Question

All of these are recognized as important influences in the development of the banking crisis of 2008 and the resulting credit crisis EXCEPT

Select one:

a. Consumers, especially homeowners, took on too much debt.

b. Too many subprime loans were repackaged and sold as securities.

c. The U.S. government promised to buy unlimited amounts of debt from homeowners.

d. Real estate prices collapsed.

Answer 1

C. THE U.S. GOVERNMENT PROMISED TO BUY UNLIMITED AMOUNTS OF DEBT FROM HOMEOWNERS.

In 2008 crisis, the backbone of the banking bussiness was broken by the huge numbers of NPA. Real eastate market collapsed, lots of people took loan that they cannot afford to repayback and the bank has also subprime loans to be sold as securities by repackaging it. Only the thing that i havent heard about is the US goverment promised anything like that and hence the answer is c.