To the extent that failure to appreciate the implications of the decline in house prices on the financial system contributed to the financial crisis of 2008-2009, blame for this mistake lies with:
A) mortgage brokers.
B) investment banks.
C) homebuyers.
D) regulators.

Question

Quizplus · Accepted Answer

It was the responsibility of regulators to ensure that the financial system was stable and that they adequately understood the implications of the decline in house prices. Regulators failed to recognize the potential risks and did not implement measures to mitigate them, which contributed to the financial crisis.

To the Extent That Failure to Appreciate the Implications of the Decline