Actions by the government that contributed to the collapse of the savings and loan industry included all of the following EXCEPT:
A. increasing down payment requirements.
B. commercial real estate loans.
C. permitting money market mutual funds.
D. deregulation.
I am totally confused by this one cause my textbook mentions all choices.
I understand your confusion. The question is asking you to identify the action by the government that did NOT contribute to the collapse of the savings and loan industry. Let's analyze each choice to find the correct answer.
A. Increasing down payment requirements: If the government increased down payment requirements, it would have made it more difficult for people to afford homes, potentially leading to loan defaults. This action could contribute to the collapse of the savings and loan industry.
B. Commercial real estate loans: If the government allowed savings and loans to invest in risky commercial real estate loans without proper regulations, it could have resulted in excessive lending and subsequent defaults, which could contribute to the industry's collapse.
C. Permitting money market mutual funds: This action refers to allowing money market mutual funds to exist, which are investment vehicles separate from savings and loans. While this action might have had some indirect impact on the industry, it is not a direct contributor to the collapse of the savings and loan industry.
D. Deregulation: Deregulation refers to the reduction of government controls and regulations. This action allowed savings and loans to engage in riskier investments and have more flexibility in their operations. Deregulation is a key factor that contributed to the collapse of the savings and loan industry.
Therefore, the correct answer is C. Permitting money market mutual funds. While this action might have had some indirect influence, it is not considered a primary contributor to the collapse of the savings and loan industry.