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2008 Global Financial Crisis - Coggle Diagram
2008 Global Financial Crisis
Causes
Deregulation
Repeal of Glass-Steagall Act
Weakening of financial oversight
Subprime MOrtgages
Rise in risky lending practices
Adjustable-rate mortgages (ARMs)
Securitization
Mortgage-based securitites
Collateralized debt obligations
Credit Default Swaps (CDS)
Insuring risky assets without adequate reserves
Predatory Lending
High-risk loans to unqualified borrowers
Key Players
Financial Institutions
Lehman Brothers
AIG
Bear Stearns
Rating Agencies
Moody's, S&P, Fitch
Inflated ratings for toxic assets
Government & Regulators
SEC
Federal Reserve
lack of oversight and regulation
Investment Banks
& Hedge Funds
Profiting from risky bets
Short-selling and speuclation
Events Timeline
2007: Subprime mortage default Rise
2008: Bear Stearns Collapse, LEhman Brothers bankruptcy
Bailouts: TARP (Troubled Asset Reief Program), AIG Rescue
Global Impact: Economic downturns in Europe, Asia
Consequences
Economic Recession
Global Stock Market Crash
Rising unemployment
Foreclosures
Milions lost homes
Bank Failtures
Widespread collapse of financial institutions
Government Interventions
Bailouts and stimulus packages
New regulations (Dodd-Frank Act)
Lesson Learned
Importance of financial oversight
Accurate rating and disclosures
Improved risk assessment in financial markets
Seperation between regulatory bodies and industry players