Which of the Following Was an Underlying Cause of the Economic

question 503

Multiple Choice

Which of the following was an underlying cause of the economic crisis of 2008?

• A) a failure of government to impose regulations on Fannie Mae, Freddie Mac, and other mortgage lenders
• B) the imposition of government regulations on Fannie Mae, Freddie Mac, and other lending institutions that eroded the conventional lending standards in place prior to the mid-1990s
• C) greedy mortgage lenders who extended risky loans to sub-prime borrowers even though the regulators were trying to limit these loans
• D) federal housing regulations that made it difficult for Fannie Mae, Freddie Mac, and other lending institutions to obtain sufficient loanable funds for the finance of housing construction

---

Definitions:

De Facto Corporation

Latin for “corporation in fact”; a corporation that has not substantially met the requirements of the state incorporation statutes.

Corporation By Estoppel

A defective corporation that has conducted business with a third party and therefore cannot deny its status as a corporation to escape liability.

De Jure Corporation

Latin for “lawful corporation”; a corporation that has met the mandatory statutory provisions and thus received its certificate of incorporation.

Alien Corporation

A business that is incorporated in a foreign country.