Financial Crisis Breakdown Part Three: The Government’s Response

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As the economy was collapsing and capital markets froze, the U.S. government had to take action to revitalize the economy and reduce the panic sweeping across the nation. The Fed and U.S. government’s main priority was to prevent the economy from absorbing even more damage through the use of aggressive monetary policy. Troubled Asset Relief […]

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Financial Crisis Breakdown Part Two: The Collapse of the Market

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After the introduction of subprime mortgage-backed securities, investors were throwing their money into the U.S. housing market and housing prices began to rise. The newly relaxed lending regulations and low interest rates drove housing prices higher, making the MBS and CDO seem like even better investments. They figured that even if the borrower defaulted on […]