This Short discusses the events leading to the 2008 financial crisis when banks and investors heavily invested in mortgage-backed securities thinking the housing market was infallible. With rising housing prices, lending standards became lax, leading to high-risk loans. The housing market crash in 2007 triggered widespread mortgage defaults and significant losses in MBS, causing financial giants like Lehman Brothers to collapse. The crisis prompted global economic ripples, massive government bailouts, and severe unemployment. In response, regulations like the Dodd-Frank Act and the creation of the Consumer Financial Protection Bureau were introduced to prevent future financial instability and protect consumers.
