Global Banking and Finance Lesson 6 Activities
Global Banking Lesson 6 Worldwide Financial Crises Primer

Time: 30 minutes
Skills: Holistic Thinking
Objectives 1 and 3
Related Resources:
- PBS Newshour Explains the Financial Crisis. (2008, March 24). Youtube. Retrieved from: http://www.youtube.com/watch?v=bHXcnWrw7r4 (9 min 56 sec.)
- The Credit Crunch Explained. (2008, September 2). Youtube. Retrieved from: http://www.youtube.com/watch?v=wGxmgwUWNr0&feature=related  
- Timeline: Credit crunch to downturn. (2009, August 7). In BBC News. Retrieved from: http://news.bbc.co.uk/2/hi/7521250.stm 
- Timeline: The unfolding eurozone crisis (2012, June 13). In BBC News. Retrieved from: http://www.bbc.co.uk/news/business-1385658 
- RSA Animate – Crises of Capitalism (2010, June 28). Youtube. Retrieved from: http://www.youtube.com/watch?v=qOP2V_np2c0

The instructor shows the recommended videos to explain the 2007-2009 financial crises to the students. Alternatively, the videos could be assigned for homework and the class time is used for discussion.

The PBS Newshour video explains the root of the financial crisis, but does not explain the response of the banks once the crises hit.

“The Credit Crunch” video explains the response by financial system to the sub-prime mortgage crisis. 

“The Timeline: Credit crunch” article provides an overview of the Credit Crunch which resulted from the Sub-Prime Mortgage Crisis. The BBC article includes a great slide series that maps out the credit crunch and could be used as an alternative to the video.

If the class is advanced and has a good grasp of the fundamentals, the “Crises of Capitalism” provides a good analysis of the different narratives and gives a Marxist perspective on the crisis.

Discussion Question:

  1. What role did American real estate play in the 2007-2009 financial crises?
  2. How do subprime loans differ from regular loans and what are the risk and benefits?
  3. What is a mortgage-backed security? What benefits and risks are associated with them?
  4. How did supply and demand contribute to the sub-prime crises and the subsequent credit crunch?
  5. How did banks respond to the sub-prime crises? How did their response impact ordinary people?
  6. Who is at fault? How did homeowners, banks, hedge funds, investors (national and international), regulators, and real estate brokers contribute to the sub-prime crises and the subsequent credit crunch?
  7. Which narratives provides the most plausible explanation for the 2007-2009 financial crisis (sub-prime crises and the credit crunch) and why? (RSA – Animate video)
Global Banking Lesson 6 Ethical Issue Activity

Time: 15 minutes
Skills: Holistic Thinking
Objectives 1&3
Related Resources: n/a

The instructor gives the following instructions to the students:

You are a member of the board of directors for one of the nation’s largest banks. In response to global crisis, suppose the U.S. now wants to regulate the financial service industries (banks) to maintain the integrity and stability of financial systems. What advice do you give to the bank’s executives prior to meeting with the government? Write your answer from the point of view of (a) bank depositor, (b) bank borrower, (c) home buyer, (d) small business owners, etc.

Global Banking Lesson 6 Module Reflection

Time: 15 minutes
Skills: n/a
Objective 3
Related Resources: n/a

The instructor asks the students the following questions:

1)      What are some of the main lessons you learned about banking and finance?

2)      How has these lessons changed your view of banks and multilateral institutions (if at all)

3)      What is something that you learned that surprised you?

4)      Have you learned anything that will change your own behaviors, investments strategies, purchases, etc?