1. Wall Street 2 (Day 3) Take Handout Take out notebook – Write down How did this start? You will Understand how events from 1980’s to 2006 led to crash and the role of individuals and companies in the crisis.

2. How did this happen? 1980’s -90’s Bull Market (investors expect INCREASE in profits) 2000-2006 – Bear Market (investors expect DECREASE in profits) ENRON (falsely reported earnings $90.00 a share to $1.00) Bernie Madoff: reading Housing Market: prior to 2006 bubble It could also be described as a trade in products or assets with inflated values.

3. How did this start? 2006 – US Banking Industry subprime loans Subprime: loaning to borrowers with high interest – bad credit = profitable to banks. ¼ all mortgages in US subprime Can’t repay (default) – foreclose – bankruptcy Bailout: 700 Million 2006 to: banks, auto makers, Wall Street financial firms

4. Bernie Madoff: American former stockbroker, investment advisor, Chairman of NASDAQ second-largest stock market and the admitted operator of a Ponzi Scheme that is considered to be the largest financial fraud in U.S. history.

5. Ponzi Scheme A Ponzi scheme are fraudulent investments that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from profit earned by the individual or organization running the operation. The Ponzi scheme entices new investors by offering higher returns than other investments, abnormally high or unusually consistent.