US Financial Crisis 2007-08: Assignment Topic

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Assignment Topic

US Financial Crisis 2007-08


Submit To Dr. Mohammed Kamrul Hassan
Faculty of Global Finance

Submitted By
Name ID : Islam Md. Anikul : 09-14017-2

Name ID

: Islam Md. Anikul : 09-14017-2

Name ID

: Islam Md. Anikul : 09-14017-2

Name ID

: Islam Md. Anikul : 09-14017-2

1. The Situation Before US 2007-08 Financial Crisis:


The U.S. subprime mortgage crisis was a set of events and conditions that led to the late-2000s financial crisis. The immediate cause peaked housing bubble in approximately 20052006. After U.S. house sales prices peaked in mid-2006 and began decline forthwith, refinancing became more difficult. Interest rates began to rise and housing prices started to drop moderately in 20062007 in U.S. adjustable rate mortgages (ARM), began to increase quickly thereafter.

2. Cause Of US 2007-08 Financial Crisis:


In August 2002 an analyst identified a housing bubble. Homeowner speculation, High-risk mortgage loans and lending/borrowing practices, Mortgage fraud, Inaccurate credit ratings, Globalization, technology and the trade deficit, of central banking gives rise to an artificial boom, Boom and collapse of the shadow banking system, recession and high unemployment, credit default swaps contributed to the systemic meltdown.

3. Who Are The Responsible:


Government monitory policy and central bank monitory policy was not good enough for control the other investment bank. Government over-regulation, failed regulation and deregulation have all been claimed as causes of the crisis. Central bank tightening of monetary policy, credit rating agency, real state company, House owner and financial institution are responsible for this financial crisis.

4. Government Monitory Response:


In early 2008, the Federal Reserve's response has followed two tracks: efforts to support market liquidity and functioning and the pursuit of our macroeconomic objectives through monetary policy. The U.S. government passed the Emergency Economic Stabilization Act of 2008 (EESA or TARP) during October 2008. On 17 February 2009, Barack Obama signed the American Recovery and Reinvestment Act of 2009, $787 billion stimulus package with a broad spectrum of spending and tax cuts.

5. Effect On Aggregate Economy:


The crisis began to affect the financial sector in February 2007, when HSBC, the world's largest (2008) bank, subprime related loss. About $750 billion in such losses had been recognized as of November 2008. Developing world, rises food prices as well as the knock-on effects from the financial instability and uncertainty in industrialized nations are having a compounding effect. High fuel costs, soaring commodity prices together with fears of global recession are worrying many developing countries.

6. Way Of Get Rid of This Financial Crisis:


Need some critical to effective reform process. Expand the Federal Deposit Insurance Corporation bank resolution mechanism to include institutions. Ensure that a firm is allowed to fail in an orderly way and not be "rescued". Ensure taxpayers are not on the hook for any losses, by applying losses to the firm's investors and creating a monetary pool funded by the largest financial institutions. Apply appropriate checks and balances to the FDIC and Federal Reserve in this resolution process. Require stronger capital and liquidity positions for financial firms and related regulatory authority.

7. It Can Be Happened In Bangladesh:


It can be happened in Bangladesh. If we closely analyses the US finical crisis, this crisis was created after the US stock market crash namely great depression, housing bubble, subprime mortgage, government deregulation in stock market and central bank lose controlling of investment bank and other financial institution. In Bangladesh same things is happened. Now Bangladesh faces stock market crash recently. It de-motivated the investor. Also real state business feel looses. It also affected the total economy. Recently, Bangladesh being clashed between World Bank and foreign aid institution. It may long run can create problem of FDI, import and export, may be some year after Bangladesh face financial crisis.

8. Conclusion:
US 2007-08 financial crises is now called global financial crisis. Its very important to us. We need to learned something, how we can control our national economy. Otherwise we will fall in trap. Because world now face grate economic problem. In long run may be our country will affect by greatly. Our county policies need to stable. Also need to improve our infrastructural condition to attract the foreign business institution.

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