United States Financial System and the World Financial System.docx

United States Financial System and the World Financial System.docx

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Financial systems [email protected] United States Financial System and the World Financial System: Name: Institution:
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Financial systems The government tended to lack adequate regulatory control measures regarding the banks, and due to this, the banks were able to make easy lending standards. The banks gave the consumers easy credits without proof of substantial consistent income earnings that would in turn guarantee payment of the loans. The banks did not also need sufficient down payments on the set mortgages, the auto loans or even the consumer loans. The consumers in particular were able to access assets and once the job market was on a souring front, the consumers lost their jobs, and were not able to pay off their loans thereby resulting in a financial crisis. To get out of the situation the government went on to tighten the lending standards and also injected funds into the economy through the process of interest rates lowering and bond selling.
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