The financial crisis of 2007-2008 was years in the making. By the summer of 2007, financial markets around the world were showing signs that the reckoning was overdue for a years-long binge on cheap credit. Two
Bear Stearns hedge funds had collapsed, BNP Paribas was warning investors that they might not be able to withdraw money from two of its funds, and the British bank Northern Rock was about to seek emergency funding from the Bank of England.
Yet despite the warning signs, few investors suspected that the worst crisis in nearly eight decades was about to engulf the global financial system, bringing Wall Street's giants to their knees and triggering the Great Recession.
It was an epic financial and economic collapse that cost many ordinary people their jobs, their life savings, their homes, or all three.
KEY TAKEAWAYS
- The 2007-2009 financial crisis began years earlier with cheap credit and lax lending standards that fueled a housing bubble.
- When the bubble burst, financial institutions were left holding trillions of dollars worth of near-worthless investments in subprime mortgages.
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