The damage caused by the failed asset securitization plan swept the housing market and its enterprises, and then triggered the subprime credit crisis. The crisis caused more banks to sell major silver plates in the market. These excessive houses have greatly reduced the surrounding housing prices, which are easy to be taken back by the court for auction or abandoned. This result laid the groundwork for the future financial crisis.
Process: The affected companies are limited to those directly involved in housing construction and subprime loans, such as Northern Rock Bank and National Financial Services Corporation. Some financial institutions engaged in mortgage securitization, such as Bear Stearns, have become victims. In July 2008 1 1, the largest company in America went bankrupt.
Due to the continuous decline in house prices and the rising foreclosure rate, the assets of IndyMac Bank were seized by federal agents after being crushed by the pressure of credit crunch. On that day, the financial market fell sharply because investors doubted whether the government would try to save the mortgage institutions Fannie Mae and Freddie Mac.
September 7, 2008, late summer. Although the federal government took over Fannie Mae and Freddie Mac, the crisis continued to intensify.
Then, the crisis began to affect ordinary credit unrelated to real estate, and then affected large financial institutions not directly related to mortgage loans. Most of the assets owned by these institutions are obtained from the income related to housing mortgage loans.
These securities with credit loans as the main target, or credit derivatives, were originally used to protect these financial institutions from bankruptcy risks. However, due to the subprime mortgage crisis, the number of members affected by these credit derivatives has increased, including Lehman Brothers, American International Group, Merrill Lynch and HBOS.
Other companies began to face pressure, including Washington Mutual, the largest deposit and loan company in the United States, and affected Morgan Stanley and Goldman Sachs.
Extended data:
After the early subprime mortgage crisis broke out, investors began to lose confidence in the value of mortgage-backed securities, which triggered a liquidity crisis. Even if many central banks injected huge amounts of money into the financial market many times, they could not stop the outbreak of this financial crisis. Until September 9, 2008, the financial crisis began to get out of control and led to the closure of several fairly large financial institutions or government takeover.
The abuse of financial derivatives prolongs the chain of financial transactions and encourages speculation. Finally, American monetary policy added fuel to the fire. Many financial institutions in the United States are not immune from this crisis, and the severity of the subprime mortgage problem far exceeds people's expectations. The Wall Street storm triggered by the American subprime mortgage crisis later evolved into a global financial crisis. Its rapid progress and great influence are unexpected.
Baidu Encyclopedia -2008 Financial Crisis