History of the United States II / Unit 17 USH2 2462 review, 2 to 3 minutes
What Caused the Great Recession
The idea
What caused the Great Recession of two thousand eight is the second question, and the sources point to several causes. The anchor leads with the mortgages: banks made high-risk subprime loans to buyers who could not repay, and changes in finance and banking laws in the nineteen nineties and early two thousands let lenders securitise those loans and sell them as bonds, separating the lender's interest from the borrower's ability to pay. The anchor also blames deregulation of the bond market and questionable new kinds of mortgage. The Yawp begins with a speculative bubble: after the dot-com bubble burst, investors turned to real estate as a secure investment, and home prices climbed through the nineteen nineties and after.
In practice
Loans bundled and resold so fast, the Yawp says, that it became hard to tell which firm held an interest in which tranche.
Where people slip
The Yawp makes deregulation bipartisan: decades of it had rolled back Depression-era restraints, and in the nineteen nineties Clinton signed laws repealing Glass-Steagall's separation of commercial and investment banking and exempting credit-default swaps from regulation. Unit eleven taught Glass-Steagall's making; this is its unmaking. Two misreadings sit on either side. The first blames borrowers alone for taking loans they could not repay; the anchor's account of securitisation places the incentive with lenders who no longer bore the risk. The second blames a single law or a single party; the Yawp's bipartisan account and the anchor's list of causes contradict that. The response divided the country too: the anchor says many resented bailing out the rich while ordinary people lost their jobs and homes, and the Yawp traces that resentment to both the Tea Party and Occupy Wall Street. The course names every cause the sources give and does not reduce them to one.
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