Purchase Solution

2008 U.S. economic financial crisis: sub-prime loans

Not what you're looking for?

Ask Custom Question

Please help me answer these questions about the economic recession and the housing crisis.

1. How did the housing market affect the 2008 economic recession?
2. Discus How did the Banks influence the behavior of borrowers.
3. Briefly describe how the president and the government reacted to the 2007 to 2009 recession, and was it the right answer?
4. What was the cause and effect of sub-prime loans?
5. Discuss the current mortgage and housing crisis in U.S.
6. Discuss the need for federal government interventions in these crisis.

Purchase this Solution

Solution Summary

The response provides you a structured explanation of financial indiscipline and economic recesssion . It also gives you the relevant references.

Solution Preview

1. The housing bubble that reached its acme in 2006 led to the values of securities connected to real estate pricing to fall, leading to problems for financial institutions globally. As housing prices declined, many large investment and commercial banks suffered losses and faced bankruptcy. The housing bubble followed by a price decrease which is called the housing price crash. The owners of the houses were left holding a negative equity. The low level of lending standards was fostered by relaxed lending standards by government affordable housing policies.

2. The banks directly influence the behavior of borrowers by lending more freely or by lending very strictly. For example during the housing bubble banks began giving out more loans to potential home owners, without complying with strict lending laws. If regulations are not followed the borrowers tend to borrow more than their capacity. Borrower for house loans borrowed more than their capacity to repay or their level of earning.

3. The president and the government reacted to the 2007 to 2009 recession through stimulus measures. The Federal Reserve reduced the ...

Solution provided by:
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
Recent Feedback
  • "I read your comments, and thank you for this feedback. Do I need to find other studies that applied this methodology Ive used? That's where I'm stuck at."
  • "Thank you kindly sir. "
  • "Excellent and well explained. --Thank you kindly. "
  • "Awesome notes. I appreciate you."
  • "I have the follow-up project and I will assign that to you very soon. "
Purchase this Solution

Free BrainMass Quizzes
Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.