1. What caused the housing market to drop in stock prices and loans?
variable rates and bad investments
2. What led to Bear Stearns' financial problem
bad investments
3. What deal did the Federal Reserve strike with Bear Stearns that temporarily saved the company? the government provided secure funding through JPMorgan to help save the company.
4. Why did Congressman Paulson believe that the Federal Reserve needs to let these Financial Institutions fail? He pictured a 1-2 thousand point drop in the DOW. He also believed that the uncertainty was to great. He thought that bailing out the companies , who caused their own problems by being greedy, were getting off easy, and that if the companies do survive , they wouldn't learn from their previous mistakes and would be looking for a bailout each time.
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