Savings And Loan Crisis

Savings And Loan Crisis
The two largest modern bank runs in American history were the Savings & Loans Crisis of the 1980's and the Financial Crisis in 2008–2009. Both
crises left permanent scars on our financial system and provide important lessons moving forward. In this paper, I will provide a comparative analysis
of the various causes, economic effect and regulatory responses, in an attempt to perhaps display a pattern for these crises that we can lean on to
prevent future ones. Ultimately, the analysis yielded that at the core both crises were caused by regulatory negligence, attempting to cheat the system
and government policy mistakes regarding financial policy, all contributed to the rise of these crises. Both had detrimental economic effects, and both
regulatory... Show more content on Helpwriting.net ...
This was a huge issue for S&L's because they were tied up with several long–term loans, with fixed interest rates that were much lower then the
interest rate at which they could borrow. This led to an increased focus on high interest rate transactions and a subsequent asset–liability mismatch.
(Bodie, 2006) As a result of this they could not attract the necessary capital to remain solvent and failed at a massive rate. In 1980, Savings &
Loans institutions had a net income of $781 million and wound up falling to negative $8.7 billion by 1982. During the first 3 years alone as shown
in Table 4.2, 118 S&L's with $43 billion in assets failed because of this and approximately 500 more were absolved in mergers (Robinson,
... Get more on HelpWriting.net ...

How The Financial Crisis Has Significant Influence On The...
Introduction

The Financial Crisis Of 2007
Financial Crisis of 2007 How an attempt to avoid a bubble, led to a crash that brought a country near to complete collapse. Essay for Mn2101
Financial Management by Shreya Lodhia 139030749. Word count: 2172 (2214– including titles/headings/subheadings.) CONTENTS пЃ¶Introduction2
пЃ¶Causes of the crash3 пЃ¶Effects today6 пЃ¶Why interest rates are low8 пЃ¶Future of the interest rates9 пЃ¶Conclusion10 пЃ¶References11
пЃ¶Appendix14 Financial Crisis of 2007 How an attempt to avoid a bubble, led to a crash that brought a country near to complete collapse.
Introduction The Financial crisis of 2007 was one of the largest crises the world had faced since 1980, which almost brought the economy of one
of the strongest and largest country, USA, to a near collapse in 2008/9. It was triggered by the housing bubble bust, which had taken place due to
the creation of toxic subprime mortgages. The increase in irresponsible lending, as well as extreme borrowing through the use of exceptional
securities, made the economy highly geared. With a reality being uncovered, of the reckless borrowing and lending by large financial institutions, the
curtains came down quickly. The first part of this essay will be examining the cause of the financial crash followed by the effects of the crash on the
economy today. The last part of the essay will be addressing the issue of why interest rates have remained low and my views on whether

Analysis Of The Movie Inside Job
Nhu Nguyen History 8 Film Review – Inside Job Inside Job From the 1920s to 2009 the United States history experienced a number of economic
downturns; however, the most significant was the Great Recession of the early 2000s. And the movie "Inside Job" which is staged under the
direction of famed director Charles Ferguson, is a true narrative of the worst economic events in history. There are five parts totally in the film
including: How We Got Here, The Bubble, The Crisis, Accountability, and Where We Are Now. The crisis is closely comparable with an abyss,
engulfing the world's strongest economy. It also has collapsed the entire monetary system of leading banks and led to the bankruptcy of a series of
economic groups. This is a failure of policy, systematic faults. The crisis also forces the world to rethink the moral philosophy of development. I
absolutely agree with the film that the cause of economic crisis was not only by the objective factors such as securitization and the housing boom but
also by subjective factors. These are the abolition or the reduction of market regulations, a lack of supervision and personal interests that blind the eyes
of those who are important to the movement of the market. Eliminate market regulations called "deregulation". Deregulation began in the 1980s and
continues until the days of President Bush and Obama. Deregulation paved the way for the formation of investment banks and financial giants, along
with the introduction of complex

Issues Americans Cannot Understand: The Federal Reserve...
Over the last 3 years the United States has seen an incredible flux in the economy from an all time high, to the lowest position since the Great
Depression. Many Americans have no idea why or how these cycles affect their everyday lives, most importantly, they do not understand how the
government intervenes to control these issues. Most people cannot comprehend the complexity of the United States banking system, how the Federal
Reserve (FED) controls interest rates, the way our currency works, inflation, credit, etc... This is just a small list from a plethora of topics, that
American's are under–educated, and these are issues that we all need to face at some point in our lives. Rather than explaining each of these issues in
detail, it... Show more content on Helpwriting.net ...
However, these mortgages required no income verification, or resources to pay for the mortgage, as long as they signed the mortgage papers. Fanny
Mae and Freddie Mac were the lending arms that provided the money. Both are now government run, but formerly were privately held companies,
unlike Ginnie Mae, which is fully backed by the government. When the homeowners could no longer pay their mortgages, the house of cards collapsed.
With the lack of education in this country, the middle and lower class were greatly affected by the government's intervention in Mortgage rates. The
subprime mortgage crisis can be blamed for much of this country's economic problems, but we don't need to point fingers at what went wrong, we need
to address the problems and find solutions.
There are several issues that need to be addressed, to help solve this foreclosure crisis. The first issue is how the banks were clearly misled by the
government, in a sense, that they approved clients for home loans they could not afford. They then took advantage of the late payments, and increased
interest rates. We have seen firsthand what happens when people take advantage of the uneducated, ultimately everyone fails. We as a society need to
stop dwelling on failure, stop preventing bankruptcy, and rather reward success through government guarantees. The United States government has
already pumped billions of dollars into the US banks, but the money is not being used the way it was

Alexander Hamilton Proposed Using A Banking System
Alexander Hamilton proposed using a banking system in America in 1781 after seeing how beneficial they were in other nations for advancing trade.
In 1791, First Bank of the United States became the first commercial bank of the United States in Philadelphia, Pennsylvania. By the 1900's, there
were almost 170 banks per every million people in the United States, but because of this, there was a lot of debate about banking and the regulations
needed and the fears that people had about the amount of control it was giving the government. This paper will be starting from the Great Depression
and talk its way into the current situation of the United States banking regulations and why there is a debate on if there should be more or fewer
regulations on banking.
The Great Depression is a large reason for the beginning of many banking regulations. Many believe that the banking and financial crises were a
large contributor to how the Great Depression went down, especially the three banking crises that hit the United States during that time. The first
panic happened in October of 1930, the second in March of 1931, and the third began at the end of 1932. Because of all this, different reforms started
to be passed into the banking world. The Great Depression is a major reason on why banking regulations started being a necessity. After Franklin
Delano Roosevelt was inaugurated, the first major regulation put into effect was the Emergency Banking Act of 1933, where a major part of it granted

