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1. What is “the Subprime Crisis”2. Impact of the Subprime Crisis3. How the Subprime Crisis Happened
The Subprime Crisis in 2008
• Started in 2008• Mortgage industry in the U.S.• Borrowers approved for mortgages • Borrowers could not afford mortgages
What is the Subprime Crisis?
• Before 2008– 10 banks failure
• After 2008– 465 banks failure
The Impact of the Subprime Crisis
• Washington Mutual Bank with Asset of $307 Billions– Acquired by JP Morgan Chase– The largest bank failure
• Lehman Brothers with Asset of $600 Billions – The fourth largest investment bank– The largest Filing for bankruptcy
How the Subprime Crisis Happened?
• Richard Fuld • Best known as the final Chairman and CEO of Lehman Brothers• Since the firm's 1994 spinoff from American Express until 2008
• A global financial services firm headquartered in New York City
• The fourth-largest investment bank• Declared bankruptcy in 2008• The biggest bankruptcy filing in U.S. history
How the Subprime Crisis Happened?
Mortgage
• Brokers• Banks
Bond• Investment Banks• Financial Institutions
Bomb• U.S. Investors• Global Investors
House• House buyers• Individuals with bad credits