To the extent that the undervaluation of the riskiness of mortgage-backed securities contributed to the financial crisis of 2008-2009, blame for this mistake lies with:
A) mortgage brokers.
B) investment banks.
C) rating agencies.
D) government policymakers.

Question

Quizplus · Accepted Answer

The rating agencies played a significant role in the financial crisis, as they assigned overly optimistic ratings to mortgage-backed securities, which made them appear less risky than they actually were. This led investors to purchase these securities, ultimately exacerbating the crisis when the housing market collapsed. While other parties, such as mortgage brokers, investment banks, and government policymakers, likely also contributed to the crisis, the rating agencies' role in underestimating the riskiness of mortgage-backed securities is widely acknowledged.

To the Extent That the Undervaluation of the Riskiness of Mortgage-Backed