The Subprime Credit Crisis of 2007

Abstract

The current U.S. financial crisis began in 1997 when the market lost confidence in the creditworthiness of subprime mortgages and the structured financial products tied to them. In attempting to unravel the origins of the current problems, it has become clear that many factors and many market participants have played a role. In this article, the authors dissect the subprime mortgage crisis and clarify its many facets and offer a number of recommendations for changes to the system that could greatly reduce the probability of similar crises in the future.