The financial crisis that occurred in 2007-2008 had a major impact on the United States and was considered the most dangerous crisis since the Great Depression. Since this crisis did not just affect the United States, it continued globally. It all started in 2006, when many house prices started to fall, while real estate agents assumed this was a good thing due to the “overheating housing market.” Real estate agents predicted home prices would adjust. However, one of the most important factors in purchasing a home, having good credit, has not been taken seriously. In other words, many homeowners had bad credit and were unable to keep up with their installment payments due to their questionable credit sense. Many banks have been pressured into making loans to people with substandard credit, which has been blamed on the Community Reinvestment Act. The CRA is proposed to push banking institutions to help meet the credit needs of specific networks, including neighborhoods with low direct wages. However, this was not the only cause of the 2007-2008 financial crisis. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essayThe real cause of the crisis was the Gramm-Rudman law, which allowed banks to participate in the exchange of lucrative subordinates that they sold to speculators. Subordinates were voraciously interested in an ever-increasing number of real estate mortgages. The Federal Reserve trusted the subprime contract and would limit itself to real estate. Home loan banks not only hold credit, but are able to receive monthly checks from the home loan holder. In most cases they sold these loans to a bank or to Fannie Mae or Freddie Mac, two government-licensed institutions created to buy contracts and give contract lending specialists more money to lend. Fannie Mae and Freddie Mac could then submit the home loans to speculative banks who would package them with hundreds or thousands of others into a "home loan sponsored security" that would provide a pay stream involving most of the month's total in month. contract installments. Then the security would be divided into perhaps 1,000 smaller pieces which would be sold to financial specialists, often misidentified as good speculations. Supported authorities did not know how far the damage would spread. The real reasons for the subprime contract were understood only later. They thought an element of protection called a credit default swap guaranteed them. A conventional insurance agency known as American International Group sold these swaps. When employees lost their esteem, AIG didn't have enough revenue to meet all the trades. This created a domino effect where the Federal Reserve began liquidating and tearing down banking systems through the term “auction structure.” This sold forward assets to safe organizations. All shop organizations that qualified to obtain the essential credit program were qualified to participate in the TAF exchanges. All advances were fully collateralized. Each TAF sale was for a set sum, with a rate controlled by the sale process (subject to a base bid rate). However, this was not enough to stop the financial crisis. The Fed turned to an investment firm called Bear Stearns, which approached JP Morgan with a $30 billion deal to help revive the crisis..