The 2008 Financial Crisis Was A Huge Deal Essay

1627 Words May 7th, 2016 7 Pages
The 2008 financial crisis was a huge deal. Ben Bernanke said it could’ve resulted in a 1930s style global financial economic meltdown with financial stipulations. But what happened? Why did it happen? And could have it been avoided? This whole ordeal of the financial crisis began with a significant piece of paper called a mortgage. Basically, a mortgage is used when someone wants to buy a house, but doesn’t have enough financial holdings to pay the full amount, so they would borrow hundreds of thousands of dollars from a bank. In return, the bank would get this piece of paper, called a mortgage. Every month, the person who borrowed the money, the homeowner, would have to pay back the principle, plus the interest that added up, to whomever holds the paper. If they stop paying, that’s called a default, when a debtor is unable to meet the legal obligations of a debt repayment, and whomever has the mortgage in the end, gets the house. Usually, the original lender, the bank, doesn’t often keep the mortgage, rather sells it to some third party. Traditionally, if you didn’t have a secure occupation or weren’t financially stable, it was typically hard to get a mortgage. Lenders didn’t want to take the risk that you’ll end up “defaulting” on your loan. But all this changed in the new millennium.
Starting in the 2000s, investors from both the United States and abroad began looking for low risk, high return on investments, thus leading them to the U.S. housing market. U.S. Treasury…

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