The document discusses the 2008 global financial crisis and subprime mortgage crisis. Key events included Lehman Brothers declaring bankruptcy, Merrill Lynch being acquired by Bank of America, Bear Stearns being acquired by JP Morgan Chase, and AIG receiving government assistance. European banks also experienced problems, with BNP Paribas suspending funds and the ECB pumping money into European markets. The crisis originated from high-risk subprime home loans in the US that later defaulted in large numbers.

1. Presented By Chanchal Kumar 50803005 Nisheeth Srivastava 50803023

2. Lehman Brothers BANKRUPT. Merrill Lynch acquired by Bank of America for $50 billion. Bear Stearns acquired by JP Morgan Chase for $1.2 billion AIG helped by government by borrowing it’s assets.

3. French bank BNP Paribas suspended three investment funds worth €2 billion . The European Central Bank (ECB) pumped €95 billion into the European banking market . The Dutch bank NIBC announced losses of €137 million from asset-backed securities in the first half of this year. ICICI too facing heat in India.

4. C = Consumables , I = gross investment G= Government spending X= Export , M= Import

6. Growing Market Economy Declining Market Economy

9. The bursting bubble was called : SUB-PRIME CRISIS Sub-prime home loans Sub-prime rate Sub-prime mortgage

10. Big American Dream by Mr. Bill Clinton House to all Americans. Emergence of robust and good credit rating financial institutions Risk willingness Authorities to financial institution apart from banking sector.

12. Good or bad customers Customers rated by FICO (Fair Isaac Corp.) Score = 620 Mortgage within 12 months Emergence of financial institutions for development of low income group.

13. They took loans from banks Having good credit rating Division of loans into smaller portions Used to give them out as home loans. But higher interest rates charged.

14. Borrower below prime candidature. Bad customer Past payment Credit history Income level Employment status

15. Sub-Prime Rate : Lending home loans at higher rate of interest. Sub-Prime Home Loan Market : the home loan and the market it created.

17. Between 1997 and 2006 , American home price increased by 124% Houses were started treated as investments like stock

19. Financial s sector downturn. Mortgage of companies Shutdown Merger deals Market weakness Indirect economic effect

20. Job losses GDP slow down Inflation rise Stock indices worldwide trended downturn Liquidity risk About 85 % decline in profit of US banks Operation suspended IMPACT OF CRISIS