2007 Financial Crisis

The 2007 financial crisis was a major economic downturn caused by risky lending practices and excessive borrowing in the housing market. Banks offered many people easy loans to buy homes, often ignoring their ability to repay. When housing prices dropped, many homeowners defaulted on their loans, causing large financial losses for banks. This led to a credit crunch, where lending slowed dramatically, affecting businesses and individuals worldwide. The crisis resulted in bank failures, severe recession, and millions losing their jobs and homes, highlighting vulnerabilities in the financial system and leading to significant regulatory reforms.