Impact Of The Crisis On The Banking Industry
In 2008 the world economy faced the worst global financial crisis since the great depression of 1930's. The impact of the crisis on the banking
industry was critical during this period. From 2007, bank runs began on several British and American major banking firms, but instead of the
classic bank run it was as described by Gorton, G. and Metrick, A. (2009) 'a run on the shadow banking system'. This period was characterised with
failure of major banks across Europe and the US. This financial crisis resulted in few takeovers in backing sector and forced governments to rescue
the global financial market. In this essay I will discuss what happened during the financial crisis of 2008–09, why it happened, and what questions
researchers have... Show more content on Helpwriting.net ...
In 2008, losses of these securities were estimated to exceed $500 billion.
A global saving glut is considered as a factor that contributed to the global financial crisis. In early 1990's, developing countries such as China used
to borrow capital from developed countries. But developed countries suffered currency crisis due to low level of foreign exchange holding and it
caused developing countries capital outflow and recession. After the currency crisis, developed countries started managing international capital flows.
These countries increased the saving but reduced the investment therefore it caused the current account surplus. Countries such as South Korea and
Thailand started holding high volume of foreign currency and it led to global saving glut. It allowed the US to overinvest and in 2002 the US
recorded current account deficit of over $450 billion. A factor contributed to the low interest rate was an influx of Chinese capital into the US.
Bernanke (2005) suggested the global saving glut helped increase in the US currency account deficit and the relatively low level of long term real
interest rates in the world. As a result, global saving glut caused the credit availability and the US housing boom.
Sub–prime loan is a major factor that led to the global financial crisis. During the housing boom, mortgage companies sold mortgage

The Global Economic Crisis Of The Middle Of 2007 And...
Introduction
The finР°nСЃiР°l crisis of 2007/2008 was not Р° СЃР°sРµ of markets failing. InstРµР°d, it shows how markets ultimately rРµСЃtify their internal
shРѕrtСЃРѕmings. The global economic crisis started in the middle of 2007 and lasted about five years. The crisis was triggered by the bursting of a
housing bubble (Mishel, Bivens, Gould, & Shierholz, 2012). It was characterized by massive withdrawal of investors from markets as a result of
reduced confidence, volatile world stock markets and reduced liquidity for banks which were unable to offer or obtain credit. Some financial
institutions were facing the risk of collapse. Governments around the world rushed to save these institutions and cushion their economies from the
economic crunch through what were popularly referred to as economic stimulus programs. This essay discuses the causes, results and exists of the
financial crisis regarding financial market, financial institution, and central bank (monetary policy) of Greece or Ireland and Europe from 2007–2009.
Causes of the Financial Crisis
A country's trade balance depicts differences in income generation and domestic consumption. If a country's imports value exceeds its exports value, it
means that the country is 'living beyond its means'. To make up for the excess spending, the country must borrow funds from abroad. Similarly, if
finance investment spending exceeds domestic saving, foreign savings must be spent to fill the deficit. The amount of money a country borrows is

Solving the Foreclosure Crisis Essay
The subprime mortgage crisis is an ongoing real estate crisis and financial crisis triggered by a dramatic rise in mortgage delinquencies and
foreclosures in the United States, with major adverse consequences for banks and financial markets around the globe. The crisis, which has its roots in
the closing years of the 20th century, became apparent in 2007 and has exposed pervasive weaknesses in financial industry regulation and the global
financial system. The collapse of the US housing market has had a devastating effect on the nation, where the housing price boom was particularly
pronounced, and the subsequent decline has been particularly disastrous. Hundreds of thousands of working and middle class citizens are in danger of
losing... Show more content on Helpwriting.net ...
To stimulate longer–range expansion in residential construction, Title II of the U.S. Home Loan Bank Act authorized the establishment of an insurance
fund for mortgages on homes built under Federal supervision or purchased after Federal appraisal. Under the U.S. Home Loan Bank Act, as it still
operates, the prospective homeowner applies to a local mortgage lender for a mortgage loan. The loan application includes evidence of the borrower's
credit rating, the plans for the house, and an appraisal of it. The Federal Housing Administration (FHA) field office reviews the plans, inspects the
dwelling during construction, appraises the property, and rates the credit risk of the borrower. If it approves the mortgage loan, the FHA will then
insure the loan when made by the applicant lending institution. The borrower pays a ВЅ percent insurance premium, and these insurance premiums are
pooled in an insurance fund maintained by the FHA. If the mortgage subsequently goes into default, the mortgage lender forecloses the property,
turning over title to the FHA. FHA, then, pays the mortgage lender the outstanding balance on the mortgage in debentures and sells the property or
proceeds against the original borrower to recover its losses. FHA mortgage insurance system had many purposes. First, the FHA gave commercial and
savings banks and

Why Investment Decisions Have Been Affected By Credit...
Private rating institutions such as Moody's, S&P and Fitch are institutes specialized in determining credit quality giving an indication of the risk of
default and creditworthiness. Rating agencies have been known to favour larger banking institutions anticipating additional opportunities for business
in securities rating. This has resulted, on multiple occasions, in asymmetric information to prevail causing an overestimate of creditworthiness leading
to adverse selection. This report aims to investigate how investment decisions have been affected by credit quality problems over the last 30 years, by
focussing on the actions and involvement of banking institutions during times of crisis.
S&L crisis
The most recent financial crisis was not ... Show more content on Helpwriting.net ...
Consequently, they were not able to attain adequate capital to maintain their activities. Supervisory oversight of the S&L industry was both
decentralised and split from the examination area, which meant that many insolvent thrifts were not identified.* Due to the specific methods of practice
in their area of specialisation, their financial health worsen over time. Lack of supervision also allowed some of the thrifts to re–invest in speculative
ventures16.
Nevertheless, regulatory authorities decided to lower capital standards giving even more power to S&Ls to make new (ultimately riskier) investment
decisions. The Table 1.1 below shows the cost which was eventually imposed on tax payers as a result of negligent behaviour of S&Ls.
Table 1.1. S&L Failures, 1980–1988 ($Thousands)
15 Federalreservehistory.org, (2015).Savings and Loan Crisis – A detailed essay on an important event in the history of the Federal Reserve.. [online]
Available at: http://www.federalreservehistory.org/Events/DetailView/42 [Accessed 11 Nov. 2015]. 16 Ibid15 Year
Number of Failures
Total Assets
Estimated Cost 1980 11 1,348,908
158,193
1981 34 19,590,802 1,887,709 1982 73 22,161,187 1,499,584 1983 51 13,202,823 418,425 1984 26 5,567,036 886,518 1985 54 22,573,962 7,420,153
1986 65 17,566,995 9,130,022 1987 59

The Big Short Movie Financial Crisis
Lessons from the Financial Crisis in the Movie The Big Short
The outbreak and spread of the financial crisis of 2007–2008 have caused the most of countries into severe economic difficulties and also created an
adverse impact on the global economy. The beginning of the financial crisis is defaults in the subprime mortgage market in the USA. Although the
global economy seems to recover since 2009, the impacts of the crisis still affect many countries until now. This essay focuses on the background and
impacts of financial crisis, and the learning from the movie The Big Short.
In the movie the big short, Lewis Ranieri, who is a banker of the Wall Street, created an idea that companies packed thousands of mortgage all bundled
together to sell, which is the AAA credit–rating bond, and can obtain high yields with low risk because everyone should pay for their mortgage. The
concept of Lewis Ranieri is called mortgage–backed securities (MBS). However, the demand of buying MBS is more than MBS supply. Therefore,
when the risk of MBS is high, Collateralized Debt Obligation (CDO) is a way to change subprime loans to high– rating bonds and it can be sold again.
Although CDO is full of subprime loans, it still can get AAA rating because... Show more content on Helpwriting.net ...
"When the dust settle from the collapse, 5 trillion dollars in pension money, real estate value, 401k, saving, and bonds had disappeared. 8 million
people lost their jobs; 6 million people lost their homes" пј€120
min.пј‰.The amount of money is equal, just from one person to anther person. Many
people suffer a lot in the financial crisis, and also some people predict the financial crisis to make money. Financial crisis is a certain event and
happens not only once. The financial crisis still exists in today's market. As the movie mentioned last, "In 2015, several large banks began selling
billions in something called a "bespoke tranche opportunity", which is just another kind of CDO"

