The financial crisis of 2008 was a global economic collapse that began with cheap credit and lax lending standards that fueled a housing bubble. When the bubble burst, the banks were left holding trillions of dollars of worthless investments in subprime mortgages, which led to the Great Recession that followed and cost many their jobs, their savings, and their homes. The following are some of the main causes of the financial crisis of 2008:

• Excessive risk-taking: Banks and investors took on excessive risk in a favorable macroeconomic environment, which led to increased borrowing.
• Regulation and supervision: There was a lack of regulation and supervision of the financial industry, which allowed for risky behavior and practices.
• Housing bubble: The housing bubble was fueled by cheap credit and lax lending standards, which led to a rise in home prices.
• Subprime mortgages: Banks made loans to people with poor credit histories, known as subprime mortgages, which were packaged and sold as securities to investors.
• Financial engineering: Financial engineering, such as the creation of complex financial instruments, contributed to the crisis.

The financial crisis of 2008 was a complex event with many contributing factors, and people are still debating the relative importance of each factor. The crisis led to a global recession, and recovery was slower than past recessions that were not associated with a financial crisis.