The subprime mortgage crisis has the following characteristics:
1. Credit expansion: Before the crisis, financial institutions lent excessively, especially in the subprime mortgage market. This has enabled many borrowers with poor credit status to obtain housing loans, thus promoting the prosperity of the real estate market.
2. Securitization: Financial institutions package subprime mortgages into complex financial products, such as mortgage-backed securities (MBS) and debt-backed bonds (CDO), and sell them in the financial market. This makes the risk spread rapidly in the financial system and intensifies the impact of the crisis.
3. Failure of rating agencies: Before the crisis, rating agencies had defects in rating mortgage-backed securities and debt-backed bonds, which made it impossible for investors to accurately assess the risks of these financial products.
4. Loan default: With the cooling of the real estate market, many subprime borrowers are unable to repay on time, resulting in a large number of defaults. This further aggravated the plight of financial institutions and led to the spread of the crisis.
5. Bankruptcy of financial institutions: During the crisis, many financial institutions suffered heavy losses and some went bankrupt or were rescued by the government due to the default of subprime mortgages and the sharp drop in the prices of financial products.
6. Economic recession: The subprime mortgage crisis triggered a global financial crisis, leading to a serious economic recession. Unemployment rate rises, consumer confidence drops, and enterprises and families face financial difficulties.
The subprime mortgage crisis has brought great impact to the global economy, and many countries have adopted fiscal and monetary policies to deal with the crisis. This crisis has also triggered reflection and reform on financial supervision, credit expansion and financial innovation.