The Cause Of The Two-Thousand-Eight Financial Crisis?

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The Two-Thousand-Eight financial crisis is also popularly referred to as the global financial disaster of Two-Thousand-Eight and is ranked as the worst financial crisis since the great depression. The disaster started within the United States of America before spreading to other parts of the world. The financial crisis resulted in enormous economic losses and even threatened the failure of big banks not just within the United States but around the world. The first main cause of the Two-Thousand-Eight financial crisis was the eruption in the housing sector in the United States that spiked in the years of Two-Thousand Five and Six. Because of this, there were high cases of defaults on adjustable and subprime mortgage rates. Therefore, banks…show more content…
The large increase in the housing industry created competition among the top mortgage leaders within the country. With time, the number of creditworthy borrowers decreased and made many of the lenders relaxed on underwriting standers extending credit to uncreditworthy borrowers. The government-sponsored enterprises to maintain low underwriting standards in the years leading to the financial crisis. While the market power moving to originators from securities and as government-sponsored enterprises faced strong competition from the private securities, the mortgage standards went down and risky loans…show more content…
In October Two-Thousand-Seven, the Dow Jones industrial average index stood at 14,000 points before entering a period of sustained decline. The crisis also impacted the financial institutions in the United States and other countries. The first warning signal of the stalling economic crisis was the decision by BNP Paribas to stop withdrawals from 3 hedge fund accounts. Major banks in both the United States and Europe collectively acquired a loss of more than one trillion dollars from bad loans and toxic assets. The losses were cucullated to be much higher if nothing was done to alleviate the

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