SUb-pRiME LENDiNG;

I watched a video on a very detailed outlook what caused the recession. from this video I learned that the recession in actuality began because of sub-prime lending. Sub-prime lending is financial loan companies lending to unfit borrowers who are not financially stable to pay the loan back. Sub-prime lenders do not perform background checks and credit reports to see if their borrowers are worthy of loans. A sufficient, accurate background check for lending involves a precise scroll of whether or not the borrower has filed for bankcruptcy or if their information is so limited to obtain precise credit history.

These loans were known as NINA, No Income No Asset. NINA is what caused subprime lending. The breakdown of the what we call "the global pool of money". The global pool of money is all the money either loaned, borrowed, and held by the world. This money is guarded by investment managers whose confusion of what to do with the money because they are unsure of how to sustain the money and make it multiply. Somehow, they were mislead to believe to invest all their money into ceratin areas primarily the United States housing market. Foreign countries with bonds in the U.S, were let in on the U.S housing market success.

For three years, between 2003-2006, the housing market was roaring successfully. The demand for bonds by other countries became rambunctious. There was not enough bonds to be given. Therefore, buyers acquired up lump sums of mortgages and turned them into "bonds" and sold them to eager investors. This is what is known as a mortgage backed bond.

However, there was low supply of mortgage because those capable of having a mortgage already obtained one. This is where the climax comes in.

Loan lenders changed their rules for money advances. They would allow borrowers to simpy state their income. While the original regulations involved a definite background check. This is what essentially drove us into our national recession.