What are the important causes of the 2007-2009 financial crisis in the US?

The subprime loan scandal.What are the important causes of the 2007-2009 financial crisis in the US?
The financial crisis of 2007 to the present was triggered by a liquidity shortfall in the United States banking system.[1] It has resulted in the collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. In many areas, the housing market has also suffered, resulting in numerous evictions, foreclosures and prolonged vacancies. It is considered by many economists to be the worst financial crisis since the Great Depression of the 1930s.[2] It contributed to the failure of key businesses, declines in consumer wealth estimated in the hundreds of billions of U.S. dollars, substantial financial commitments incurred by governments, and a significant decline in economic activity.[3] Many causes have been suggested, with varying weight assigned by experts.[4] Both market-based and regulatory solutions have been implemented or are under consideration,[5] while significant risks remain for the world economy over the 2010鈥?011 periods.[6]



The collapse of the housing bubble, which peaked in the U.S. in 2006, caused the values of securities tied to real estate pricing to plummet thereafter, damaging financial institutions globally.[7] Questions regarding bank solvency, declines in credit availability, and damaged investor confidence had an impact on global stock markets, where securities suffered large losses during late 2008 and early 2009. Economies worldwide slowed during this period as credit tightened and international trade declined.[8] Critics argued that credit rating agencies and investors failed to accurately price the risk involved with mortgage-related financial products, and that governments did not adjust their regulatory practices to address 21st century financial markets.[9] Governments and central banks responded with unprecedented fiscal stimulus, monetary policy expansion, and institutional bailout.What are the important causes of the 2007-2009 financial crisis in the US?
http://en.wikipedia.org/wiki/Financial_c鈥?/a>

http://baselinescenario.com/financial-cr鈥?/a>



There is general agreement that it was triggered by the housing bubble collapsing and that lack of effective regulation of the financial sector led to very high leverage ratios so that when the bubble burst, the effect was major rather than minor.



Beyond, there were many factors and there is still disagreement about how important each factor was and is.

http://delong.typepad.com/sdj/2010/12/de鈥?/a>

http://www.nybooks.com/articles/archives鈥?/a>

http://www.voxeu.org/index.php?q=node/51鈥?/a>

http://www.economics.harvard.edu/faculty鈥?/a>



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