2008 Financial Crisis Essay

Financial crisis in 2008 began with the explosion of housing bubble burst since there were a lot of demands on housing due to low interest rate. The banks started to offer the subprime mortgages to the customer while they would not pay back which lead to the financial crisis in 2008. (Mishkin & Eakins, 2012) The key players involved in this crisis mainly are the banks, in addition, the broker agencies, the insurance companies, the credit rating agencies, the government, the investors, and the Federal Reserve. The broker agencies found the customers to borrow the loan and they would get the commission. (Marshall, 2009) These agencies did not care much about the ability to pay back the loan of the customer as long as they got the commission.

Moreover, the banks did not examine and they did not have the big incentive enough to go through customers’ qualified criteria. In the same way, the credit rating agencies and the insurance companies experienced the same large fee incentives to advise the borrowers and sign the contract respectively, that drive them out of ethical decision making. They did not think much about the consequences that follow their decisions and actions. The investors should take into account, as well. (Dullien, Kotte, Marquez, & Priewe, 2010) They saw the increasing sharply of the profit; they did not voice any concern and find the root cause. They just concern only with their self-interest. They ignore the rational decision. For the government and Federal Reserve, they did not prohibit or took action into these activities which all of these factors involved in the ethical issue. They only concern with their self-interest as long as everyone got the large incentives. The root causes of the financial crisis involved many parties that lack of making the right decision that promote the majority of human