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A risk manager at a bank is giving a presentation to a group of interns on lessons learned from financial crises. The manager focuses on the case of the savings and loan (S&L) crisis in the US during the 1980's. Which of the following is most appropriate for the risk manager to conclude as a lesson to be learned from this case?
A
Financial institutions face a disadvantage when issuing floating-rate residential mortgages that are funded by short-term liabilities.
B
Maintaining a negative interest rate spread between lending and borrowing rates is a profitable business model for financial institutions.
C
Financial institutions should not be bailed out if the sole funding source for the bailout is other, larger financial institutions.
D
Issuing mortgage-backed securities helps provide financial institutions with liquidity for their mortgage portfolios.