the 2008 financial crisis started almost 2 – 3 years prior to that.
it was due to lending money for homes to people whose credit rating was less than perfect . you might have heard the name – subprime mortgage crisis.
the lending rules were relaxed – people could buy homes with no money down or almost 5 % down instead of the usual 20 % down payments.
The people who got an adjustable rate and since the rates were low initially and slowly went up , people who had bought three , four homes could not pay back the monthly payments for their loans and starting defaulting on their loans.
The result – they started walking away from their homes . the bank’s balance sheets started going bad very quickly and caused the crisis.
Michael Lewis , the author , has written a book on this , called , the big short .Add to favorites