Sub Prime Crisis

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The Sub-Prime Crisis of Has Led to a Financial Crisis in 2008-2009 That Impacted Many Countries Around the World. Discuss the Cause of the Sub-Prime Crisis and the Major Parties Responsible.
The sub-prime crisis of has led to a financial crisis in 2008-2009 that impacted many countries around the world.
Discuss the cause of the sub-prime crisis and the major parties responsible.

A number of parties were responsible for the sub-prime crisis during the period of 2008 to 2009. This essay will be discussing the parties responsible for the sub-prime crisis and how the individual party’s action causes the others to step deeper into the problem.

As define by investopedia, sub-prime is “a classification of borrowers with a tarnished or limited credit history. Lenders will use a credit scoring system to determine which loans a borrower may qualify for. Subprime loans carry more credit risk, and as such, will carry higher interest rates as well.” The US subprime mortgage crisis was the catalysis of the finical crisis and subsequently cause the recession that began in 2008.

The cause of sub-prime crisis arise from sub-prime loans or also know as sub-prime mortgage, the growth of this loan started expanding during the 1990s and such load is popularly seen in auto (car) loans, home equity (housing loans) and mortgage lending. Sub-prime loans are higher-risk loans labeled “B”, “C” and D credits, where “D” being the “worst”, resulting in a higher interest rate, which also mean a higher risk to the lenders. But it seem not to be a hindering problem, from the point of view of the finical institute who lend out the money, which will be explained later in this essay.

In the past banks would only offer housing loans to qualified homeowners after assessing their creditworthiness, net disposable income and ability to finance the repayment of the mortgage. In the 1980s a UK…...

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