What effect did the declines in housing prices in the United States in the late 2000s have on the banking sector?
A) Most banks made a lot of money by betting against housing prices, leading to a general increase in bank profits.
B) Banks became increasingly willing to lend money to borrowers.
C) The resulting consumer mortgage defaults resulted in large profits for banks.
D) The resulting consumer mortgage defaults resulted in large losses for banks.

Question

Quizplus · Accepted Answer

The declines in housing prices in the late 2000s resulted in many consumers defaulting on their mortgages, which in turn led to significant losses for banks that had invested heavily in mortgage-backed securities. Many banks were forced to write down these investments and suffered from high levels of defaults and foreclosures, causing substantial losses throughout the banking sector.

What Effect Did the Declines in Housing Prices in the United