Banks that suffered significant losses in the 1980s made the mistake of

Question

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Banks that suffered significant losses in the 1980s failed to diversify their loan portfolio, meaning they focused on lending to a narrow range of industries or types of borrowers rather than spreading their risk across multiple areas. This lack of diversification left them vulnerable to economic downturns and industry-specific problems. The other choices - holding too many liquid assets, minimizing default risk, and holding only safe securities - are all generally considered prudent banking practices, and alone would not necessarily lead to significant losses in the 1980s or other economic downturns.

Banks That Suffered Significant Losses in the 1980s Made the Mistake