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increased (Moosa, 2008). Second, the process of “securitization” had
become widespread. This refers to the selling on of mortgage debt to
investors by banks in order to free up credit for further lending. When
interest rates rose in the mid-2000s, investors became wary of buying

these high-risk securities and banks were left with them on their books,
causing other banks and lenders to withdraw their credit facilities or
otherwise reduce their exposure to the affected banks. As financial

institutions became wary of borrowing from or lending to one another, a
lack of liquidity in the financial system resulted from this situation, and
the credit normally available to consumers and businesses that fuels
economic activity quickly dried up (Moosa, 2008).

The situation was exacerbated when several major financial
institutions prevented their investors from withdrawing their funds,
which they claimed could no longer be accurately valued. This sparked a

worldwide panic to withdraw money or raise cash by selling less liquid
investments such as stocks and bonds, and many major financial
institutions went bankrupt as a result (BBC News, 2009). Another factor

contributing to the escalation of the crisis was the nature of the present-
day global financial system, which has complex interdependencies and
links between lenders and borrowers throughout the world, including

individual consumers, investors, businesses, and financial institutions.
This has been the first truly transnational crisis in which personal credit
played a major role (Porter, 2009).
Gradually, the world economy seems to be emerging from

recession, helped in part by major injections of money into national
economies by their governments, notably in the U.S. and the U.K.;
lowering of interest rates by national banks; and direct government

assistance for some struggling financial institutions. It is questionable,
however, whether these measures will help to prevent another financial
collapse, unless the root causes of the crisis are properly addressed. It
can be argued that information failure was one of the main root causes

underlying virtually all the other factors that precipitated the crisis. In
this case, the information professional may also be partly responsible for
the occurrence of the crisis and can thus play a role in facilitating

sustainable recovery.
The role of “information failure” in the crisis
In an international survey of Chief Financial Officers (Towers

Perrin, 2008), 62% respondents attributed the financial crisis to poor risk
management by financial institutions; this is what is likely to have led to