Reference vocabulary:

Financial crisis: financial crisis.

Reference sample:

What caused the financial crisis?

I think we can summarize (the reasons for) our current economic crisis in one word— - Greed (greed).

Over the past few years, mortgage lenders have been happy to lend money to those who couldn't afford their loans. But how did they do it, because there was nothing to lose. These lenders were able to charge higher interest rates and make more money on subprime mortgages. If the borrower defaults, they simply seize the house and put it back on the market. Best of all, they can insure the mortgage risk by insuring it or packaging these loans as mortgage-backed securities. Easy money! What's wrong with our financial system?

The whole thing was a big plan. All are great homes are selling well and their values ??are on every month. Lenders make it easier to lend money, and higher demand drives the value of the home. High home prices mean lenders can lend larger mortgages, while also giving lenders some protection against foreclosures. All of this translates into more money for lenders, insurance companies and investors. Unfortunately, many borrowers with adjustable mortgages end up slamming the adjustment when they do. When too many people are unable to repay, this causes these banks to suffer liquidity problems and sit on more redemptions than they can sell. The risks and values ??of mortgage-backed securities do not become those created by investment firms like Lehman Brothers.

In addition, insurance companies that insured loans from companies like AIG were also in trouble. This program, the structural system (worked), but this reversed course and now comes back to hurt all with a vengeance.