Banks lost trillions of dollars after the housing bubble burst because:

Question

Quizplus · Accepted Answer

Many large banks held massive quantities of high-risk mortgage-backed securities which became nearly worthless as housing prices plummeted and foreclosures surged. As a result, the banks incurred significant losses and some even failed. Foreign investors did withdraw some money, but it was not the primary driver of the losses. Bank runs did occur during the crisis, but they were not the cause of the losses. The government provided significant support to banks during the crisis, rather than removing subsidies.

Banks Lost Trillions of Dollars After the Housing Bubble Burst