The 2008 Financial Crisis: Causes and Consequences

The 2008 financial crisis was primarily caused by reckless banking practices, including the issuance of risky home mortgages and the creation of complex financial assets based on these loans. Major banks were interconnected, leading to a systemic risk that threatened the entire financial system when mortgage repayments collapsed. Millions of individuals faced severe economic consequences, including job losses and home foreclosures, while the banks received substantial bailouts from the federal government. As a response, policymakers initiated investigations and discussions to understand the failures in regulation that allowed such a crisis to occur.