What caused the credit crisis of 2008?

Question

Quizplus · Accepted Answer

The credit crisis of 2008 was caused by a combination of factors, including the sub-prime mortgage mess and the huge leveraged bets made by investment banks and other firms not regulated by the Fed. The sub-prime mortgage mess was caused by the lending of large sums of money to home buyers who were not able to repay their loans, resulting in a surge of defaults and foreclosures. Meanwhile, investment banks and other firms made leveraged bets on the prices of real estate, which created a domino effect when prices fell, leading to massive losses and the collapse of several major institutions.

What Caused the Credit Crisis of 2008