What was the primary cause of the financial crisis of 2008? 🔊
The primary cause of the financial crisis of 2008 was the collapse of the housing bubble, which was fueled by subprime mortgage lending practices. Banks and financial institutions excessively issued risky loans to borrowers with poor credit histories, leading to widespread defaults. As housing prices plummeted, mortgage-backed securities, heavily invested in by financial firms, lost immense value. The crisis triggered a severe global recession, resulting in bank failures, widespread unemployment, and significant government interventions, including the Troubled Asset Relief Program (TARP) to stabilize the economy.
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