Mortgage Crisis Essay Example | Topics and Well Written Essays - 1500 words

Mortgage Crisis - Essay ExampleThis financial turmoil became such an tart problem in the derivative food market that many premier financial firms like Lehman Brothers, Washington Mutual, and AIG eventually surrendered to the situation by incurring huge losings and few among them collapsed. The downfall of such stalwarts of the financial market pressurized the entire economy of the world to go down with them. If we analyze the issue we would find that it is the de-regulation of the US government, which at long last resulted in the Subprime crisis. De-regulation of the US opinion system is the main cause behind the mortgage crisis and the only fashion of restoring the normal situation is by tightening the degree regulation in the credit market.With loosening of the credit market regulations, those creditors eagerly gave loans to the set of people who did not fall in the set of potential borrowers in advance and credibility assessment was loosened. The crisis affected the inter-b ank lending, ultimately slowing down the entire credit process of the nation. around of the assets on which financial market worked at that time were not real as at that sign of time there were an increasing number of home buyers in United States who defaulted during their loan payments. Many Americans were constrained to leave their home, though the issue was not solved at that point (Gale, 2005). As mentioned above, their (home-owners) failure to foregather the debt created havoc within the American as well the Global Economy (Mortgage crisis robbing seniors of golden geezerhood, 2009). In the first three months of the year 2007, only 0.58 percent of the default mortgages were in foreclosure (Gale, 2005). This percentage was high in the case of the sub-prime buyers where about 2.43 percent of the mortgage properties were evacuated. This could lead to further rise in banks losses (Wei and Grant, 2009). The financial institutes, the government, as well as the public were stress ed out (Katz,