The Importance Of The Prime Minister ( Pm ) Of The Uk Essay

826 Words Oct 29th, 2015 4 Pages
To the attention of the Prime Minister (PM) of the UK. The Global financial crisis’ started in 2007, summarised ‘the immediate origins of the crash lay in the lending practices associated with sub prime mortgages in the United States…’ Previous mortgages were only only given to ‘prime’ candidates, these were people and families who qualified for a mortgage on the basis of income and required a down payment in order to secure a mortgage. Sub prime mortgages were given out to those with lower credit rating, and no down payment was needed. Investors, who were sat on piles of money usually would have put their money in the federal reserve, on AAA investments which were the safest for returns, however ‘interest rates were cut to the bone’ to just 1% in the Federal Reserve, which for these investors was a poor return. Instead they looked elsewhere. As the rate of interest was so low, banks were able to borrow at lower rates, which they did to make investments. Investors saw these investments and the banks managed to link the two. When a family managed to gather together a down payment for their home, they went to a mortgage broker who put them in contact with a mortgage lender, then if the mortgage lender decided they were viable for a mortgage, the family would get one, and own their own home. Then, investment banks, such as J.P. Morgan and Lehman Brothers, would get in contact with the mortgage lender and buy the mortgage for a reasonable fee. The investment…

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