Watch this 2009 interview (through 28:22) with Thomas Sowell to gain background on the anatomy of the Housing Boom and Bust and the ensuing financial crisis/response. Thomas Sowell is American economist and a Senior Fellow at Stanford’s Hoover Institution. He is a libertarian, conservative thinker and advocates for supply-side economics.
Thomas Sowell on the Housing Boom and Bust
Once you have completed the video, answer the following questions.
1. There were two key markets that contributed to the financial crisis, what were they?
2. What change in lending practices that made mortgage-backed securities riskier?
3. Why do you think banks continued to lend to lesser qualified borrowers?
4. What did the US government do in response to the financial crisis?