1. What was life like in Iceland before the financial crisis? 3. How much did Iceland s three banks borrow? What happened to the money?

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1 E&F/Raffel Inside Job Directed by Charles Ferguson Intro: The Case of Iceland 1. What was life like in Iceland before the financial crisis? 2. What changed in 2000? 3. How much did Iceland s three banks borrow? What happened to the money? 4. What role did U.S. accountants and the ratings agencies play in Iceland s bubble economy? 5. What happened to Iceland s economy when the banks crashed? Part I: How We Got Here 6. How many people worked for Morgan Stanley in the 1970s? How many people work for Morgan Stanley today? 7. What changed in the 1980s? 8. Who was Charles Keating? 9. What role did Alan Greenspan play in the Savings & Loan disaster of the 1980s?

2 10. What views did Larry Summers and Robert Rubin have regarding deregulation? 11. What did the Glass-Steagall act do? Why was it overturned? What were the effects? 12. How did the internet stock bubble of the late 1990s expose some of the conflicts of interest on Wall Street? 13. How did the SEC respond to this problem? 14. List some of the examples of criminal behavior by the major investment banks after Glass-Steagall was overturned. 15. How large was the derivative market in the 1990s? 16. Why was Brooksley Born (who led the Commodity Futures Trading Commission) ultimately unsuccessful in regulating the derivative market in the 1990s? 17. Explain the process of securitization (see homework). 18. Once securitization became established practice, what happened to the number of mortgages issued?

3 19. Why did banks prefer subprime mortgages? Part II: The Bubble ( ) 20. Once securitization became established, what happened to the number of mortgages banks issued? What happened to housing prices? 21. Why did the Federal Reserve refuse to use its powers to regulate the mortgage industry in the early 2000s? 22. What happened to the number of federal regulators who worked for the SEC during this time? 23. What is leverage? 24. Why did the banks increase their leverage? 25. What major decision did the SEC related to bank leverage? 26. What was the impact of the SEC s leverage decision? 27. How do Credit Default Swaps (CDSs) work? 28. What was AIG NOT required to do when it sold CDSs? 29. How many CDSs did AIG sell (in dollar terms)?

4 30. What happened to the people at AIG who sold CDSs? 31. What risk to the financial system did economist Raghuram Rajan identify? What was his solution? 32. Describe the quality of mortgages that went into the later CDOs prepared by Goldman Sachs. 33. Why was becoming Treasury Secretary the best financial decision Hank Paulson ever made? 34. What was the impact on investors went CDOs lost value? 35. How many CDOs (in dollar terms) did Goldman Sachs purchase from AIG? 36. Describe the profitability of the ratings agencies during this period. 37. How could the ratings agencies have stopped the party? 38. What defense did the agencies offer for their actions? Part III: The Crisis 39. Did the Fed see the crisis coming? What did they do?

5 40. As housing foreclosures increased, what was the impact on the securitization food chain? 41. How were the banks impacted? 42. What other major federal policy maker failed to see the impending crisis? 43. What happened on March 16, 2008? What did the Fed do? 44. What happened on September 7, 2008? 45. Which investment bank collapsed first? 46. What investment rating did Bear-Stearns, Lehman Brothers, Fannie Mae and Freddie Mac all have before they collapsed? 47. What was the strategy for saving Merrill-Lynch and Lehman Brothers? Who was saved? 48. Why was Lehman allowed to fail? What was the impact on the economy? 49. How much taxpayer money was used to bail out AIG?

6 50. Who benefited from the AIG bailout? 51. Who did NOT benefit from the AIG bailout? Part IV: Accountability 52. How much money did top executives at the following firms make before and during the crisis (remembering that they were allowed to keep the money): A. Lehman-Brothers: B. Countrywide: C. Merrill-Lynch D. AIG: 53. How many lobbyists does the financial service industry have in Washington DC? 54. How much money did the financial service industry spend on lobbying and campaign contributions? 55. What s a solution for the economics professions conflicts of interest? Part V: Where We Are Now 56. What economic factors account for the rise of credit in the U.S. economy during the last 30 years? 57. Who are the Wall Streeters in President Obama s administration?

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