The Great Recession of 2008 was primarily caused by the subprime mortgage crisis, which involved risky lending practices and a housing bubble that led to widespread defaults on mortgages. Deregulation in the financial sector allowed for increased risk-taking, culminating in the collapse of major financial institutions like Lehman Brothers. In response, reforms such as the Dodd-Frank Act and Basel III Accord were implemented to enhance regulatory oversight and reduce systemic risk.

1. THE GREAT
RECESSION 2008

2. CONTENTS
• Reason for the Crisis
• The Subprime Mortgage Crisis
• Predatory Lending
• Deregulation of Financial Institutions
• Fall of Lehman Brothers
• Reforms Made in Government
Regulations
• Reforms Made in Federal Bank
Regulations
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3. REASON FOR THE
CRISIS
• Housing Bubble: Rapid increase in housing prices
led to unsustainable levels of mortgage lending.
• Subprime Mortgages: Risky lending practices,
offering mortgages to borrowers with poor credit
histories.
• Securitization: Banks packaged these risky
mortgages into securities, spreading risk
throughout the financial system.
• Deregulation: Relaxation of regulations allowed
for risky financial products and practices to
flourish.

4. THE SUBPRIME
MORTGAGE CRISIS
• The subprime mortgage crisis was the root cause of the Great
Recession.
• Subprime mortgages were loans made to borrowers with poor
credit histories.
• These loans were often bundled together and sold as mortgage-
backed securities (MBS).
• As housing prices began to fall, many borrowers defaulted on their
subprime mortgages.
• This led to a collapse of the MBS market, which triggered a
financial crisis.

5. PREDATORY LENDING
• Predatory lending is a deceptive or unfair
lending practice that targets vulnerable
borrowers.
• Subprime lenders often used predatory
lending practices to sell mortgages to
borrowers who could not afford them.
• These practices included misleading
borrowers about the terms of their loans and
pressuring them into signing on the dotted line.
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6. DEREGULATION OF
FINANCIAL INSTITUTIONS
• In the years leading up to the Great Recession, there was a
significant deregulation of financial institutions.
• This deregulation allowed banks and other financial
institutions to take on more risk.
• For example, the Gramm-Leach-Bliley Act of 1999 repealed
parts of the Glass-Steagall Act, which had separated
commercial and investment banking since the Great
Depression.
• As a result, many financial institutions were overexposed to
the subprime mortgage market when it collapsed.
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7. THE FALL OF LEHMAN BROTHERS
• The collapse of Lehman Brothers was a major turning point in the
financial crisis.
• Lehman Brothers was a major investment bank that was heavily
invested in the subprime mortgage market.
• When Lehman Brothers filed for bankruptcy in September 2008, it
sent shockwaves through the global financial system.
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8. REFORMS MADE IN GOVERNMENT
REGULATIONS
•Dodd-Frank Act: Overview of the key provisions aimed at regulating
financial institutions and reducing systemic risk.
•Increased Oversight: Strengthening of regulatory agencies such as
the SEC and CFTC.
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9. REFORMS MADE IN
FEDERAL BANK
REGULATIONS
• Basel III Accord: International regulatory framework
for banks, focusing on capital requirements and risk
management.
• Stress Tests: Implementation of stress tests to
assess banks' ability to withstand economic
downturns.
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10. CONCLUSION
• Summary of key points: causes of the Great
Recession, reforms made in government and
federal bank regulations.
• Impact: Reflection on the lasting effects of the
crisis on the economy and financial system.
• Future Outlook: Consideration of ongoing
challenges and the importance of vigilant
regulation in preventing future crises.
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11. THANK YOU