2008 financial crisis

High school (ages 12+)
History & Culture

Name:

Date:

Step 1 · Read the article

Open the article and read it at the level above. Then answer the questions below in your own words.

https://smallwhale.org/articles/2008-financial-crisis

Write what each word means, using the article.

Do not copy the article. Write two things you learned, the way you would explain them to a friend.

Answers below are taken from the article’s stored facts, so they match what the student read.

1. What is the key financial instruments?Mortgage-backed securities (MBS) and collateralized debt obligations (CDOs)
2. What is the major institutional failure?The bankruptcy of Lehman Brothers in September 2008
3. What caused the 2008 financial crisis?It started when many banks gave risky home loans called subprime mortgages, then bundled them into complex products that lost value when people couldn't pay. Banks had trouble lending to each other, causing a big money problem worldwide.
4. Why did banks stop lending to each other after 2008?Banks were scared that other banks might also have bad loans hidden inside their money, so they didn't trust each other and stopped sharing money.

Collateralized Debt Obligation (CDO): A complex financial product backed by a pool of loans and other assets.
Systemic Risk: The potential for the failure of one financial institution to cause widespread economic collapse.
Leverage: Using borrowed money to increase the potential return on an investment, but also increasing potential losses.