The 2008 financial crisis was mainly caused by the subprime housing credit crisis in the United States. Initially, the affected companies were limited to those directly involved in homebuilding and subprime lending, such as Northern Rock and National Financial Services.
Some financial institutions engaged in mortgage securitization, such as Bear Stearns, became victims. On July 11, 2008, the largest mortgage company in the United States collapsed.
IndyMac's assets were seized by federal agents after they were crushed by tight credit, as home prices continued to slide and foreclosure rates rose.
Financial markets fell sharply that day as investors wondered whether the government would try to bail out mortgage lenders Fannie Mae and Freddie Mac. On September 7, 2008, it was late summer. Although the federal government took over Fannie Mae and Freddie Mac, the crisis continued to intensify.
The crisis then began to affect general credit that had nothing to do with real estate, and by extension, large financial institutions that were not directly related to mortgage lending.
Most of the assets owned by these institutions are obtained from income related to home mortgages. For these securities with credit loans as the main subject matter, or credit derivatives, they were originally used to protect these financial institutions from the risk of bankruptcy.
However, due to the occurrence of the subprime housing credit crisis, the number of members affected by these credit derivatives has increased, including Lehman Brothers, American International Group, Merrill Lynch and HBOS. Other companies have begun to face pressure, including Washington Mutual Bank, the largest deposit and lending company in the United States, and affecting large investment banks Morgan Stanley and Goldman Sachs Securities.
Extended information
Since the subprime mortgage crisis broke out in August 2007, it has caused great impact and damage to the international financial order, causing a strong credit crunch in the financial market. The systemic financial risks accumulated over a long period of time in the international financial system have been exposed.
The financial crisis caused by the subprime mortgage crisis is the most serious financial crisis in the United States since the "Great Depression" in the 1930s. The subprime mortgage crisis that originated in the United States is spreading across the world. The global financial system has been significantly affected, and the crisis has impacted the real economy. China was also affected by the subprime mortgage crisis.
Excessive innovation of financial instruments, distorted interests of credit rating agencies, and deregulation of monetary policy are the main causes of the U.S. subprime mortgage crisis. Although the response measures taken by the U.S. government such as substantial capital injections, consecutive interest rate cuts, and direct intervention have achieved certain results, they have not fundamentally solved the problem.
The enlightenment this brings us is: financial regulation policies must conform to the economic situation and comply with the laws of cyclical fluctuations; financial products and their systems should be promoted on the basis of strengthening financial supervision and improving risk prevention mechanisms. Innovation; we should seize favorable opportunities to encourage overseas asset mergers and acquisitions, optimize overseas asset structures, and diversify overseas asset risks.
Baidu Encyclopedia - Subprime Crisis