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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legislation encouraging financing for affordable housing.[8] In 1999, parts of the Glass-Steagall legislation were repealed, permitting financial institutions to comingle their commercial (risk-averse) and proprietary trading (risk-taking) operations.[9] Arguably the largest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.

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Financial crisis of 2007–2008 - Wikipedia
oup Chrysler Citigroup Fannie Mae Freddie Mac General Motors Lehman Brothers Royal Bank of Scotland Group UBS Related list: List of banks acquired or bankrupted during the Great Recession v t e <span>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. In 2010, the Dodd–Frank Wall Street Reform and Consumer Protection Act was enacted in the US as a response to the crisis to "promote the financial stability of the United States".[17] T


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