Beginning in 2007, the Great Recession caused extreme disruption within American financial markets. Consumers and businesses suffered from the economic failures that took place during these years. The events that lead up to this economic loss were the results of the deception and corruption of businesses. Events such as the collapse of the housing bubble and the changing mortgage origination processes lead to an economic recession, which negatively impacted the lives of many people. The Great Recession was caused by the corrupt decisions made by many businesses, and resulted in financial struggle for the investors and consumers who had put their money into these markets. .
Two of the causes of the Great Recession directly correspond with one another, the housing bubble burst and the mortgage origination process. The housing bubble was in part created by problems with the mortgage origination process, so we will discuss this first. The mortgage origination process was not very credible during the Great Recession. Mortgage loan companies were giving out mortgage rather freely, and as these loans became easier and easier to obtain more people began to acquire them (Haley, 2011). This may not seem like an issue but many of these individuals, who were taking out loans, did not have the means to repay them anytime in the near future. However, mortgage companies were not highly concerned with the ability of their customers to repay their loans. Investment banks were making money off of the increased number of loans being taking out by American citizens, and so the easier the loans were to obtain the more money these investment banks would make. Some investment banks even began to realize that they could buy out mortgage loan firms and then sell the loan packages to investors at a greater value. (Luhby, 2012) As the loans were no longer being sold in an open market, these investment banks were not presenting the same amount of credible information about the loan packages, as would be required in an open market.