banking risk

Essay by rafee_1051 February 2014

download word file, 4 pages 0.0

Submitted to :

Farzana Akter


Dept. of business administration

East west university

Submitted by:

Md. Shafayat Ullah Bhuiya

Id # 2010-2-10-151

Date of submission: September 23rd, 2013

Global financial crisis -2008 and onward:

In 2008, the United States of America experienced a huge financial crisis which led to the most serious recession since the Second World War. Both the financial crisis and the downturn in the U.S. economy spread to many foreign nations, resulting in a global economic crisis. The global financial crisis took its place actually from the mid of 2007 to 2008. To be specific From august 2007 to September 2008. The US Federal Reserve Bank formed a plan in order to rescue their real estate industry. There was fairly wide agreement that poor people will get a benefit of mortgage. Their finding was that after the

collapse of the tech bubble in 2000 and the 9/11 terrorist attacks in 2001 was to cut interest rates to the very low level of one percent.

This was at a time when housing prices were still growing quite strongly at a rate above one percent. So they have influenced commercial banks to act more positively in this sector. According to this explanation what had happened was that the way the mortgage industry worked had changed significantly over the years. At that time a big bubble which afterword known as real estate bubble of US grew. The most important reason that the bubble was so big in the U.S. was the policies of the Federal Reserve back in 2003. Because of those policies many financial institution invested in the sector but they forgot to overlook the rule that if the borrower fails to pay the institution have to make the payment by itself. After some day when the price of...