The Role of the Community Reinvestment Act on the 2007 Housing Bubble Collapse

2007 Residential Bubble Community Reinvestment Law burst the real role in the past 80 years, the most serious financial crisis led to extensive speculation on that reason. Although it offers a lot of theory, in 1977 bursts with permanent and serious errors as nobody like the "Regional Reinvestment Act" plays an important role in the real estate bubble. The "Community Investment Act" (CRA) states that critics assume a high-risk loan, push banks to meet the credit needs of low-income borrowers, legally-binding lenders, these loans I insist that I prove to be financially irresponsible.

The 2009 American Recovery and Reinvestment Act estimated the financial crisis of 2008 since the most dangerous Great Depression (the 2009 financial crisis) in the 1930s. Catalyst, the real estate market bubble burst in 2007, and quickly spread to the US financial sector, eventually affecting the world economy. The automobile industry in the United States was damaged by this crisis. Detroit 's three biggest companies, Ford, Chrysler and General Motors' debt problem have been revealed. Increasing cash flow to reduce debt and enabling them in the next few years remains a viable entity to force automakers to seek solutions.

In December 2007, due to the real estate bubble, the so-called Great Depression began ("Great Depression"). Prior to this, when people increase their home value to gain benefits in technology, so when continuing to purchase mortgage-backed securities, risky mortgage, home values ​​began to decline, however, These securities are worthless, so people can not pay homes - many people confiscate their homes. Due to the loss of this wealth, consumer spending sharply declined and many banks closed down. The US government tried to solve this problem but they created a lot of fiscal policy, controversial because they are intervening in the economy. Discussions started as to whether the government should reduce its taxes and create jobs and invest money to stimulate the economy.

December 2007 - June 2009: The US housing bubble ruptured due to the subprime mortgage crisis. Despite the decrease in housing-related assets, oil and food prices are still rising. Closed out of the business of many major financial institutions in the country, including Fannie Mae, Freddie Mac, Lehman Brothers, Bear Stearns and American International Group. The country's automobile industry is also affected, and the stock market has plummeted. The government adopted a $ 787 billion stimulus package to promote economic growth