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10 years of 2008 financial crisis: How it all happened

Updated : September 13, 2018 07:33 AM IST

In the US, a person needs a credit score of 600 or more to avail a loan, but banks and mortgage brokers even lent out money to individuals with a credit score less than 600 or none at all with little or no reason to worry about loan repayment or a down payment.  Individuals bought 2-3 houses, some even condos, which they could have never afforded. 
The lenders made profit on these sales. These investment banks went a step ahead and bundled good loans with toxic loans into collaterised debt obligations (CDO) and sold them off to investors, making money in the process. The banks became the ‘middleman’ between the buyers and the investors.
United States fourth largest bank Lehman Brothers filed for the largest bankruptcy in the US history at the time, having been exposed to the subprime mortgage market extensively.
10 years of 2008 financial crisis: How it all happened

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