Poors, Moody’s, and Fitch rated many of these assets very safe.

The collapse of the markets for these assets precipitated the financial crisis and led to the failure of Lehman

Brothers, a major investment bank, numerous large commercial banks, such as Wachovia, and even the

Federal National Mortgage Corporation (Fannie Mae), which had to be nationalized—that is, taken over by the

federal government. One response to the financial crisis was the Dodd-Frank Act, which majorly attempted to

reform the financial system. The legislation’s purpose, as noted on dodd-frank.com is:

To promote the financial stability of the United States by improving accountability and transparency

in the financial system, to end “too big to fail,” to protect the American taxpayer by ending bailouts,

[and] to protect consumers from abusive financial services practices. . .

All market-based economies operate against a background of laws and regulations, including laws about
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