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Answer: Fannie Mae and Freddie Mac were nationalized by the US government.
A is correct. The peak of the subprime crisis came in the fall of 2008, which saw a cascade of events, including the two mortgage agencies Fannie Mae and Freddie Mac being nationalized. B is incorrect. The collapse of Long-Term Capital Management occurred in 1998 and was not related to the subprime mortgage crisis. C is incorrect. On September 15, 2008, Lehman Brothers filed for bankruptcy, after attempts to organize an industry rescue or to sell the firm to another large bank ultimately failed. D is incorrect. Morgan Stanley and Goldman Sachs, not Citigroup, were converted to bank holding companies during this time.
Author: LeetQuiz Editorial Team
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Question: The 2007-2009 financial crisis, also known as the subprime mortgage meltdown, had profound impacts on financial institutions and markets worldwide. As part of a webinar presentation, a risk manager at a financial institution aims to highlight several critical market events that involved major financial entities during this period. Which of the events listed below occurred at the peak of the subprime mortgage crisis?
A
Fannie Mae and Freddie Mac were nationalized by the US government.
B
Long-Term Capital Management (LTCM) was acquired by a consortium of banks after losing most of its capital.
C
A large financial institution purchased part of Lehman Brothers and thereby prevented Lehman from being forced to file for bankruptcy.
D
Citigroup was converted to a bank holding company and became regulated by the Federal Reserve.
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