The Financial Crisis Of The Decade - 1364 Words

The financial crisis of the decade is considered the largest and most severe compared to the Great Depression. The crises reshaped the financing and investment banking business not only in the United States but globally. The top largest banks have fallen due to the losses they have incurred in connection with their investments in the subprime mortgage markets. (Financial Crises 2007-2008 Overview) Governments had to come up with some solutions in order to further avert the decline of their country s economy as the financial crises of the United States overflowed into the global financial and world economy. (Marshall, n.d).This paper discusses the history of the financial crisis - its causes, impacts, and the responses of governments and other institutions. The origins of the financial crises The root causes of the financial crisis were a combination of debt and mortgage-backed assets. While inflation had been going up since the end of the World War the house prices in the United States had been steadily rising at a much higher rate than the inflation trend. As shown in the chart the fluctuations are few, but the trend had been upward. (Financial Crises 2007-2008 Overview). Prior to the financial crisis with rising prices of housing in the United States banks and investment managers had been looking for more loans and credit to offer potential homeowners. The funding of credits had been backed by real estate or through investments in construction companies which wereShow MoreRelatedFinancial Crisis Essay1119 Words   |  5 Pagesto various periods of economic turmoil in the past several decades; the 1979 energy crisis, the Savings and Loans crisis of 1982, the â€Å"Black Monday† global stock market crashes of 1987, the Dotcom bubble of 2000-2, the recession of 20 02-3, the housing bubble and subsequent crisis of 2006-2008. It is from many of these crises that we can observe a pattern; many periods of economic downturn could have been prevented had common sense financial policies been enacted prior to these red periods. A primeRead MoreRisks Faced By The Bank1291 Words   |  6 PagesRisks Faced Similar to other financial institutions and firms, SunTrust also faces a myriad of risks. Chief among these risks is financial mismanagement and gross misconduct by its staff. After the financial crisis, the bank admitted that it had mismanaged the risks that are associated with credit for mortgage financing (Nikravan par. 2). This mismanagement saw the bank become part of the many institutions which set the stage for the financial crisis by lending credit to individuals whose credit-worthinessRead MoreFinancial Crisis And Its Effects On Businesses, Governments, And Consumers978 Words   |  4 PagesThe worldwide impact of the recent financial crisis outlines the importance of having a decent understanding of crises. Latest episode has definitely showed that status of economic as well as the financial performance is greatly affected by financial turmoil. During the crisis, world stock markets have been collapsed, largest financial institutions have been bought out or fallen, and the wealthiest nations like UAE, UK of USA had to stand up and aid their financial systems as well as the economic onesRead MoreThe Roles Of Auditing And Assurance Services1397 Words   |  6 PagesIntroduction The role accounting firms played in the last financial crisis raised questions about the legitimacy of auditing and assurance services. Auditors, who are considered independent and are supposed to provide reliable information to financial statement users, played a major part in the financial institutions’ crisis. The role of auditing is not to stop management from making poor business decisions, but it is to make sure that those decisions are properly disclosed (Rapoport, 2010). 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Many analysts propose that rising levels of inequality led to a credit boom and eventually to a financial crisis. Others, however, have distanced themselves from that notion arguing that while inequality can be blamed for many things, the global crisis may not be one of them. In deriving a personal stand regardingRead MoreThe Asian Financial Crisis and Thailand: Catalyst for Change...or More of The Same? 1647 Words   |  7 Pagesaccomplished in a matter of decades, which led many to believe in an East Asian miracle. However, in 1997 Thailand became the first country swept into an economic crisis that spread throughout the region within months. Why did Thailand unexpectedly fall into a rapid economic crisis and how has the crisis shaped the current political economy of the country? Although Thailand sustained high levels of growth for decades, in ternational capital flight triggered an economic crisis that was exacerbated by