This document discusses the subprime mortgage crisis in the United States. It defines subprime mortgages as loans given to borrowers with poor credit ratings. The crisis coincided with the 2007-2009 recession as home prices declined sharply, many subprime borrowers defaulted on their loans, and financial institutions incurred major losses. This led to effects like a decline in GDP, rising unemployment, a drop in real estate prices, and the bankruptcy of large banks. Government remedies included quantitative easing, credit easing, expanded deposit insurance, capital injections for banks, and programs to avoid home foreclosures.

1. Presnted By : Aman Gujrati
Tanuja Goel
Submitted To: RVM Finishing School
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9550812082
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2. Introduction
 “Subprime” is an adjective
relating to or for people with a
poor credit rating. Banks provide
loan or mortgage to these
people called “Subprime
Mortgage” or “Subprime Loan”.
 The U.S. subprime mortgage
crisis was a nationwide banking
emergency that coincided with
the U.S. recession of December
2007-June 2009.
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3. Causes
Large decline in home
prices.
Effect on subprime
borrowers.
Loss to the financial
institutions.
Increase in mortgage interest
rate.
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4. www.rvmfinishingschool.com

5. Effects
 Effect on Gross Domestic Product(GDP).
 Unemployment.
 Decline in Real estate.
 Drastic effect on Stock Market.
 Increase in National Debt.
 Lead to bankruptcy of largest US banks.
 Effect on GSE-Fannie Mae/Freddie Mac.
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6. Price of Bank Stock in $
250
200
150
100
50
0
Jan '08
Jan' 07
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7. Remedy
 Quantitative Easing.
 Credit Easing.
 FDIC expanded guarantees.
 Capital Injections by Govt.
 Stress test on largest Banks.
 Programs to avoid home foreclosures.
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8. Conclusion
The “Financial or the Subprime Crisis” was the
shear consequences of ‘greed’ and to make ‘too
much profit’ on the part of Wall Street Firms and
Investment Banks.
This crisis also shows as failure of capitalist
market economy. Though the Indian economy
would be able to withstand the crisis without
any major difficulty, but the crisis is still causing
mayhem all over the world.
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9. Thank You
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