The objective of this assignment is to research the Financial Crisis of 2008 and to examine the underlying causes and factors that contributed to its occurrence. Using Chapter 5 in the text and the...

Research on the Financial Crisis of 2008        4
RESEARCH ON THE FINANCIAL CRISIS OF 2008
Table of Contents
Introduction    3
Causes    3
The Role of Banks, Home Buyers, Ratings Agencies, And the Government    4
US Government’s Actions to Solve the Crisis    6
Analysis And Opinion Regarding the Likelihood of Another Upcoming Financial Crisis    7
Conclusion    8
References    9
Introduction
The global financial crisis of 2008 and its aftermath served as a harsh reminder of the complexities of crises. They affect both small and large countries, as well as the destitute and the wealthy. Crises may strike at any time and in any place. They might come from the corporate or public sectors and have domestic or international roots. They appear in a variety of shapes and sizes, develop into new forms, and spread quickly across boundaries. They frequently necessitate fast and extensive policy responses, necessitate significant changes in financial and economic policies, and might demand global policy cooperation. Having a strong knowledge of crises is crucial, as evidenced by the global financial crisis of 2008. Economic and financial policy may be severely impacted by financial turbulence, as the recent event has clearly demonstrated. Because of the lasting impacts of the recent crisis, a detailed examination of the implications and optimal solutions to crises has become an essential element of current policy debates.
Causes
    Despite the fact that business analysts shift on the particular starting points of the monetary emergency, there is boundless concession to the components that added to it. A gentle downturn that started in 2001 was anticipated by The Federal Reserve (Fed), the country's national bank. The Fed cut financing costs on for the time being advances of government reserves (i.e., balances held at a Federal Reserve bank) multiple times between May 2000 and December 2001, from 6.5 percent to 1.75 percent, fully expecting the downturn (Lacker, 2004). This huge decrease permitted banks to offer shopper credit at a lower prime rate, permitting them to loan even to "subprime," or high-hazard, customers at higher financing costs.
Regardless, banks were permitted to offer subprime customers home credits with swell installments or movable loan costs as a result of changes in financial guidelines that started during the 1980s. In the in the meantime, subprime borrowers might safeguard themselves from over the top home loan installments by renegotiating, acquiring against the expanding worth of their homes, or in any event, selling their homes at a benefit and taking care of their obligations.
Securitization was broadly utilized by banks to package subprime contracts and other safer shopper obligation and sell them (or bits of them) in capital business sectors as protections (clings) to different banks and financial backers, including flexible investments and benefits reserves. This added to the development of subprime loaning. It was the home loan supported protections, or MBS, which permitted their purchasers a piece of the interest and head installments on the credits they bought.
    Fourth, the Glass-Steagall Act (1933), authorized during the Great Depression, was somewhat revoked in 1999, permitting banks, protections firms, and insurance agencies to join each other's businesses and consolidate, driving in the improvement of "too enormous to even consider falling flat" establishments (Karmel, 2010). Their breakdown would be excessively critical such that it would risk the entire monetary framework....