A type of financial institution created to primarily provide residential mortgages.
The removal or reduction of government rules on an industry, which in the 1980s allowed S&Ls to make much riskier investments.
A system that guarantees the safety of bank deposits up to a certain limit. The increase in this insurance created a "moral hazard" for S&Ls.
A U.S. government agency that provides deposit insurance and played a key role in resolving the S&L crisis. L. William Seidman was the Chairman of the FDIC during the peak of the Savings and Loan Crisis, who oversaw much of the cleanup.
The primary regulator of the S&L industry, which was widely seen as having failed in its oversight duties leading up to the crisis.
A U.S. government-owned corporation created in 1989 to liquidate the assets of failed savings and loan associations.
October 19, 1987, the day the Dow Jones Industrial Average fell by 22.61%, its largest single-day percentage loss in history.
An automated trading strategy where computers sell stock index futures as the market falls, which created a vicious feedback loop during the crash.
The use of computer programs to automatically execute large orders to buy or sell many stocks at once.
A strategy that uses computers to profit from small price discrepancies between stock index futures and the underlying stocks themselves.
The common name for the report by the Presidential Task Force on Market Mechanisms, created to investigate the causes of the 1987 crash.
A 1985 agreement among the G5 nations (France, West Germany, Japan, the U.K., and the U.S.) to devalue the U.S. dollar in relation to the Japanese yen and German Deutsche Mark.
The central bank of Japan, which slashed interest rates in response to the Plaza Accord, fueling the bubble.
The leading stock market index for the Tokyo Stock Exchange.
The primary residence of the Emperor of Japan. During the bubble, the value of its land became a symbol of the speculative excess.
A Japanese term for financial engineering, where corporations used speculative investments to boost their profits.
The period of economic stagnation in Japan that followed the collapse of its asset price bubble in the early 1990s.
The spread of a financial crisis from one country or market to others, often triggered by a panic among international investors.
A system where a country's currency value is pegged to another currency, like the U.S. dollar.
Money borrowed from foreign lenders that must be repaid within one year, making an economy vulnerable to sudden capital flight.
A situation where asset prices, particularly in real estate and stocks, rise to unsustainable levels not justified by fundamentals.
A term used to describe an economy where success in business depends on close relationships between business people and government officials.
An international organization that works to foster global monetary cooperation, secure financial stability, and provide loans to countries in crisis. Michel Camdessus was the Managing Director of the IMF during the Asian Financial Crisis, who oversaw the controversial bailout packages.
Economic policies that aim to reduce government budget deficits through spending cuts, tax increases, or a combination of both.
A large hedge fund that collapsed in 1998, threatening the stability of the global financial system. LTCM was founded by the legendary Wall Street trader, John Meriwether.
A trading strategy that attempts to profit from small price discrepancies between related assets.
The use of borrowed money to amplify potential returns (and losses). LTCM used extreme leverage.
In August 1998, Russia defaulted on its domestic debt and devalued its currency, the ruble, triggering the LTCM crisis.
A concept where a financial institution is so large and interconnected that its failure would have a disastrous ripple effect throughout the economy, leading authorities to bail it out.
A situation where a party is incentivized to take on more risk because it knows it is protected from the potential consequences.
A company whose business model is primarily based on the internet, a term that became synonymous with the speculative bubble of the late 1990s.
The theory that the internet was creating a fundamentally different economy where traditional rules of valuation no longer applied.
An economic bubble where asset prices rise far beyond their intrinsic value, driven by speculation.
A stock market index heavily weighted with technology and growth companies, which was the epicenter of the dot-com bubble and bust.
Funding provided by investors to early-stage, high-potential startups.
A famous phrase coined by Alan Greenspan to describe the excessive and unwarranted optimism that can fuel a speculative bubble.
Home loans granted to borrowers with poor credit histories, which were at the heart of the housing bubble.
Bonds created by bundling thousands of individual mortgages together.
Complex financial products created by slicing up and repackaging MBS and other debts into new securities.
A financial product that acts like an insurance policy on a debt. The massive, unregulated CDS market was a key source of systemic risk.
The use of borrowed money to amplify potential gains and losses. Extreme leverage at major banks magnified the crisis.
A major investment bank whose bankruptcy in September 2008 was a pivotal event that triggered the most acute phase of the crisis.
Debt issued by a national government. The crisis was triggered by fears that certain European nations would default on their debt.
The group of European Union countries that have adopted the Euro as their common currency.
An agreement between countries to share a single currency, but not necessarily a shared budget or tax policy.
A situation where a government's spending consistently exceeds its revenue, leading to rising debt.
The central bank for the Eurozone, responsible for managing the Euro and maintaining price stability. Mario Draghi was the President of the ECB during the height of the crisis.
A famous phrase used by ECB President Mario Draghi in 2012, which signaled a powerful commitment to save the Euro and is credited with ending the panic phase of the crisis.
A permanent bailout fund established by the Eurozone to provide financial assistance to member states in difficulty.
A situation where the availability of cash decreases sharply as investors rush to sell other assets.
The key short-term interest rate controlled by the Federal Reserve, which was cut to zero.
A monetary policy tool where a central bank purchases assets (like government bonds) to inject liquidity into the financial system.
Special programs created by the Fed to provide targeted loans to specific, crucial parts of the financial system during a crisis.
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