Introduction
For the past several years, The United States economy has been very strong, and the housing market was at the constant growth which leads people continue to enjoy long term economic prosperity, and businesses continuing to expand. However there is a significant underlying question people tend to ignore is that can people really afford the things they are enjoying right now? Are businesses really doing the right thing to keep growing their earnings?
Unfortunately the prosperity of the U.S. economy didn’t last too long as U.S. housing market unexpectedly collapsed this year, the U.S. banking industry is suffered by huge losses in mortgage loans.
“We just had a big party where people and businesses over borrowed.” said Joseph Mason, an economist who worked for the U.S. Treasury Department in the 1990s and is now a finance professor at Louisiana State University. For the past few years it is almost like a modern business trend that marketing division from banks start to letting people borrow money without providing documentation to verify their income and assets as a result, people over borrowed.
The largest bank failure in U.S. history happened on September 25, 2008 the U.S. government agency FDIC seized Washington Mutual Bank, the nation's largest savings and loan, with more than $180 billion in deposits. How did it happen? What are the causes behind the failure? Who is responsible for the failure?
In this paper, our team is going to examine the causes of the U.S. bank failures. We will make our assumptions for the recent banking issues; then, we will list the three biggest U.S. bank failures and in each discuss the causes of failures.
Variable
Banks are the safest place to keep your cash. However, banks go under when they are no longer able to meet their obligations. They might be unable to pay the bills, or a bank failure may arise because they can't provide cash when depositors demand it. Thus, the reason why will cause the bank...