and WorldCom led to the Sarbanes-Oxley Act in 2002. The government designed Sarbanes-Oxley to increase

confidence in financial information provided by public corporations to protect investors from accounting

fraud.

The Great Recession, which began in late 2007, was caused at least in part by a global financial crisis, which

began in the United States. The key component of the crisis was the creation and subsequent failure of several

types of unregulated financial assets, such as collateralized mortgage obligations (CMOs, a type of mortgage-

backed security), and credit default swaps (CDSs, insurance contracts on assets like CMOs that provided a

payoff even if the holder of the CDS did not own the CMO). Private credit rating agencies such as Standard &

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
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