the decade leading up to the price high of 2008 has been recently identified. The destabilizing effects of this price variance has been proposed as a contributory factor in the financial crisis.

Question: Following the collapse in the housing bubble, what happened to a number of commodity prices?
Answer: Rapid increases

Question: How much did the price of oil increase from early 2007 to 2008?
Answer: nearly tripled from $50 to $147

Question: What did the price of oil began doing when the financial crisis began to take hold in late 2008?
Answer: plunging

Question: What is one of the reasons experts believe contributed to the volatilaty in oil prices in 2008? 
Answer: monetary policy

Question: Consumers tend to have less money to spend on other goods, when the price of which commodity is higher?
Answer: gasoline
Financial crisis of 2007–08

In testimony before the Senate Committee on Commerce, Science, and Transportation on June 3, 2008, former director of the CFTC Division of Trading & Markets (responsible for enforcement) Michael Greenberger specifically named the Atlanta-based IntercontinentalExchange, founded by Goldman Sachs, Morgan Stanley and BP as playing a key role in speculative run-up of oil futures prices traded off the regulated futures exchanges in London and New York. However, the IntercontinentalExchange (ICE) had been regulated by both European and U.S. authorities since its purchase of the International Petroleum Exchange in 2001. Mr Greenberger was later corrected on this matter.

Question: Who was the former director of the CFTC that testified before the Senate Committee on Commerce, Science, and Transportation on June 3, 2008?
Answer: Michael Greenberger

Question: Who did Michael Greenberger erronesously name as a key player in speculative run-up of oil futures?
Answer: IntercontinentalExchange

Question: Who founded the Atlanta-based Intercontinental Exchange?
Answer: Goldman Sachs, Morgan Stanley and BP

Question: Who purchased the International Petroleum Exchange in 2001?
Answer: IntercontinentalExchange (ICE)

Question: Where are regulated future exchanges located?
Answer: London and New York
Financial crisis of 2007–08

Feminist economists Ailsa McKay and Margunn Bjørnholt argue that the financial crisis and the response to it revealed a crisis of ideas in mainstream economics and within the economics profession, and call for a reshaping of both the economy, economic theory and the economics profession. They argue that such a reshaping should include new advances within feminist economics and ecological economics that take as their starting point the socially responsible, sensible and accountable subject in creating an economy and economic theories that fully acknowledge care for each other as well as the planet.

Question: Who is one of the feminist economists that believe the financial crisis revealed a crisis of mainstream economics and call for a complete reshaping of the economy?
Answer: Ailsa McKay

Question: Feminist economists Ailsa McKay and Margunn Bjornhold believe that the financial crisis and response reveal a crisis of ideas in this?
Answer: mainstream economics

Question: According to feminist economists McKay and Bjornholt, would type economics should be included in a reshaping?
Answer: feminist economics

Question: What do economists McKay and Bjornholt want to occur in the economy, economic theory, and economics profession?
Answer: a reshaping