Even though deposit insurance existed, the United States experienced a major financial crisis from 2007 to 2009 because:

Question

Quizplus · Accepted Answer

The financial crisis of 2007-2009 was caused by several factors, including a run on shadow banks that were not covered by deposit insurance. These shadow banks (such as investment banks) were involved in risky investments and when their investments failed, they could not meet their obligations to their investors. This caused a domino effect throughout the financial system, leading to widespread financial distress. It is important to note that the deposit insurance system itself did not fail, but it was not designed to cover shadow banks.

Even Though Deposit Insurance Existed, the United States Experienced a Major