Economists and many other scholars give many reasons--like greed from banks, unverified income, and simple carelessness--for the crash in the housing market that contributed to the Great Recession. Like the 2015 film, The Big Short, my goal is to focus on the housing market from the bank and buyers side to illuminate how the economy got so bad. In such a complex subject, I will provide you with the basics that you must understand. When someone applies for a loan, their financials, which include income, assets, and investments, are viewed and verified so that a person or family can be approved for a loan from a bank. People who have high income, investment value, and asset value will be labeled as having low-risk loans because it's almost a
…show more content…
He was a selfish person only focusing on his own ambitions, and it was a major cause for his downfall. He followed through with his ambitions and created a monster. The banks became sucked into their greed and carelessness, that they created a monster that swindled millions of Americans. I believe Victor Frankenstein had a chance to make it right and give the creature a partner, but he could not go through with it. This parallels with the banks in that they had chances to stop setting up the economy for disaster, but they simply could not follow through. The monster might have been looking fine in the beginning with promise and potential, but it was left uncared fro and blew up in Frankenstein’s entire life. The CDO did the exact same. The housing market looked great, and the CDO seemed like a solid investment. Ultimately, it ruined those who invested into it and America’s economy, leaving them with little hope for a future. After the subprime mortgage crisis, one might wonder how the banks have changed or improved. Maybe the big banks were broken up, the SEC had major employees fired, and everyone paid for the disaster they set up. In reality, explained in the end of The Big Short, the banks used money they got from the American people to pay themselves huge bonuses, and the government bailed out the rest of them so that the economy would not be any worse. In 2015, banks started selling things they called “Bespoke Tranche Opportunities. Bloomberg called it another name for a
He was a selfish person only focusing on his own ambitions, and it was a major cause for his downfall. He followed through with his ambitions and created a monster. The banks became sucked into their greed and carelessness, that they created a monster that swindled millions of Americans. I believe Victor Frankenstein had a chance to make it right and give the creature a partner, but he could not go through with it. This parallels with the banks in that they had chances to stop setting up the economy for disaster, but they simply could not follow through. The monster might have been looking fine in the beginning with promise and potential, but it was left uncared fro and blew up in Frankenstein’s entire life. The CDO did the exact same. The housing market looked great, and the CDO seemed like a solid investment. Ultimately, it ruined those who invested into it and America’s economy, leaving them with little hope for a future. After the subprime mortgage crisis, one might wonder how the banks have changed or improved. Maybe the big banks were broken up, the SEC had major employees fired, and everyone paid for the disaster they set up. In reality, explained in the end of The Big Short, the banks used money they got from the American people to pay themselves huge bonuses, and the government bailed out the rest of them so that the economy would not be any worse. In 2015, banks started selling things they called “Bespoke Tranche Opportunities. Bloomberg called it another name for a