Essay On Know Your Financial Crisis And Say No To Your...
Know your financial crisis and say no to your unwanted expenditure!
Money money money! Money can do anything; actually, money can do everything. People work to earn money. They need money to earn a living.
They need money to survive. People in the world do various things to earn money. Not only earning money but saving is also important. There must a
limit to everything; people should know their limits in spending their money. A future planning is required for each and every person in the world to
proceed in his or her life. There are several factors due to which you need to have a control on your expenditure. According to the latest survey, almost
half of the population of United States would struggle to come up with a four hundred ... Show more content on Helpwriting.net ...
2. When your housing takes most of your income:
There are many advantages having a spacious and lovely house in the middle of the city or near to office or school or beach or tourist attraction
spots. The Major disadvantage of having a beautiful and peaceful house is the cost to be paid. For many Americans, the housing cost is the most
expenditure that is spent on their salary. You cannot say no to if the expenditure is in the house or the furniture. But this is one of the major
expenditure many of the Americans going to spend from their salary. It is the easy trap where everyone falls into and left out with the financial crisis.
The expenditure on the house which includes mortgage loan, property taxes, house insurances etc., if this all summed up to more than 30%of your
salary then it is the clear indication that you are in a big financial crisis. More than 50%of Americans belong to this stage by the recent studies. This
crisis effects directly onto the retirement savings and health insurance. If you think having a beautiful and big spacious house shows your status and
dignity, then in some months or years you will face some serious crisis. It takes much time and hard work to overcome this type of crisis. So better
find a less lavish home that you can afford meaning property that takes less than 30% of your income.
3. No savings:
It is advised to save at least ten percent of their monthly

The Housing Market Of 2007
The Housing Market of 2007 has been described as one of the worst financial crisis since the great depression. Not because the actual hit of the
crisis, but because of the lingering effects that still plagues the United States and other countries today even in 2015. The United States economy
was not economically prepared for the crisis that presented itself in 2007. This financial crisis hit a variety of areas such as the housing market
which seemingly was one of the major causes of the financial. Causes of the Housing Market One of the major causes of the financial crisis was
the housing market. The housing market prior to the 2007 financial crisis was pretty good and stable. It was the American Dream to own your own
land which would be inclusive with a house. So prior to 2007 most Americans were buying into the American dream by buying housing even if they
could not afford to pay for these houses according to MoneyTalks.Com you are only supposed to 30% of what you earn towards a rent/mortgage.
This allows for breathing room for other areas of your income which includes savings, rainy day funds, and inflation. However as we know most
people do not abide by this rule according to statistics one in three Americans actually spend 66% of their earnings before taxes on housing according
to money.cnn.com . This as you can see is what

Financial Crisis By Mainstream And Heterodox Economists
The occurrence of financial crises following financial reforms is attributed by mainstream economists to economic reforms being incomplete or to their
incorrect sequencing. Briefly explain this argument. Focus your briefing note on the reasons advanced particularly by heterodox economists to criticize
this argument. The purpose of this note is to briefly examine the different approaches in interpreting the financial crisis by mainstream and heterodox
economists. To emphasize the drawbacks in the neoclassical (mainstream) view, and criticize it from the post–Keynesian (major heterodox) viewpoint.
The latest financial crisis of 2008 and 2009 will definitely become a cornerstone in the history of economic though and, correspondingly, the
development of capitalistic system. It is a turning point as the neoclassical (mainstream) theory that has seemingly been a driver of the late 30 years of
development lacks the ability to comprehensively explain the causes of frequent economic downturns, and provide policy implications for preventing
crisis from occurring again and again. However, the masterminds of the neoclassical school have suggested some reasonable arguments in favor of free
markets, liberalized interest rates, trade, foreign direct investments, privatization, deregulation, and property rights summarized in the list of 10 reforms
(John Williamson, 2004) and called for more financial liberalization policies. While the financial markets are liberalized and the real

The False Claims Act
On October 24, 2012 the Unites States of America filed a lawsuit against the Bank of America Corporation for selling toxic mortgages to Fanny Mae
and Freddy Mac which cost the taxpayers more than $1 billion dollars. The lawsuit sought penalties under two laws; the False Claims Act, which is
normally used to target fraud against the government, and the 1989 FIRREA Law. FIRREA does not usually hold up in court, but the government is
once again relying on it because of the financial crisis as a possibility for targeting civil fraud concerning financial institutions. (Viswanatha, Aruna,
2013) (Stempel, Jonathan, 2012) On May 8, 2013, U.S. District Judge Jed Rakoff issued a two–page ruling that dismissed the claims in the lawsuit
seeking penalties under the False Claims Act, but allowed the claims that sought penalties under Financial Institutions Reform, Recovery and
Enforcement Act (FIRREA) to advance. The relevance of the False Claims Act and the FIRREA Law will be further explored in this case.
(Viswanatha, Aruna, 2013) The False Claims Act The False Claims Act, also known as the "Lincoln Law" is an American federal law that holds
persons and companies accountable for abusing governmental programs. However, the law includes a "qui tam" provision that allows people without
government ties to file actions on behalf of the government. This is also referred to as "whistleblowing". The Act prohibits such measures as
knowingly presenting false claims for payment or approval,

China's Financial Market Essay
In countries with well developed financial markets like the US, firms use the equity and debt markets to raise capital for their operations, instead of
relying on just financial intermediaries such as banks. China's financial markets, however, are relatively undeveloped, with equities and debt
instruments combined accounting for <3% of total assets, as compared to 32% in the US (Xiong 2017). The stock market in China is heavily
speculative with volatile prices, while the bond market is still in development. In the absence of well developed financial markets in China, the
financial sector sector is dominated by financial intermediaries, mainly banks. Bank deposits are 85% of all financial assets in China, and these savings
are invested ... Show more content on Helpwriting.net ...
Interestingly, private capital dominates rural financial institutions through joint–stock commercial banks and co–operatives, as compared to state
ownership of big commercial banks (Xiong 2017). There also exists other region focused banks, such as city commercial banks, which have local
governments as majority shareholders, and credit cooperatives in rural areas.
The heavy involvement of the state in China's banking system stands in stark contrast with the private spirit of the US's financial system, which
exists almost independent of the government, with the exception of a few large policy institutions (Freddie Mac, Farmer Mac, Ginnie Mae, Fannie
Mae, etc.). Large banks in the US operate almost exclusively on private capital, and the state has been reluctant to participate except as a lender of
last resort. In fact, when in 2008 the treasury took control of Citibank, they sold all of their investment as soon as it was stabilized through a
secondary sale in 2010 (Randall Smith 2010). In exchange for this relative autonomy, banks in the US follow strict banking regulations (such as
provisioning and mark to market accounting) as well as tight capital requirements, especially post the 2007 Financial Crisis. There is no state control
over credit policy as in China, as private capital makes the bulk of the US banking system. Regional co–operatives also exist in the US, in the form of
thrifts, and savings and loans institutions (S&L), which operate primarily in

