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The Current Financial Crisis

TASA ID: 1258

The United States has been in the midst of a financial crisis since mid-2006 that resulted from residential real estate foreclosures.  The foreclosures caused severe pressures in subprime mortgage markets and ultimately in global money markets.  As a result of stricter accounting standards and downgrades by credit rating agencies, various complex mortgage backed financial instruments had to written down on financial institution balance sheets.  As housing prices declined, financial institutions worldwide faced severe losses that threatened their survival.  By September 2008, severe credit tightening was becoming evident.  In response to these events, Congress passed legislation authorizing the Secretary of the Treasury to spend up to $700 billion to purchase troubled financial assets. 
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