American banks gave out many risky loans, called NINJA loans, to borrowers with no verified income or assets. They packaged these risky loans into mortgage-backed securities and derivatives that were sold to other banks. When housing prices fell, many borrowers defaulted, causing the value of these securities to plummet. This created a domino effect where banks stopped lending to each other and to businesses, slowing the economy. The lack of banking regulation in the US allowed this crisis to start.