The Great Recession And Financial Crisis - 1865 Words

The Great Recession or Financial crisis started in late 2006 beginning of 2007 when the subprime mortgages in the united states started to exhibit at a growing rate of mortgage defaults. Which led, in late 2006, to a decline in US housing market after exponentially higher growth. Many homeowners witnessed how the assets, (main source) devalue. By mid 2007, the housing market started showing an unusual default on home loans. By 2008, the U.S. witnesses and live the worst financial recession since the end of WWII. In 2008, a number of Banks, Financial Institutions and Non-Financial institutions failures sparked Financial Crisis or as some economist call â€Å"The Great Recession† that efficiently froze the entire world Financial institutions,†¦show more content†¦The Financial crisis has its roots in real estate and the famous sub-prime lending crisis. In 1990, during president Bill Clinton administration, Commercial banks and residential properties witnessed their values increase for almost a decade. Increases in the house market coincide with the lowering of interest rate and lending standards to unqualified borrowers accepting them to take out mortgages whereas at the same time the government deregulations mixed the lines between traditional financial institutions and mortgages lenders. The real estate loans were distributing through out the financial Banking system in the shape of CDOs and other complex derivatives in order to scatter or spread the risk; however, when home values stopped to rise and homeowners flopped to keep up with their payments and banks were forced to foreclosure their homes. The financial crisis from 2007 to 2009 may well be called the financial engineering and corporate authority gone wild. The birth of the financial crisis can be draw back to the property asset bubble in the US between 1997 and 2006. This financial bubble was enabled by a badly regulated subprime mortgage industry and the assumption that property prices would continue to