Register now or log in to join your professional community.
Banks then demanded more mortgages to support the profitable sale of these derivatives. They created interest-only loans that became affordable to subprime borrowers. ... When the values of the derivatives crumbled, banks stopped lending to each other. That created the financial crisis that led to the Great Recession.
Crisis began on the real estate market much earlier than Lehman Brothers collapse. The most important cause was the belief that property prices are rising indefinitely. The rest we all know, communicating vessels worked perfectly.
