The mortgage defaults during the 2008-2009 financial crisis severely reduced the capital positions of:

Question

Quizplus · Accepted Answer

All three entities mentioned in the answer choices were impacted by the mortgage defaults during the financial crisis. Major investment banks such as Lehman Brothers and Bear Stearns held significant amounts of mortgage-backed securities and suffered huge losses. Government-sponsored enterprises like Fannie Mae and Freddie Mac also held large portfolios of mortgages and faced significant losses. Finally, AIG had issued credit default swaps on mortgage-backed securities and faced large payouts when the securities defaulted, severely damaging their capital position.

The Mortgage Defaults During the 2008-2009 Financial Crisis Severely Reduced