Question

After watching the Inside Job, answer the following questions:

1. Name at least 3 administrative agencies mentioned in the documentary. For each one, give a 1-2 sentence description of what it does:
2. Name an administrative agency that was created during the timespan of the documentary. What was it supposed to do?
3. Name one thing that an administrative agency could have done to assist in the crisis or the events leading up to it.
4. With one agency in mind, who should have been responsible for keeping accountable the administrative agency? Research if it is an executive or independent agency.

https://watchdocumentaries.com/inside-job/

Answer 1

Some agencies mentioned in the documentary are -

1. Investment Banks: Investment Banks are organisations that assist people in their investment drives. These are financial organisations that are created to help target prospective investors in seeking investments and possible investors in finding the best buy.
2. Financial conglomerates: These are a group of many different financial institutions under the same banner which are supposed to provide services in at least two different finance related activities like banking, insurance, trading, etc.
3. Insurance companies: Insurance companies insure against your risks. In this context, insurance companies were the ones which had insured all these financial institutions against bankruptcy.
4. Rating Agencies: Rating agencies are organisations whose purpose is to rate the credibility of the stock or the investment asset. These ratings form the basis on which investors decide whether or not to invest on an asset. In this case, mortgage backed securities were given a AAA rating.

The Troubled Asset Relief Programme was created during this time. This was an initiative by the United States government to purchase toxic assets from the financial agencies in the country to be able to strengthen the financial system.

The TARP bought many of the mortgage backed securities which were in free fall in the market and thus bailed out the banks and financial institutions that had stocked up in these mortgage backed securities.

The Securities and Exchange Board (SEC) should have been tasked with the purpose of keeping the financial system free from such risky bets. This is an independent organisation of the Government, which is outside the purview of the Federal Executive Departments and the Executive Office of the President.