The problems arrived over a period of time from 1995 to 2008. The first and main problems that lead to the economic collapse was sub prime mortgages. Sub prime mortgage is a certain kind of loan granted to people with poor credit histories, who which wouldn’t usually be qualified for conventional mortgages (Investopedia). These sup prime mortgages would backfire on banks across the nation resulting in huge financial loses. According to USA Today, “Housing crisis deepens.
The financial crisis in 2008 was been considered as the worst financial crisis since the Great Depression. One of the major reasons of the crisis was that banks in the States were given permission by the repeal of the Glass-Steagall legislation, which allowed banks to affiliate with insurance, real estate, security. The goal was to create financial firms “better equipped to compete in global financial markets”. With the firewall between commercial banks, which make loans and take deposits, and investment banks, which underwrite securities removed, an opportunity rise for banks to create and push more money and eventually to speculate on financial markets. The financial crisis reminded us that the banking industry has a serious influence on the economy and it should be under strict regulations.
Today, the Global Financial crisis resulted in the loss of people’s savings and homes, leaving them unable to pay back their debt. The global financial crisis has devastating effects worldwide and is still present nowadays. In order to recover the economy, banks and the government have take actions to overcome the financial cris... ... middle of paper ... ... Recession’s True Cost Is Still Being Tallied” Nytimes, January 2014. Web. 20 Apr.
IBISWorld launches hedge funds industry market report. Available: http://www.hedgeweek.com/2014/03/18/198773/ibisworld-launches-hedge-funds-industry-market-report. Last accessed 18/03/2014.