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  • The Subprime Crisis: Presented By:-Pankaj Gupta

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    The document discusses the subprime crisis and its causes and effects. It began with subprime mortgages being loans granted to borrowers with poor credit who would not qualify for conventional mortgages. These mortgages charged higher interest rates due to increased risk for lenders. Many subprime borrowers took out adjustable rate mortgages (ARMs) that had low initial rates but increased dramatically later, causing mortgage payments to rise. As borrowers defaulted, it damaged banks and the broader economy. The bankruptcy of Lehman Brothers, a major investment bank, during this crisis was the largest in corporate history.

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    The document discusses the subprime crisis and its causes and effects. It began with subprime mortgages being loans granted to borrowers with poor credit who would not qualify for conventional mortgages. These mortgages charged higher interest rates due to increased risk for lenders. Many subprime borrowers took out adjustable rate mortgages (ARMs) that had low initial rates but increased dramatically later, causing mortgage payments to rise. As borrowers defaulted, it damaged banks and the broader economy. The bankruptcy of Lehman Brothers, a major investment bank, during this crisis was the largest in corporate history.

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    49 views8 pages

    The Subprime Crisis: Presented By:-Pankaj Gupta

    Uploaded by

    Pankaj Gupta
    The document discusses the subprime crisis and its causes and effects. It began with subprime mortgages being loans granted to borrowers with poor credit who would not qualify for conventional mortgages. These mortgages charged higher interest rates due to increased risk for lenders. Many subprime borrowers took out adjustable rate mortgages (ARMs) that had low initial rates but increased dramatically later, causing mortgage payments to rise. As borrowers defaulted, it damaged banks and the broader economy. The bankruptcy of Lehman Brothers, a major investment bank, during this crisis was the largest in corporate history.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    The Subprime Crisis

    Presented by:-
    Pankaj gupta
    IMG/09-11/11
    What are subprime crisis ?

     Typically, those who qualify for the most ideal mortgages with the best interest
    rates are those with good credit scores and minimal debt.

     A subprime mortgage is a type of loan granted to individuals with poor credit , who
    would not be able to qualify for conventional mortgages.

     Subprime mortgages charge interest rates that are above the typical interest rate
    because of the risk that is involved on the part of the lender.

     Subprime is the cause of USA Economy melt down.  It is the very popular news
    among everyone and it is become very serious then expected.
    CONTD……………..

     There are several different types of subprime mortgages, but the most common is the
    adjustable rate mortgage (ARM).

     ARMs can be misleading to subprime borrowers because they initially pay a lower interest
    rate. After the given period of time, their mortgages are set to a much higher rate. Therefore,
    their mortgage payments increase dramatically.

     It caused more damage to all the industries. Subprime crisis caused big loss to the banks
    and now it is affecting the other industries like Automobile companies (GM, Ford, etc.).

     Subprime Mortgage Loans (or housing loans or junk loans) are very risky.
    Lehman Brothers Holdings Inc.

     Lehman Brothers was an investment bank providing financial services to corporations,


    governments and municipalities, institutional clients and wealthy individuals around the
    world.

     The firm filed for bankruptcy on September 15 due to over $600 billions of dollars in
    debt from mortgage-backed securities and a steep decline in its stock price.

     The bankruptcy is the largest in corporate history.

     Lehman would become a financier for many top retailers in the U.S. including Sears
    Roebuck and Co., R.H. Macy and F.W. Woolworth Inc. It would also back new
    entertainment firms including Paramount and 20th Century Fox.
    CONTD…………..

     The company would broaden its expertise into merchant banking and
    launched a securities trading business.

     Lehman Brothers would become a member of the New York Stock


    Exchange in 1887.

     The Firm also moved into the area of financial advisory, which provided
    the foundation for underwriting expertise.

     There was three brothers, Henry Lehman, Emanuel and Mayer, an


    immigrant from Germany, opened a general store in the city of
    Montgomery in 1844. Six years later, they were joined brothers and they
    named the business Lehman Brothers.
    THANK YOU
    QUESTIONS

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