Description
1. Watch the documentary “Inside Job” https://www.youtube.com/watch?v=T2IaJwkqgPk&t=2859s&ab_channel=AdityaShukla and answer the following questions:
a. The movie mentions that Greenspan recognized the complexity of subprime mortgages but refuses to regulate them. What do you think about Greenspan’s ideology? What are the benefits of free markets? To what extent was Greenspan right? How was he wrong?
b. The movie discusses the securitization food chain which allows risk being transferred from financial institutions to the investors. Can you explain how subprime mortgage loans were “pooled”. Do you think events would have unfolded differently if the financial institutions that made subprime loans had kept them instead of selling them? Why?
c.Inside Job criticizes several Wall Street executives who made tens of millions – or hundreds of millions – of dollars, even as their firms collapsed. Why is Wall Street compensation so high? Is it because Wall Street banks are creating so much value? How might the prospect of such large bonuses affect the behavior of employees? taking more risk or less? What do you expect to happen to bonuses in the future?
d. How is it possible for risky subprime mortgages to be pooled together and then, miraculously, to become AAA-rated CDO investments? What is your view on the conflicts of interest in the credit rating industry, considering the fact that credit rating agency is supposed to serve the general public, but is paid by the security issuers.
e. What do you think of the professors from Columbia and Harvard mentioned in the movie (Mishkin is the author of our textbook.)? Do you think educational institutions should have a policy regarding conflicts of interest?
f. Robert Gnaizda calls the government “a Wall Street government”. Do you agree? Can you recall some of the names of the key players in the administration from the movie? Please list out the positions they held before and after the 2008 election.
g. Do you think someone should go to jail for the behavior depicted in the film? Who and why?
2. Week 9 Reflection
Based upon what you learned in Week 9 study, share with your classmates something that you found to be an”ah-ha” learning moment and how it applies to your current or past experiences.
Please Answer ALL questions
