In the aftermath of the financial crisis of 2008, several banking practices came into sharp focus for contributing to the crisis. One of those practices was the issuance of “subprime” mortgages - mortgages made to borrowers who were unlikely to be able to repay in the case of a recession or a decline in housing values. Banks defended their choice by arguing that if the mortgage holders defaulted on the payments, the banks themselves would be the ones taking a loss in profits. In the end, however, the default rate on these loans was so high that the country’s entire financial system was at risk of collapse, and taxpayer dollars were used to keep banks solvent. This information indicates that subprime mortgages are _________.Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.apublic goodsbcommon resourcescgoods with additional social costsdgoods with additional social benefits

Multiple Choice QuestionDuring the housing bubble in 2007, banks made loans to subprime borrowers. In other words, these loans were made toMultiple choice question.the highest-quality borrowers.government-backed businesses.individuals with low credit ratings.small business owners.

By the middle of 2008, when the median family income was around $50,000, the average American family’s debt included an $84,000 home mortgage, $14,000 in auto and student loans, $8,500 in credit card balances, and $10,000 in home equity loans. What effect did this amount of borrowing have on the country?Click or tap a choice to answer the question.In response, the Federal Reserve worked to increase interest rates for loans in order to protect at-risk Americans.Eventually many Americans defaulted on their loans, and banks found themselves holding billions of dollars of worthless investments.Housing prices fell as many Americans carried too much debt to finance a new home.Americans became less likely to invest in health care, as they had significantly less income available.

Give a brief history of mortgage backed securities from their inception until the end of the financial crisis. Why were they originally invented? Why were they so profitable for banks? How were they misused? (500 Words)

Although the subprime mortgage market problem began in the United States, the first indication of the seriousness of the crisis began in A. Europe. B. Australia. C. Asia. D. South America.

In a deleveraging economy, value of collateral drops, banks are squeezed and interest rates soon hit