The Unethical Financial Crisis of 2008

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The financial crisis of 2008 was the most detrimental crisis since the 1930s when the Great Depression transpired. Stock markets had fallen all around the world, huge financial institutions had collapsed or were bought out, and every nation’s government needed to bail out their financial systems. There are many different theories as to why this crisis began including the blame of deregulation and regulation among other things. The housing boom reversal and the subprime mortgage crisis had a large influence on the occurrence of the financial crisis which makes me believe greed and not enough regulation encouraged this to occur. The subprime mortgage crisis was a result of excess borrowing because of the assumption that housing prices would only continue to rise. Since many people dream to be home owners and homes are very expensive, people need to borrow money to acquire one of their own. Before the crisis in the early 2000s, mortgage interest rates were low which permitted you to borrow money at a lower monthly payment. At this point in time, many of the families who qualified for a mortgage received houses and made their monthly payments. After a while, there were less people who had good credit and were eligible for a mortgage. In order for mortgage brokers, lenders, investment bankers, and investors to continue to make their money, they needed people who were going to buy houses or else they would not be able to maintain their large amounts of income. They decided to accept unqualified mortgage applicants. This added risk to the mortgage and made it inevitable that the homeowners would default on their mortgage resulting in the house foreclosing where the investment banker could then put the house up for sale. This cycle continued to happen which caused houses to lose their value bringing down the other houses around them. In the end, many people lost money, jobs
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