The Routledge Companion to Business Ethics

p.393

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The economic crisis

Causes and considerations

Randall G. Holcombe

The economic downturn that began in 2008 had its origins in the housing market. A substantial run-up in housing prices early in the 2000s followed by a collapse in housing prices as the economy slid into a recession led to defaults on mortgages, which in turn led to a collapse in the value of mortgage-backed securities that put many financial institutions, and perhaps the financial system more generally, in peril. Factors that led to problems in the housing market can be traced back decades, to many government policies that affected how financial institutions qualified buyers for mortgages and how the market for mortgages operated. The crisis was global in scope, but began ...