Taleb said the financial crisis occurred because people took many hidden risks, which meant a small blip could have massive consequences.

This is a causal claim about the 2007–2009 financial crisis, judged by what was known when it was made (2009-01-12) together with later authoritative analyses of the same events. True: major authoritative accounts (for example the US Financial Crisis Inquiry Commission report, central bank or IMF post-mortems, or the main academic surveys) find that hidden, opaque or under-recognised risk-taking was a central cause. Such risk-taking includes off-balance-sheet exposures, concealed tail risk, excessive leverage and poorly understood derivatives or securitisations, which left the system fragile enough that a relatively small shock (such as losses on subprime mortgages) had outsized consequences. Mostly true: these accounts treat hidden risk and fragility as one of the main causes, alongside others that are given comparable weight (for example monetary policy, regulatory failures or housing policy), so the claim is broadly right but simplified. Mixed: the accounts are split, with hidden risk-taking seen as an important contributor by some and as secondary by others. Mostly false: the accounts treat hidden risk as a minor contributor and attribute the crisis mainly to other factors, or show that the triggering shock was not small. False: the accounts show that the risks were neither hidden nor central, and that the crisis had a substantially different cause.

Set before the research began.

1. E1 Speech by Chairman Bernanke on some reflections on the crisis and the policy response Board of Governors of the Federal Reserve System · 13 April 2012

   “In the private sector, some key vulnerabilities included high levels of leverage; excessive dependence on unstable short-term funding; deficiencies in risk management in major financial firms; and the use of exotic and nontransparent financial instruments that obscured concentrations of risk.”

2. E2 Speech by Chairman Bernanke on some reflections on the crisis and the policy response Board of Governors of the Federal Reserve System · 13 April 2012

   “Thus, losses on subprime mortgages can plausibly account for the massive reaction seen during the crisis only insofar as they interacted with other factors--more fundamental vulnerabilities--that served to amplify their effects.”

3. E3 Finance and Development International Monetary Fund · December 2008

   “Finally, financial institutions did not always sufficiently disclose the type and magnitude of their on- and off-balance-sheet risk exposures, particularly those related to structured products.”

4. E4 The Financial Crisis Inquiry Commission American Enterprise Institute (testimony to the US House Financial Services Committee) · 16 February 2011

   “If as I believe government housing policy was responsible for the financial crisis, it was not caused by failures of regulation or risk management, or by predatory lending, unregulated derivatives, or compensation structures on Wall Street.”

Bernanke's 2012 speech names high leverage and "exotic and nontransparent financial instruments that obscured concentrations of risk" as key private-sector vulnerabilities (E1). The same speech says subprime losses could explain the size of the crisis only because deeper vulnerabilities amplified them, which supports the idea that a small blip had massive consequences (E2). An IMF article from before the claim date says financial institutions did not always sufficiently disclose their on- and off-balance-sheet risk exposures, particularly those related to structured products (E3). Testimony from the American Enterprise Institute to the House Financial Services Committee argues that government housing policy, rather than failures of risk management or derivatives, was responsible for the crisis (E4). Together, the sources treat hidden risk and fragility as one of the main causes, with other causes given comparable weight, so the claim is broadly right but simplified.