The Financial And Political Systems Have Always Played
The financial and political systems have always played a major role in stabilizing the society and ensuring a smooth transition between public
policies and economic activities. Over the past decades, we've witnessed the global crisis of 2008, which costs "tens of millions of people their
savings, their jobs, and their homes". Interestingly, the root of the problem comes from the corruption of the financial industry and how the political
figures respond to the crisis. This response paper corresponds to the documentary Inside Job, the movie that examined carefully the crisis of 2008.
The major key points that we will analyze are: the main issue that the documentary is addressing; causes and implications of the 2008 crisis; roles of
the key... Show more content on Helpwriting.net ...
Each crisis has caused more damage, while the industry has made more and more money. More ironically, the people who should be responsible for
the failures of the firms of often get away without being prosecuted. In this section, we will examine closely the causes of the 2008 crisis outlined by
Inside Job. Firstly, the documentary suggests the financial deregulation under the Reagan administration. In 1982, the Reagan administration
deregulated savings and loan companies, allowing them to make risky investments with their depositors ' money. By the end of the decade,
hundreds of savings and loan companies had failed. This crisis cost taxpayers 124 billion dollars, and cost many people their life savings. The
second one is unregulated derivatives. Using derivatives, bankers could gamble on virtually anything. This allowed AIG to write $3 trillion in
derivatives (credit default swaps) while reserving precisely zero dollars against future claims. The third one is the problem with the credit rating
system and investment securities. A new system was invented, with complex derivatives, called collateralized debt obligations, or CDOs. Lenders didn
't care anymore about whether a borrower could repay, so they started making riskier loans. The investment banks didn 't care, either; the more CDOs
they sold, the higher their profits. And the rating agencies, which were paid by the investment banks, had no liability if

Proposed Plan for Resolving the Housing Crisis in America...
The United States' foreclosure and housing market problems have been well–documented in recent years. This issue has only been heightened by the
2009 economic downturn. Can the sky–rocketing foreclosure market truly be blamed on the recession, however? Can the issue be pinned down on
the masses of people who have lost their occupations? Surely many of the cases can be traced back to these harsh conditions, but many more, most
likely, can be attributed to something else. Foreclosures are not a new phenomenon and have been a part of American society for years. So, in order to
determine a plan for how best to reduce the number of American families losing their homes, it seems best to look backwards rather than simply at the
present. The... Show more content on Helpwriting.net ...
Though it may not immediately impact the economy for the better, the far reaching consequences will be much greater than simply writing a new
homeowner a check for $8,000 that they may or may not have earned. This financial education will focus on a far–ranging plethora of topics, but in
regards to buying a house specifically, there will be three main pillars: the importance of a savings account for emergencies, the importance of
living by a budget, and a more expansive area of loan and interest education. The education of the masses must start early on for many reasons. One
is that by the time most citizens are old enough or financially established enough to buy a house, their spending habits and mindset have been
locked, and it would take a great deal of change to undo them. It will be much easier to produce a more financially savvy buyer if the principles
have been instilled since youth. It is suggested that a person is unable to become a native speaker of a language once a certain age has been reached.
In much the same way, it can be assumed that it will be much more difficult for an adult to become a "native speaker" of strong financial conscious
than for a child who has repeatedly practiced the tenants of smart decision making. The three pillars of sound home buying will be taught beginning in
fifth or sixth grade, when youth are

Theu.s. Housing Market And The U.s. Financial Crisis
The credit crunch, which occurred in the U.S. housing market between 2007 and 2009, led to the biggest global financial crisis. The impact of this
crisis extended over the world, and the economies of many countries were damaged. Kawai stated that: 'The ongoing global crisis has had a profound
impact on the Asia and Pacific region, particularly on its exports.' (2009:1)
There were a lot of factors which brought about the crisis. Due to limited space, this essay will look at the U.S. housing market and the U.S. financial
system, and discuss the increasing demand of the subprime market as the most important factor bringing about this crisis.
There are three parts in this essay. The first part of this essay will focus on the causes of the... Show more content on Helpwriting.net ...
According to Marshall (2009), the dramatic increase of house price in the US was more than double from 1998 to the end of 2005, and the rising
house prices were the result of large increase in demand. Increasing demand in houses caused the housing bubble.
There were three causes which supported subprime market and the creation of the bubble.
The first cause of the housing bubble is low interest rates which resulted from inflow of large amount of foreign money since investors from other
countries believe that investment in the U.S. provided low risk and good returns for them.
Holt illustrated that: 'Mortgage interest rates were falling despite the low savings rate in the U.S. because of an influx of saving entering the U.S. from
other countries' (2009:121)
The Federal Reserve preserved low interest rates policy in order to stimulate economic growth. The interest rates of mortgage market were kept low
therefore demand of mortgage lending market went up rapidly. Moreover, mortgage agencies made low short term interest rates for example adjustable
rate mortgages (ARMs) to encourage house buyer and investment with borrow money. The low interest rates encouraged more people to borrow
money in financial market that led to excessive demand in the market and the housing bubble.
The second cause of housing bubble

The Impact Of U.s. Economy On The Housing Crisis
In 2008, the National Bureau of Economic Research publicized that the U.S. Economy had entered into a recession. The overall agreement of what
was the primary cause of this recession was the credit crisis from the bursting of the housing bubble. This lead the U.S. into the worst recession in over
sixty years (Holt).
The decade before the 2008 crisis, showed the development of a key factor that would later contribute to the crisis. It was the dramatic increase in
aggregate households' indebtedness that had become so severe in the United States. This large growth in household indebtedness was a direct result in
large by the significant and sustained expansion in residential mortgage lending. With the growth in the residential mortgage ... Show more content on
Helpwriting.net ...
Another economist by the name of Thomas Sowell stressed that the government's role in creating the housing bubble. With the housing markets that
had the largest home price increases were often markets that the local government had forced land use restrictions on the amount of land available for
housing. Having relaxed mortgage lending standards were mainly the result of being government influenced (Russo). During the 2008 recession, the
Federal Housing Administration increased its insurance activity to keep money flowing into the market. Without this government agency's backing, it
would have been much more challenging for the middle class to get a home loan from the start of the recession (Griffith). A few large financial firms
experienced financial stress during the 2008 Recession and in response, the Federal Reserve provided the liquidity and support through a variety of
programs motivated to help the functions of financial markets and institutions, and in effect limit the damage done to the U.S. economy. The Federal
Reserve had provided record amounts of monetary accommodation in response to the severity of the reduction and the gradual return of the ensuing
recovery. Finally, the financial crisis caused major reforms in banking and financial regulation, which included congressional legislation that
significantly affected the Federal Reserve. One example is the

