The Global Financial Crisis Of 2008-10 And Its Impact On...

The Global financial crisis has been described as the worst financial crisis after the Great Depression of the 1930’s. This was a Financial Crisis and affected terribly the banks of the United States of America. The banks during this time had low capital base and suffered from a serious liquidity crunch. Leveraging was very common at this time. This increased financial instability of the banks called for major changes in the financial regulations by the government. This essay will discuss the Origin of the Global financial crisis of 2008-10 and its impact on the financial health of the institutions. The main reason of the Global financial crisis was primarily Sub-Prime mortgages by the banks. The major U.S banks were involved in†¦show more content†¦The banks were affected terribly as the borrowers were unable to repay the amount loaned out to them to buy these real-estate properties. Also, the poor collaterals were there, so this made sure banks were not able to recover their money back. A lot of Foreclosures and evictions were observed. Also, many of these Sub-Prime mortgages were packaged into another financial instrument called as ‘Mortgage-backed Securities’ which were falsely given good credit ratings by the rating agencies and sold out as been risk free. These Mortgage backed securities ultimately defaulted, contributing to greater loss. During this time, the banks were robed out of any liquidity. BNP Paribas, a major bank of U.S had to sell its hedge funds to get in some cash. Excessive risk taking by these banks robbed the capital out of the system. Many major banks failed at this time. Even, the banks which were given the status of ‘Too Big to Fail’ also witnessed a major collapse, ruining the financial health of the institutions. Furthermore, the Federal Reserve too granted loans and aid packages to bail-out these banks, which led to magnify the world financial system and the health of the U.S economy. An Expansionary fiscal and monetary policy was adopted. The Low capital base of the banks called in for some serious changes in the regulatory and financial laws of the country. This called for the Basel norms which determine the adequacy of the banks liquid assetsShow MoreRelatedEli Lilly And Company Analysis Essay1377 Words   |  6 Pagesautoimmune diseases just to name a few (Eli Lilly Company, 2015). This paper will provide an overview of the global credit crisis, the adverse effects of the credit crisis on Lilly, and an assessment of both Lilly’s current and future financial performance. 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