The financial crisis of 2008, or Global Financial Crisis (GFC), was a severe worldwide economic crisis that occurred in the early 21st century. It was the most serious financial crisis since the Great Depression (1929). Predatory lending targeting low-income homebuyers,^[1] excessive risk-taking by global financial institutions,^[2] and the bursting of the United States housing bubble culminated in a "perfect storm." Mortgage-backed securities (MBS) tied to American real estate, as well as a vast web of derivatives linked to those MBS, collapsed in value. Financial institutions worldwide suffered severe damage,^[3] reaching a climax with the bankruptcy of Lehman Brothers on September 15, 2008, and a subsequent international banking crisis.^[4]

The preconditions for the financial crisis were complex and multi-causal.^[5][6][7] Almost two decades prior, the U.S. Congress had passed legislation encouraging financing for affordable housing.^[8] In 1999, parts of the Glass-Steagall legislation were repealed, permitting financial institutions to comingle their commercial (risk-averse) and proprietary trading (risk-taking) operations.^[9] Arguably the largest contributor to the conditions necessary for financial collapse was the rapid development in predatory financial products which targeted low-income, low-information homebuyers who largely belonged to racial minorities.^[10] This market development went unattended by regulators and thus caught the U.S. government by surprise.^[11]

After the onset of the crisis, governments deployed massive bail-outs of financial institutions and other palliative monetary and fiscal policies to prevent a collapse of the global financial system.^[12] The crisis sparked the Great Recession which resulted in increases in unemployment^[13] and suicide^[14] and decreases in institutional trust^[15] and fertility,^[16] among other metrics. The recession was a significant precondition for the European debt crisis.