During the credit crisis of 2008-2009:
A)the Resolution Trust Corporation was formed to deal with insolvent savings institutions.
B)several large savings institutions failed, including Countrywide Financial and Washington Mutual.
C)savings institutions were insulated because their regulator subsidized any of them that experienced large loan defaults.
D)the main problem for savings institutions was exposure to interest rate risk.

Question

Quizplus · Accepted Answer

During the credit crisis of 2008-2009, several large savings institutions failed, including Countrywide Financial and Washington Mutual. The crisis was primarily caused by the subprime mortgage market collapse, which led to defaults on many of these institutions' loans. The failure of these institutions contributed to the overall economic downturn. The Resolution Trust Corporation was formed in the 1980s to deal with failures of savings institutions during different economic circumstances and was not directly involved in the 2008-2009 crisis. Savings institutions were not insulated, and their exposure to interest rate risk was not the main problem during this crisis.

During the Credit Crisis of 2008-2009