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- Banks are insured by the FDIC, but securities firms and mutual fund firms are notFDIC: FAQ
- Believed to be caused by a combination of subprime mortgage lending, unethical lending and business practices and the subsequent insolvency of major banks and lendersKAIT 8 (Jonesboro, AK): The Credit Crisis: 1 Year Old, and Growing (August 1, 2008)
- The Fed has lent and continues to lend money to certain financial institutions to attempt to lessen the impact of the crisis
- Rate of inflation has increased during the crisisThe Economic Times: Growth, inflation worries box in Fed (August 5, 2008)
- More than 1 million homes currently in foreclosureCNN Money: Homes in foreclosure top 1 million (June 5, 2008)
- At least 11 banks have closed since 2007FDIC: Bank Failures & Assistance
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Banks, securities firms and other financial institutions had invested heavily in the booming housing market of the early 21st century. When the housing market began to falter, so did the banks. Banks did not have enough capital assets to borrow and lend money. When the securities company Bear Stearns folded, other banks began to follow at a record rate and home foreclosures continue to increase.FDIC: Bank Failures & AssistanceDallas Morning News: Fed cuts rate, aids in buyout (March 17, 2008)
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Tipping Point
Although the subprime mortgage crisis began before 2007, the demise of securities firm Bear Stearns on August 1, 2007, is generally thought to be the start of the credit crisis. Up to that point, individuals were facing foreclosures at record numbers but financial institutions had not been as affected. When JP Morgan bought Bear Stearns, it set off a cascade effect that worsened the subprime mortgage crisis.KAIT 8 (Jonesboro, AK): The Credit Crisis: 1 Year Old, and Growing (August 1, 2008) As of August, 2008, more than 10 banks had folded.FDIC: Bank Failures & Assistance -
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Credit Crisis Questions
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What has helped you endure crisis? 2 AnswersWhen I've had to survive a personal crisis like family issues I've always spent time being productive, getting things done rather than dwelling on the issue. I ... read more -
Is the term "crisis" overused? What constitutes a legitimate crisis for you? 4 AnswersOn a personal level, I would describe a crisis as anything where I am no longer able to control the situation and help myself, or a situation that has cause so ... read more
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Featured Mahalo Topics
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On Twitter
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Credit Suisse blames financial crisis on emerging economies. http://is.gd/aOvVR
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: Spain Credit Crisis Causing Alarm | www.bullfax.com http://creditguru.biz/credit/spain-credit-crisis-causing-alarm-www-bullfax-com/
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Greenspan Agonistes: Randall W. ForsythThe former Fed chairman tries to exonerate himself for the credit crisis, http://url4.eu/1rVIP
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Debt Crisis Tips: Ways You Can Dispute Purchases Made On A Credit Card Or Debit Card! http://tinyurl.com/ygzwbuv
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