PART1 FLOWCHART
Here's a flowchart illustrating the sequence of events that led to the subprime mortgage crisis:
Start -> Easy Credit and Low Interest Rates
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Lenders Offer Subprime Mortgages (High-Risk Loans)
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Homebuyers and Investors Take Out Risky Mortgages
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Housing Bubble Forms (Increasing Home Prices)
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Securitization of Mortgages (Mortgage-Backed Securities)
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Investment Banks Create CDOs (Collateralized Debt Obligations)
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Banks and Investors Overestimate Safety of MBS and CDOs
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Housing Market Peaks and Prices Begin to Fall
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Increase in Mortgage Defaults and Foreclosures
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BANK CUSTOMERS FAIL PAYING THEIR MORTGAGE MEAN BANKS ALSO FAIL IN PAYING THE SECURITIES
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Falling Home Prices Lead to Negative Equity (Homeowners Owe More than Home’s Value)
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Banks Face Huge Losses from Bad Loans and Securities
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Major Financial Institutions Collapse (Lehman Brothers, Bear Stearns, etc.)
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Global Financial Crisis (Credit Freeze, Stock Market Decline)
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Government Intervenes with Bailouts and Stimulus Packages
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Global Recession and Widespread Economic Downturn
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Post-Crisis Reforms (Dodd-Frank Act, Financial Oversight)
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Recovery and New Regulations to Prevent Another Crisis
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End
This flowchart provides a step-by-step view of the key events leading up to and following the subprime mortgage crisis. It illustrates how risky lending, speculative investments, and poor regulatory oversight combined to create the conditions for the financial meltdown.
PART2a DIAGRAM v1
Here is a diagram illustrating the subprime mortgage process, showing the flow of money and risk between subprime borrowers, lenders, and investors. It highlights the key steps involved, including the higher interest rates, packaging of loans into mortgage-backed securities, and the risks associated with this system. Let me know if you need further clarification!
PART2b DIAGRAM v2
Here is a diagram explaining the subprime mortgage crisis, highlighting the key stages involved. It visually represents the process from issuing high-risk loans to the eventual financial collapse. Let me know if you'd like any adjustments!
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