The Financial Crisis And 2008 Is A Big International Crisis
In every country, they always have a chance to have a financial crisis, it depends on the government and banks, which means Australia might go to
have a financial crisis in the further year. Banks can reduce the likelihood of having a financial crisis in countries. Many possible ways to have a
financial crisis and 2008 is a big international crisis. Australia financial system helped the government to reduce the damage from the 2008 international
crisis, many countries except Australia have a serious problem and impact after the crisis. Australiafinancial crisis can cause by banking and houses, it
can avoid one crisis, but may not evade the second, so they should find a solution to avoid the crisis come.
The financial crisis, the value of ... Show more content on Helpwriting.net ...
Therefore, every bank trying to avoid this situation (Ellis, 2015). A speculative bubble is also called stock exchange, people generate income from
buying stocks. Many people who guess the price of a stock and hoping to have a higher price after. When all people keep buying the same stock, the
price is getting higher and higher, if they all want to sell at the same time, the price will fall. Therefore, the price of a stock is more than the current
price including dividends and interest, that means the stock are having exhibited a bubble. Finally the international crisis, a speculative attack or cannot
pay the country debts, they will force to devalue its currency and either, these countries will affect other countries with their trading, therefore, create
financial crises in their country and might affect the whole world. (Sociable, 2014) In 2007 to 2008, there a huge international crisis and its affect so
many countries at one time.
In 2008, there is an international crisis started in USA. It affects almost the whole world. The American enterprise institute, Peter Wallison had found
in a research that said in United States government, they still believe in the idea of the 2008 financial crisis was caused by insufficient regulation of
the private sector (Opinion Journal: What Caused the Financial Crisis?, 2015). There are some countries in Europe have not been in crisis because
they were not have held by the United

The Financial Crisis Of 2008 Hit The American Economy
The financial crisis of 2008 hit the American economy and the world economy as well. It cost tens of millions of people their savings, jobs, and their
homes. For decades the American financial system was stable and safe, but it changed. The financial industry turned its back on society; it corrupted
the political system, and plunged the world economy into crisis. It was not an accident; it was caused by an out of control industry, a greedy industry.
The crisis has made more damage to society while the industry has made more money. The residentialmortgage crisis affected commercial real estate
by making credit much more difficult to get. Real estate investment has been driven by leverage. One of the great things about real estate investment is
that you do not need just cash to do it. The possible investors are either reluctant to acquire and develop real estate without the need of debt. As a result,
the demand for real estate slowed and prices fell down. To understand better how everything started, let's mention the great depression. After the Great
Depression, the United States had forty years of economic growth without a single financial crisis. The financial system was regulated, and most of the
banks were local. They were prohibited from speculating depositor's savings. Investments banks were small private partnerships in charge of handling
stock and trading. The private partnerships partners put their own money up as their investments; therefore they didn't risk as

Disadvantages Of Riba
In addition, when the lenders or financial institutions practices riba–based system, it will give a great blow to the poor or the needy due to the
compounding effect of the interest. Lending riba–based loans will exploit the poor as it will result in more poverty and reducing their future earnings.
This is because the longer the borrowers cannot pay the loan; the higher amount of loan will be due to its interest. On the other hand, riba–based loans
make the rich lenders richer because they gain the benefit by advancing their extra money based on interest from the needy, and this will increase
their future earnings. This situation shows the rich become richer and the poor become poorer. In the other meaning, riba will create wide gap
between the rich and the poor, where finally the situation will divide these peoples into classes which can occur inequality and give negative picture
on the social aspect of a country. Besides that, riba can be a cause or encouragement either to the borrowers or the lenders to behave negatively. It is
because when the borrowers make riba–based ... Show more content on Helpwriting.net ...
When the surplus units save their money at financial institutions in the shape of interest, they will be rewarded. The higher amount of savings; the
higher interest rate will be getting. Because the needy have low income, they making loans and were forced to pay extra. This makes them or the
borrowers less opportunity for saving more and getting interest income from the savings to make wealth. So their wealth will never sprout and will
continue to be pressed and depressed because of the debt. Meanwhile for the poor countries, foreign loans play a crucial role in their economic
development. However, a loan with the high rate of interest taken by the poor countries will make them difficult to repay the installments of the debt. It
is not help the poor countries at all, but increase the burden and make them fall

What Caused the Economic Collapse of 2008?
Anthony Smith
Dominique Dieffenbach
ENC1102 – English Composition II
7 February 2012
Who is to Blame for the Economic Crash of 2008? Throughout history there has always been some sort of a class struggle. The rich always seemed to
get richer while the poor barely managed to get by. One of the main things that contributed to the ever–expanding gap between the rich and the poor was
greed. Whether it was the greed for money or for power, greed was certainly a driving force. More recently, the greed of several, rich and powerful
individuals helped to cause one of the largest financial collapses of modern times. The purpose of this paper is to establish some of the key players in
the economic crash of 2008, and to show some common ... Show more content on Helpwriting.net ...
Sadly, this would not be the case. Later in his Presidency,Ronald Reagan would appoint Alan Greenspan to head the Federal Reserve Bank. Greenspan,
an economist, had previously sent a letter to government regulators to help convince them of the "soundness" of the savings and loan industry and its
need to be de–regulated. He was paid $40,000 by a top executive of the savings and loan industry, Charles Keating, for his work in convincing the
regulators to de–regulate the savings and loan industry. After the collapse of the savings and loan industry, many top executives were arrested and sent
to prison for looting their companies, Charles Keating was one of the main criminals that were sent to prison. (Ferguson 15:35) Works Cited
Blumberg, Alex, dir. "The Giant Pool of Money– Episode 355." Dir. Davidson Adam, This American Life. NPR News: WBEZ, Chicago, 09 May 2008
Radio.
Ferguson, Charles, dir. Inside Job. Prod. Marrs Audrey. Sony Pictures Classics, 2010. DVD.
Levin, Carl, and Tom Coburn. United States. United States Senate. Wall Street and the Financial Crisis: Anatomy of a Financial Collapse. Washington:
Committee on Homeland Security and Governmental Affairs, 2010.
Who is to Blame for the Economic Crash of 2008: An Annotated Bibliography
Blumberg, Alex, dir. "The Giant Pool of Money– Episode 355." Dir. Davidson Adam, This American Life. NPR News: WBEZ,

The 2008 Recession Affected The Global Economy
With the after effects of the stock marketing falling in 2008, and less investments involving risk and the GDP falling. This is when the economy began
turning internationally. With imports, exports and foreign investment falling along with the combination of employment and production being cut back
this recession affected the global economy. The unemployment rate in the United States began to skyrocket as well. Below is a graph depicting the
unemployment rate in the United States during the 2008 recession. This graph data is from Oregon Economic Crisis Analysis.
With lower rats of employment the United States Federal Reserve needed monetary policy to stimulate the economy. With many individuals loosing
their jobs primarily in the ... Show more content on Helpwriting.net ...
household savings increased and spending decreased. Going into 2008, many households could afford to keep debt and manage it because of the good
financial indicators. Below is a graph from Creditworthiness showing the U.S. average household debt vs saving leading into the 2008 financial crisis.
Most of the debt seen by households was in the form of mortgages, and loans against people's mortgages. Again with the government regulations
and push for more people to own houses, builders to expand their developments and banks to offer subprime loans which lead to competition among
banks to lower interest rates, give out adjustable rate mortgages, and even give no income no asset loans, it was easy to get the credit backing from
banks and financial institutions for individuals. This increased spending and debt can be contributed to why the economy was looking up for many
years, and the economy was booming. However when this uncertainty began to fall, more people pulled out of their personal investments that they
considered risk and starting hanging on to their money. Below is a chart from the U.S. Bureau of Economics depicting the household savings before
and after 2008. It is important to look at personal savings to see how the money supply could have also affected the economic crisis of 2008, which
turned the economy into a recession. With lower money supply in the economy and more in savings because of

