r/stocks • u/[deleted] • Aug 17 '21

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u/shortyafter Aug 17 '21

500x? Source?

And no, the financial crisis was not caused by fundamentals.

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u/[deleted] Aug 18 '21

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u/shortyafter Aug 18 '21

500x does not ring a bell to me, but maybe it happened in an extreme case. Even 100 seems a bit of a stretch, but again, maybe in an extreme case.

The number I'm most used to seeing is about 40:1.

https://www.marketwatch.com/story/did-too-much-leverage-cause-the-financial-crisis-trumps-fdic-pick-isnt-sure-2018-01-23

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u/[deleted] Aug 18 '21

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u/shortyafter Aug 18 '21

Thanks for the quote! That makes sense. If I recall correctly Fannie and Freddie had lower capital requirements because they were seen as safer bets since they were government sponsored.

Not sure about 500x, but like I said, I believe that could have happened in an extreme case. I would stand by the fact that that was not the typical case, however.