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Fines
US house prices had peaked in April 2006, Thereafter, the bursting of
this US real estate bubble led to the financial market meltdown, an
unprecedented decline began that affected the quality of the loans that
had paid for them. Banks like Lehman Brothers filed for bankruptcy and
was followed by US government bailing out other banks (See Diagram
8). Likewise, the UK government had to step in and bailout a number of
UK banks.
Diagram 8 Timeline - 8
“when the value of homes started falling and interest rates of subprime
mortgages increased, it became more difficult for borrowers to refinance
their loans. Packaged into so-called mortgaged-backed securities (MBS)
and marketed with positive rankings from international ratings agencies,
those toxic assets, however, had already become hot sellers among
investors all over the world,” (9)