The Real Estate Bubble Crisis
From the late 1990's to mid–2000's the United States experienced an unprecedented run up of real estate prices across the country that reached a
peaked in 2006, in some areas up to an eighty percent increase. After the increase in prices, there was a sudden collapse of real estate prices in 2008,
brought on by a surge in foreclosures, and an increasing inventory of housing.1 Foreclosure increases came from an unprecedented rise in mortgages
called, subprime mortgages. These risky subprime mortgages, and the cottage industry within the financial sector that profited from them, created an
overly leveraged and over exposed finance industry that created a massive recession when the bubble popped. In this essay, we will look into the many
... Show more content on Helpwriting.net ...
Foreign investors starving for fixed income securities that also had returns better than government securities, decided to invest in mortgage back
securities provided by Fannie Mae and Freddie Mac. In order to take advantage of the savings glut Wall Street firms began to package many of these
sub–prime mortgages together and create what was known as a mortgage backed security.1 A mortgage backed security, was an asset backed
security that was secured by a collection of upwards a several hundred mortgages. The issue was the mortgage back securities provided by Fannie,
Freddie, and investment banks were given good ratings by rating agencies such as Standard and Poor's and Moody's, even though these assets were
toxic. They gave the mortgage back securities good ratings, because their risk assessment models solely used previous housing data, and did not
include any possibility of a fall in housing prices.3 As a result, overseas investors believed they were getting secure assets with above average returns,
but instead they were getting very toxic assets instead. So the interest in these mortgage back securities continued the flood of savings, continuing the
suppression of interest rates and maintained the status quo.2 Banks lent out these sub–prime mortgages at a prolific rate because even if the borrower
foreclosed, banks were still able to make a profit, as they resold a higher priced house. Another form of easy credit came from the historically low
short term rates

Savings And Loan Crisis Research Paper
Definition: The Savings and Loans Crisis was the greatest bankcollapse since the Great Depression of 1929. By 1989, more than 1,000 of the
nation's Savings and Loans (S&Ls) had failed. This effectively ended what had once been a secure source of home mortgages. Half of the nation's
failed S&Ls were from Texas, pushing that state into recession. As bad land investments were auctioned off, real estate prices collapsed, office
vacancies rose to 30%, and crude oil prices fell 50%. The Federal Savings and Loan Insurance Corporation (FSLIC) had been created to insure their
deposits, much like the FDIC does today. However, S&L bank failures cost the FSLIC $20 billion, which bankrupted it. In addition, more than 500
banks were insured by state–run... Show more content on Helpwriting.net ...
Senators, known as the Keating Five, were investigated by the Senate Ethics Committee for improper conduct. They had accepted $1.5 million in
campaign contributions from Charles Keating, head of the Lincoln Savings and Loan Association. They also put pressure on the Federal Home Loan
Banking Board, the agency responsible for investigating possible criminal activities at Lincoln, to overlook possibly suspicious activities. What
Caused the Savings and Loans Crisis? Savings and Loans were specialized banks that used low–interest, but federally–insured, deposits in savings
accounts to fund mortgages. However, in the 1980s, money market accounts became more popular by offering higher interest rates on savings.
Consequently, investors became pulling money out of savings accounts, depleting the banks' source of funds. S&L banks asked Congress to remove
the low–interest rate restrictions. In 1982, the Garn–St. Germain Depository Institutions Act was passed, which allowed S&Ls to raiseinterest rates on
savings deposits. In addition, the banks were no longer restricted to mortgages, but were allowed to make commercial and consumer loans. Most
importantly, the law removed restrictions on loan–to–value ratios. At the same time, the Federal Home Loan Bank Board regulatory staff was reduced
thanks to budget cuts during the Reagan Administration. This further impaired their ability to investigate possible risky

Securing A Home Loan Is No Easy Task
One of the greatest feelings a person can experience is the sense of accomplishment. Buying a new home evokes joyful emotions as well as a sense
of achievement. A new home owner often has worked their entire life for this experience; for the right to be able to call themselves a proud
homeowner. It is the American dream sought by millions; a huge milestone. Renting is convenient as it provides a place to live without a long term
commitment, it does not however provide anywhere near the gratification that comes with home ownership. The prestige of owning a home is no easy
task, it takes years of hard work, financial planning and saving. Securing a home loan is a long road and great financial preparation must take place.
During the subprime... Show more content on Helpwriting.net ...
With the job market now stronger, many people have money saved and are surely eager to own a home again.
Rent–to–own is a convenient way for many to bring themselves back into home ownership. The way rent–to–own works is that the renter pays a little
extra every month to down pay the price of the home. This does several things, first it brings up their credit score to give them a better shot at landing a
mortgage. Second, it brings down the price of the home and makes the long term payments lower and therefore easier to pay. When the subprime
lending took place many people put down very little for their homes causing their monthly rates to be high. With the lower rates comes a better
opportunity at home possession. It also ensures that a person is ready for home owner ship, paying the extra money for the duration of the term proves
that they have a steady income and are able to contribute to the mortgage. During the crash, banks gave out loans which required minimal down
payment with hefty monthly payments, rent–to–own has the potential to reverse that.
As with benefits of the rent–to–own, there are also draw backs. For one, if things do not work out and onefalls behind in payments they may lose their
entire investment. Not qualifying for a loan at the end of the contract term could also

Foreclosure : The Foreclosure Crisis
The foreclosure/housing market crash several years ago affected a vast amount of families across the country. Unfortunately, my family was also
affected. Thankfully, my parents have not gone through foreclosure yet, but we are all stuck in a house because we are "underwater" (owe more than
it is worth). This crisis directly and indirectly affected so many, but thankfully we are all starting to bounce back.
For those who had the unthinkable misfortune to lose their home and go through foreclosure, it isn't the end. In fact, if they still dream of
becoming homeowners again, it can happen. It may take a while, years in fact, but it can be done. The first thing a potential boomerang buyer
(previous foreclosure victim in the process of transition to own property again) should do is to be educated on the recovery process after
foreclosure. Foreclosure doesn't necessarily begin the day you pack up, move, and turn over your keys to the bank. Foreclosure could literally take
years after that. A foreclosure is listed on your credit report for seven years. It may be listed longer, but it can really only be held against you for
that long. However, this doesn't mean you have to wait seven years or longer after foreclosure to purchase property again. The time you have to wait
will largely depend on the lender, the type of loan and your credit.
During the wait, you need to clean up your credit history. It is one thing to have a foreclosure and no other issues in your credit

