The combination of falling U.S. housing prices and the large number of subprime borrowers defaulting on...

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Economics

The combination of falling U.S. housing prices and the largenumber of subprime borrowers defaulting on their mortgages justprior to the financial crisis of 2008 created a solvency problemfor U.S. commercial banks that had provided mortgage loans tosubprime borrowers and held those mortgages on their balance sheets(ie. they did not sell them to Special Purpose Vehicles). Brieflyexplain how these two events could threaten to make those U.Scommercial banks insolvent.

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ANSWER The fall in housing costs and the subprime borrower defaults impactsly affect the business banksThe above circumstance plainly characterizes the way that those were the central point that prompted the budgetary emergency of 2008 and its effects on the US economy particularly the business banking division were heartbreaking Presently let us break down how these two elements influences the dissolvability of business banks as a rule and the US specifically With the fall in the housing costs the instances of home advance defaults are relied upon to increment for a huge scope coming See Answer

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