Major firms like Lehman Brothers filed for bankruptcy, while others, such as Bear Stearns and AIG, required government bailouts. These products were sold to investors worldwide, spreading risk across global markets.
Global Economic Fallout: How the Subprime Crisis Spread Risk and Triggered a Liquidity Crunch
Credit markets froze as trust evaporated, leading to a severe liquidity crisis. It underscored the need for transparency, accountability, and robust oversight in financial markets.
Internationally, the Basel III framework introduced higher capital requirements and stress testing. Global stock markets declined sharply, economic growth stalled, and unemployment rates surged.
Global Economic Fallout: How the Subprime Crisis Spread and Impacted Markets Worldwide
passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, creating stricter oversight of financial institutions and establishing the Consumer Financial Protection Bureau. The crisis exposed the fragility of globalization and prompted governments to intervene aggressively with stimulus packages, bailouts, and monetary easing to stabilize economies.
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