financial crisis 2008 blame

The Blame for

the Financial Crisis



crisis reform as long as
blame borrow scrape (2)
profit invest find/found/found (3)
seem include bubble (2)
sub prime mortgage
loan afford boom (2)
rate interest crash (2)
fault criticize struggle
lend impact fall/fell/fallen
link massive nosedive (2)
loss face (2) enormous
seize go bust chair (2)
effect regulate US Federal Reserve
price want in grow/grew/grown
allow keep up burst/burst/burst
affect seize up tighten (2)






The financial crisis affected everyone.

But who was to blame? Was it borrowers and investors?

In the years before the financial crisis, money was cheap. Borrows and investors, like Bob and Ingrid here, found it easy to borrow, invest and scrape off the profit.

It seemed so easy, everyone wanted in, including people like Chuck.

Was it subprime mortgages?

Chuck lives here, in Cleveland, Ohio.

Before the crisis, Chuck’s city was at the center of a US housing boom. Here’s Chuck’s house, bought with a subprime mortgage loan.

Really a loan he could not afford to pay. So when interest rates went up, many people like Chuck, struggled to keep up.

And when house prices fell, the bank asked for its money back . . . and millions, like Chuck, lost their homes.

So was it the banks’ fault?

Years earlier, rules on mortgage lending were relaxed, and as long as house prices kept rising, banks could make money, even when lending to people like Chuck.

They also borrowed massively, to invest in complex financial products, many of them linked to those same subprime mortgages.

But, when the housing market nosedived, the banks faced enormous losses. Some like Northern Rock and Lehman Brothers went bust.

Banks stopped lending, and the whole financial system seized up.

So where were the regulators?

Here’s Alan Greenspan, former Chair of the US Federal Reserve. He’s been criticized for keeping interest rates too low, for too long, allowing the housing bubble to grow.

When it burst, he said he’d made a mistake, thinking the financial system could regulate itself.

So after the crash, banking regulations were reformed, lending rules were tightened, making borrowing more difficult.

Everyone, including Bob, Ingrid, Chuck and Alan, even the bankers, felt the impact.

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1. Only bankers and financial institutions were affected by the financial crisis of 2008. True or false?

2. “In the years before the financial crisis, money was cheap.” What does this mean? Why was money “cheap”?

3. Did only rich and upper-middle-class people take out loans?

4. What did borrowers do with their loans? What did they invest in?

5. Everything remained the same. Is this right or wrong?

6. Describe the banking rules and regulations. Did they remain the same?

7. Who is Alan Greenspan? What did he do?


A. Do you remember the financial crisis of 2008? Did it affect you or your friends?

B. Is there a consensus as to the cause of the crisis, or is there a lot of disagreement?

C. Is it easy or difficult to get a loan from the bank, or does it depend?

D. Do most people own their own homes, do they rent, or do they share with family, friends or housemates? Do they live in houses or apartment buildings?

E. What will happen in the future?


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