These institutions, as well as certain regulated banks, had also assumed significant debt burdens while providing the loans described above and did not have a financial cushion sufficient to absorb large loan defaults or MBS losses. These losses impacted the ability of financial institutions to lend, slowing economic activity. Concerns regarding the stability of key financial institutions drove central banks to provide funds to encourage lending and restore faith in the commercial paper markets, which are integral to funding business operations. Governments also bailed out key financial institutions and implemented economic stimulus programs, assuming significant additional financial commitments. COUNT 5
QSN1 Some regulated banks did not have sufficient financial cushions in place to absorb what losses as a result of the financial crisis of 2007? ANS1 MBS QSN2 What was a consequence of the large loan defaults and MBS losses in 2007? ANS2 slowing economic activity QSN3 Who provided funds to encourage lending and restore faith in commercial banks in the aftermath of the financial crisis of 2007? ANS3 central banks QSN4 Who bailed out key financial institutions and implemented economic stimulus programs as an answer to the financial crisis of 2007? ANS4 Governments QSN5 What impacted the ability of financial institutions to lend in the financial crisis of 2007? ANS5 large loan defaults or MBS losses