The most recent financial crisis of 2007 was felt throughout the world, and brought about huge economic consequences that are still being felt to this
day. Within the United States, the crisis undoubtedly resulted in a surge in poverty and unemployment, a significant drop in consumption, and the loss
of trust in the capitalist economic system. Because of globalization, this crisis was felt through the intertwined global markets, affecting underdeveloped
countries even more. Historical events from the past have taught us that financial crises such as the one we suffered during 2007 have occurred a vast
number of times. From Mexico to Thailand, these financial crises have resulted in contagion worldwide, and have caused governments to ... Show more
content on Helpwriting.net ...
Banks would lend money to these prospective home buyers without checking the amount of incoming and concurrent assets that they owned in
order to see if they would be able to repay the loan. These loans were then pooled and sold off to government financial institutions such as Fannie
Mae and Freddy Mac. Slowly, the homeowners were unable to repay their loans, which forced them to either sell their homes at a lower price or
foreclose, between September 2008 and September 2012 alone, 3.8 million U.S. property owners lost their homes (Balaam, 196). This severely
increased the mortgage loss rates for both lenders and investors; it became known as the subprime mortgage crisis. Eventually, government financial
institutions whom had bought these pooled mortgages filed for bankruptcy soon after, which had a chain–effect reaction throughout the entire
economic system both in the U.S. and around the world. Thus, it created what is now known as the most recent financial crisis. The U.S. government
immediately issued emergency loans and tried to increase the money supply, they extended these emergency loans to over 700 banks in order to
incentivize home, student, auto, and small business loans (Balaam, 194). By the end of 2008 the stock market in the United States and Europe had
suffered loses of over 40%; losses that until recently have recovered (Balaam, 194). The economic crisis resurged feelings of loss and insecurities that
were to some

Student Debt Research Paper
Just how bad are college students in debt in the Unites States? In the United States student debt is completely out of control but more serious for
vulnerable groups. A student loan is arranged to help students pay for colleges tuition, books, and living expenses. If you apply for financial aid, you
may be offered loans as part of your school's financial aid offer. A loan is money you borrow and must pay back.
If you decide to take out a loan, make sure you understand who is making the loan and the terms and conditions of the loan. Student loans can come
from the federal government or from private sources such as a bank or financial institution. Loans made by the federal government, called federal
student loans, usually offer borrowers lower ... Show more content on Helpwriting.net ...
According to " Student Loans: Is There Really A Crisis? " studentdebt is causing real hardship for some Americans.The article states that the public
interest is to help subsidize students to attend college. But the real question is where is the public interest in subsidizing. The article also stated that to
double the interest rate for federal student loans is less calamitous than it sounds. But the rate increase would only affect new loans. What this particular
article lack is why there is nothing stopping student loans from having student in a crisis. What ways can they minimize students being in a crisis in the
United States. What's missing is ways to help students not be in debt.
What this article needs is ways to help students not go into a crisis with student loans. The article stated financial aid programs is needed to better
target aid for those who most need it and to reduce perverse incentives for colleges and universities, but what are some ideas for fixing the federal
government's core student aid program, Pell grants. Adding more ideas on fixing the federal government could have really answered the question of
is student loans is really a crisis. Student loans is a crisis and the federal government need to find ways for students not to be in

The world before the financial crisis of 2008 had stability. Iceland in 2000 was viewed as the perfect place to live and have your family grow.
Iceland had clean energy, high standard of living, jobs, and low government debt. Iceland was a place were children played and parents laughed and
enjoyed their life. Everyone lived well; Iceland was the role model of finance, until it all melted away. Iceland let giant corporations come into its
territory and exploit its geothermal and hydroelectric resources and its banks became so large to where their banks became larger than their economy,
impossible to bail out. The banks became unruly where the people even supposed to regulate the bank one third of them worked for the bank. The
cause of the... Show more content on Helpwriting.net ...
This created a toxic situation where people took out a mortgage loan, with a high rate, could not pay it back creating a bubble to where the investment
banks had no one else to lend to, and needed to be bailed out. Banks became rich and borrowed heavily to create more loans to create more short term
money that became the big investment banks bonuses. This created a global panzi scheme.
The problem is deregulation. The definition of deregulation is the elimination of government power with in an industry. In this case banks and
financial institutions of the world. Deregulation could be seen as greed, big corporations, monopolies, where the rich get richer. Deregulation is
the cause of the financial crisis of 2008. Deregulation means no one is watching over the banks and CEO is saying no and stopping the gambling
of people's savings. The 2008 economy got to the point of a financial crisis due to speculation of savings, investor banks went public and in turn
turned Wall Street became rich. Financial deregulation made for risky investments and looting companies. An example of this is the merger of two
big insurance companies Travelers and Citigroup in the 1990 has violated the Glass Stele Act, but was ignored for a whole year by the SEC. The
SEC is the Securities and Exchange Commission ho are supposed to be monitoring and making sure big corporations like this do not monopolize. The
Gramm Leach Bliley Act cleared the merger and the way for future large corporations to

1980 Banking Crisis
Since the crisis of 1933 the United States has never been the same, following with the crisis of 1980 and 1990 and relapsing with the crisis of
2008. With banking crisis' the United States economic history isn't the best. Our country's banking and economic status depends on what we do and
don't. Bank crisis' are very rare. Being rare, bank crisis' are very detrimental. Banking crisis' have greatly impacted the economy, destroyed families,
left people homeless, and even destroyed future generations. However, the U.S. has definitely learned a thing or two as well as increased its
preparation and security due to these banking crisis, that can surely allow a efficient recovery and better preparedness if a crisis were to occur again.
One standout... Show more content on Helpwriting.net ...
This almost brought down the world's financial system, and threatened the collapse some of the large financial institutions. Which luckily was
prevented by the bailout of banks by national governments, but left the stock markets to fend for themselves, thus causing global drop. It took huge
taxpayer–financed bailouts to shore up the industry. Even so, the ensuing credit crunch turned what was already a bad turn out into the worst recession
in 80 years. In 2008 the world economy faced its most dangerous crisis since the Great Depression of the 1930s. The contagion, which began in 2007
when sky–high home prices in the United States finally turned decisively downward, spread quickly, first to the entire U.S. financial sector and then
to financial markets overseas. The American economy is built on credit, and because of this credit went unchecked and got out of control. Many
people were taking out loans, mortgages became simple. Many people got rich and wanted more. Banks made a cut on the sale, then packaged the
mortgage with a group of other mortgages and erased all personal responsibility of the loans. The housing market eventually declined, causing massive
losses in mortgage backed securities. Many banks and investment firms began losing money. This also caused a massive amount of homes on the
market which lowered housing prices and slowed

Solving the Foreclosure Crisis: Not the End of the...
Our nation today has become spoiled with instant gratification. Loans and the borrowing system have given the idea that patience is no longer a
virtue and that saving is no longer necessary. Material wealth is increased, but so is the idea of false wealth. People have become so bloated with it;
therefore they take on more than they can afford. That is what has happened with our nation's recent wave of foreclosures. Loans have led everyone
to believe that they can own a home and it has omitted the practice of saving. That is where the beginning of the solution lies. Our nation's people
need to relearn the value of patience, therefore we need to learn how to start saving again because although loans may pave a way toward... Show more
content on Helpwriting.net ...
Before this recent foreclosure crisis, these four states were the fastest growing in the U.S. No one creates this mess, and things like this do not just
happen. To try to solve this, we have to look deep down at the root of the problem. There are many reasons for foreclosure, including job loss, payment
increase or mortgage adjustment, reduced income, along with many other reasons. What do these reasons have in common? They are all due to the
bad economy and the homeowners cannot help these circumstances. Nobody would voluntarily choose to stop paying their mortgage, it would be
unforeseen circumstances that arise that leaves one without enough to meet their payments. The borrower is left with no choice and clear solution.
The borrower is just the outer surface of a deep problem. The problem lies within the system of lending itself. The system of credit that the U.S.
relies on allows purchasing based on credit, or the ability to pay bills. Gauged with a credit score, one can increase this by paying more bills.
Essentially, to gain a high credit score, one must incur more debt. This is where everything goes wrong. Though material wealth is increased, so is the
debt. Unfortunately, people become so inflated with this false wealth that they take on more debt than they can afford. With their high amount of debt,
or credit, other purchases including homes become easier. This adds a considerable amount to one's already high debt.

