Question

1. What part did your text book publisher McGraw Hill play in the financial collapse?

Answer 1

The subsidiary of McGraw Hill , the famous rating agency Standard and Poor's had a role in the collapse of the financial market during the Subprime crisis. Prior to the start of the financial crisis, S&P acted corruptly, it used to get fess from Bankers and Underwriters to rate the securities high. This charge was accepted by S&P CEO before the House Oversight and Government Reform Committee during investigation.

The artificial high ratings given by S&P aided in the steep increase in the prices of Mortgage backed securities offering high return. Investors fell for these securities in the lure of higher returns . After the housing prices started falling from 2016, most of the mortgages became delinquent and the asset backed securities lost most of their values and created a deep crisis in the financial market leading to the great recession. Many investors lost their investment and became bankrupt. At the root of the crisis remained the credit agencies like S&P who manipulated with ratings and brought about the crisis.