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EARLY : SPREADING SUBPRIME WORRIES 

COMMISSION CONCLUSIONS ON CHAPTER 12

The Commission concludes that entities such as Bear Stearns’s hedge funds and
AIG Financial Products that had significant subprime exposure were affected by
the collapse of the housing bubble first, creating financial pressures on their par-
ent companies. The commercial paper and repo markets—two key components
of the shadow banking lending markets—quickly reflected the impact of the
housing bubble collapse because of the decline in collateral asset values and con-
cern about financial firms’ subprime exposure.