FORMATIVE ASSESSMENT 2 [100 Marks] LESSONS FROM THE FINANCIAL CRISIS The financial crisis was ignited exactly ten years ago: on September 15, 2008, Lehman Brothers filed for bankruptcy. That same day, Bank of America announced its acquisition of Merrill Lynch. On September 16, the Federal Reserve bailed out AIG. On September 17, the markets were in free-fall. On September 18, Secretary Paulson and Chairman Bernanke briefed Congressional leaders on the contours of a massive bailout plan. And on September 19, the Treasury Department took the unprecedented step ofguaranteeing US. money market funds. The nancial crisis ravaged the US. and world economies and required extraordinary government interventions to prevent a major worldwide depression. It spurred a host of legislative. regulatory, enforcement, litigation, and political responses, many of which are still unfolding. ltdestroyed venerable businesses and commercial activities and spawned others. And it reshaped market dynamics across the global economy, including in such diverse sectors as private funds, derivatives, securitization, M&A, bankruptcy, and real estate. Review the video link (PANIC: THE UNTOLD STORY OF THE 2008 FINANCIAL CRISIS FULL VICE REPORT) and answer the following questions: WWW Answer ALL the questions in this section. You have been tasked by the South African Reserve Bank (SARB) to be part of a task team that is developing a risk management framework for the banking and finance industry. The scope of the task involves ensuring that the South African standards are aligned to global trends and thus you have prioritised drawing important lessons from other countries. You are expected to submit a comprehensive report to the Reserve Bank Risk Management and Compliance Committee on the 6th of December 2022. The contents of your report should include a highlight of the following. Answer ALL the questions in this section. Question 1 1.1 Provide a detailed analysis ofthe causes ofthe global financial crisis of 2008 including the role of (25 marks) the different stakeholders. 1.2 Review the different strategies that should be implemented by the SARB in order to avoid the (25 marks) occurrence of crisis similar to that of 2008. The issues provided should be relevant to the South African context 1.3 It has been evident in your research that most of the risks that have affected the financial sector (25 marks) are not detected fora long time. Against this background provide recommendations on the strategies that need to be adopted by the committee in ensuring that the efforts of identifying and assessing risks are improved in the nancial sector. 1.4 As part of your conclusion your report should discuss extensively the factors that need to be (25 marks) considered when designing a risk management strategy for the nancial sector