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Moody's Role In The Financial Crisis

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Moody's Role In The Financial Crisis
: Everyone including Moody's played a large role in the financial crisis. The less qualified home buyers were told to lie in order to qualify for the mortgage loans and no one would verify their income or assets. Those home-buyers irresponsibly purchased houses that they couldn’t afford. The mortgage lenders produced more loans to people, then packaged them altogether to sell to investment banks. As a result, the mortgage lenders had more positive cash flow for producing more loans. This process was continuing to repeat. The investment banks would then create a mortgage bonds, so the investors bought the bonds would receive a portion of the mortgage holder’s monthly payments. Under this type of circumstances, it attracted lots of investors

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