Built on Bad Mortgages

The 2008 financial crisis began with subprime mortgages — home loans given to borrowers who could not realistically afford them. Banks lent aggressively because they could sell the risk to someone else and walk away clean.

Through securitization, banks bundled thousands of risky mortgages into complex financial products and sold them to investors worldwide. Rating agencies stamped them as safe. The entire system depended on the assumption that housing prices would always rise — until they did not.