Understanding the recent financial crisis requires examining how U.S. financial markets have
changed in fundamental ways over the past 15 years. The following provides a brief historical
overview of some of those changes; explains some of the new financial products and trading
strategies in the mortgage area; and provides background on credit ratings, investment banks,
government sponsored enterprises, and financial regulators. It also provides a brief timeline of
key events in the financial crisis. Two recurrent themes are the increasing amount of risk and
conflicts of interest in U.S. financial markets.