The Financial Crisis Of The United States Essay
While 2008 neared its close, financial institutions capsized worldwide. Earlier that year the main American stock index, The Dow Jones, began a
downward spiral that ended up peaking the following March; a historic market low comparable to its 1997 levels and despite a sizeable recession, the
dot com bust, occurring in between the two troughs (1). More broadly, the International Monetary Fund recorded a 1.7% decrease in global GDP
during the approximately two–year period (2). This global contraction of economic growth became known as the Great Recession, the worst financial
crisis since the one that indirectly sent the entire world into yet another bloody war. Just like the Dow, the responsibility for this international calamity
lurks behind American markets. This collapse is inextricably correlated with the burst of the American housing bubble and multiple subsequent
bankruptcies that required Federal Reserve intervention to solve. Nonetheless, our government, through imposing limitations on shadow banking or not
deregulating the banking sector in the first place, possessed the capability to prevent this financial disaster throughout its development. The roots of the
crash trace back to U.S. regulatory and governmental activity. Thirty years prior, at the birth of financialization and Ronald Reagan's Administration,
certain policies started to favor banks' activities, particularly with respect to the practical dissolution of antitrust laws during the time and a general

The Savings & Loans Crisis Of The 1980s
The Savings & Loans crisis of the 1980s produced the biggest collapse of US financial institutions since the Great Depression. It emerged due to
volatile interest rate climate in late 1970s when depositors withdrew from these S&L institutions in large number and put them in money market funds
where they could get higher returns as these money market funds were not under the purview of Regulation Q which restricted the interest these S&Ls
could offer to their depositors. 1)How did the crisis begin? The business of the S&L industry was based on the unstable principle of borrowing short
and lending long, so they accepted short–term deposits ie their liabilities... Show more content on Helpwriting.net ...
This recapitalization bill was used as a bargaining chip against the Bank Board which had become more rigorous in dealing with these insolvent
thrifts. So, recapitalization was postponed and eventually when it was done, it was too little and already too late. Too little because although they
allowed recapitalisation but along with that, they put a forbearance clause which precluded the regulators from hastily closing these insolvent firms.
And as we know it was this delayed closure of these failed firms which actually inflated the S&L crisis. So, the reluctance of congress to confront the
real size of the crisis and leniency towards the politically influential thrifts prevented decisive measures from being taken even after the identification
of the problem. The FSLIC recapitalisation bill of 1987 had provision for just around $11 billion when the need was probably around $40 billion at that
time. Later in 1989, Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) was enacted, in fits and starts, to complete the

Negative Effects Of Borrowing Money
The practice of borrowing money has long been important to our economy and greatly impacts the everyday lives of individuals and businesses who
drive the global economy. However, one only needs to look at the savings and loan crisis of the 1980s and 1990s as well as the financial crisis of
2007–2008 here in America to see the devastating effects on borrowers and lenders of making bad loans. During and after the recessions associated
with these crises, traditional banks and mortgage lenders relied heavily on obtaining collateral to secure loans. The typical collateral such as real estate
was underwater in value, and the real estate market was so volatile that these traditional lenders were reluctant to make loans for personal use, such...
Show more content on Helpwriting.net ...
These unsecured loans are used to pay for everyday items (such as a car, travel, college tuition, elective medical procedures, etc.) or to consolidate
and pay off other debts with a single payment and lower interest rate than a typical credit card. Most recently, as competitive pressures have increased
in the market and Lending Club's performance had begun to stall, Lending Club stayed in the foreground of its competitors by expanding its model
into offering small business loans beginning in 2014 (Mandelbaum, 2015). Small businesses who needed loans in significantly larger amounts were hit
especially hard after the financial crisis and had a difficult time obtaining loans without available collateral. By offering unsecured loans to small
businesses, Lending Club has been successful in diversifying its business and boosting its bottom line for investors.
This paper analyzes data obtained over the history of Lending Club from 2007 to the most recent year's available data and applies statistical methods
to this data as follows. First, it assesses factors that are most highly correlated with the success or failure of a personal loan approved by Lending Club
(e.g.: debt to income

The Economic Crisis Was The Worst Monetary Disaster Since...
The 2008 economic crisis was the worst monetary disaster since the Great Depression that resulted in a global financial meltdown, costing the world
over $20 trillion. The Academy Award nominated filmmaker, Charles Ferguson's Inside Job, exposes the shocking truth behind the Great Recession
and how millions of people lost their savings, jobs, and homes. The film begins not on Wall Street or even in the United States, but Iceland. A nation
whose problems turn out to become the world's in microcosm. A small country with a population of only 320,000 people and a gross domestic
product (GDP) of $13 billion, ended up with bank losses of over $100 billion.
Iceland was a stable democracy with a high standard of living until the year 2000. In ... Show more content on Helpwriting.net ...
September 15, 2008, the bankruptcy of the investment bank Lehman Brothers, and collapse of the world's largest insurance company AIG, triggered a
global financial crisis. This major fallout was catastrophic; it cost the world tens of trillions of dollars, rendered 30 million people unemployed, and
doubled the national debt of the United States. Unfortunately for everyone else, this crisis was caused by an out of control industry. Since the 1980's
this industry has been feeding from the rise of increasingly severe crisis', each one causing more and more damage. The investment banks went public
and stock and bond workers on Wall Street were getting rich. In 1982, the Reagan Administration deregulated savings and loan companies allowing
them to make risky investments with their depositor's money. By the end of the decade, hundreds of these loan companies had failed, costing
taxpayers $240 billion dollars and their life savings; otherwise known as a "bank heist". An example of one of these investment loan companies was
Ctitigroup (the largest financial services company in the world). There was an ongoing merger in 1998 between Citicorp and Travelers that violated the
Glass– Steagall act, a law passed after the Great Depression so there could be no risky banking activity. Alan Greenspan under the Reagan
Administration, ignored it and said nothing. In fact, a year later, with the urging

Stock Market Failure
As of now, you are all most likely aware that our nation's economy is rapidly declining because of the stock market crash. What you may not know
is that your father and I have lost our life's savings because of it. You see, your father and I decided to invest in some shares, hoping to make a profit
in the long run. What a mistake that turned out to be! Although we only used a miniscule portion of our money, we bought the stocks on a margin,
receiving loans from the bank. When the market crashed, our bank announced that all loans must be fully paid off. We lost everything. We were forced
to pay off a loan that cost more than our personal investment in the shares. The loan was worth such a great amount of money that your father and I
had were

Savings And Loan Crisis

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