How did mortgage-backed securities contribute to the financial instability of investment banks during the 2007-2009 recession?

• A. They lost value as mortgage defaults increased, leading to significant losses for banks.
• B. They were insured by the government, preventing any financial losses.
• C. They were primarily held by commercial banks, not affecting investment banks.
• D. They were considered safe investments and led to over-leveraging by banks.

Answer: (A)