Question

Laws passed in the late 1990s restricted the activities of financial firms to narrowly defined services they could provide, prompting the financial crisis of 2007 and 2008.

a. True
b. False

Answer 1

False. Deregulation of the financial industry along with other circumstances that provided incentive for companies to grant high-risk loans led to a bubble in the mortgage market. Further packaging of and speculation on these loans eventually led to the crisis.