The great recession occurred when the housing market, which everybody had thought was previously quite stable, crashed. Banks willingly gave out housing loans, thinking that with the rising housing prices the loanees would easily be able to repay it. When the housing prices fell, homeowners were unable to pay back their mortgages from the sale of their houses. Even when the banks foreclosed on the houses they were unable to make their money back, causing some of them, such as the Lehman Brothers to go bankrupt.
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