Give a brief history of mortgage backed securities from their inception until the end of the financial crisis. Why were they originally invented? Why were they so profitable for banks? How were they misused? (500 Words)

During the GFC, which institutions took advantage of information asymmetry in the sale of sub-prime loans to investors in mortgage-backed securities?Group of answer choicesAIG (America’s largest insurer)The Wall Street investment banksThe ratings agenciesThe Federal Reserve

In the aftermath of the financial crisis of 2008, several banking practices came into sharp focus for contributing to the crisis. One of those practices was the issuance of “subprime” mortgages - mortgages made to borrowers who were unlikely to be able to repay in the case of a recession or a decline in housing values. Banks defended their choice by arguing that if the mortgage holders defaulted on the payments, the banks themselves would be the ones taking a loss in profits. In the end, however, the default rate on these loans was so high that the country’s entire financial system was at risk of collapse, and taxpayer dollars were used to keep banks solvent. This information indicates that subprime mortgages are _________.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.apublic goodsbcommon resourcescgoods with additional social costsdgoods with additional social benefits

Includes the financial securities that represent an ownership interest in a pool of mortgage loans.

When a bank securitizes a parcel of its home loans, the credit risk posed by the loans is borne by:Group of answer choicesthe ratings agencythe special purpose vehicleinvestors in the mortgage-backed securitiesthe bank whose loans are being sold

________ is a process of bundling together smaller loans (like mortgages) into standarddebt securities.A) SecuritizationB) OriginationC) Debt deflationD) Distribution