The causes and consequences of the global financial crisis (GFC) are numerous and remain hotly debated. One catalyst was clearly the collapse of the U.S. housing market in 2007–2008. The Federal Reserve played a role by overstimulating the economy during 2004–2007 when the housing asset bubble was forming. Later the Fed tightened credit conditions throughout late 2007 and early 2008 even though the Banker’s Roundtable reported that loan demand had “fallen off a cliff.” Congress played a role in writing legislation that encouraged home ownership by those with no real prospect of repaying a mortgage loan. Subprime mortgage loans were even granted to borrowers with no income, no job, and no assets (so-called NINJA loans). Middle-income borrowers played a role by seeking mortgages for much larger houses than they could afford. Mortgage brokers earned fat commissions facilitating these transactions which bankers approved, while bank regulators looked the other way. ……..
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