2007-2008 financial crisis

2007-2008 Financial Crisis Student’s Name Institutional Affiliation Course Professor Date 2007-2008 Financial Crisis The 2007 -2008 financial crisis refers to the huge financial disaster the world saw from 2007- 2009. This disaster affected people and organizations in the world, with millions of Americans being heavily affected. Financial institutions began to fall, and many were riveted by larger organizations. In such an event, the U.S. Government was enforced to provide bailouts to ensure many institutions remain afloat. This crisis, often identified as "The Great Recession," did not occur overnight. Significant factors resulted in the crisis, and their effects might even be present today. This essay offers a summary of the financial crisis of 2007-2008, underscoring significant events and the aftermath results. Origin of the Crisis The foundation of this crisis was started by the housing market bubble that had started back in 200os because of the increasing property values caused by low interest rates and an abundance of capital (Turner, 2023). During this time, financial institutions, such as banks and other loaning organizations, provided low interest rates on loans and supported many properties holder in taking out mortgages that they might not pay for. With the increasing number of loans, creditors started to develop new financial tools known as mortgage-backed securities (MBS). MBS were basically mortgages pushed together that might then be sold as securities with slight risk load since they were supported by credit default swaps (CDS) (Turner, 2023). Lenders might then effortlessly pass along the mortgage and all other risks. Such securities were sold to investors, such as hedge funds, larger banks, and even international financia...