What were the reasons many bankers saw potentially bigger profits in t

What were the reasons many bankers saw potentially bigger profits in the areas of mortgage investments in the early 2000s?

As the bubble burst in the housing market, what specific consequences resulted and what were their affects on America’s financial institutions? How did the U.S. government respond and in the end were its responses effective? Why or why not?

ANSWER
Answer: An ideal answer will:
1. Discuss how prices of houses continued to increase while interest rates continued to remain low and how this equated to larger profits for banks.
2. Discuss the dynamic shift in the idea of a mortgage from a primary residence to an investment.
3. Discuss the craze of “flipping” and what made “flipping” seem like easy money.
4. Discuss how the housing bubble finally burst and what were the consequences faced by people, who prior to the burst, enjoyed large profits from “flipping.” Also discuss how banks, like people, were in trouble by defaulting on their loans.
5. Discuss the federal government’s response to restore the financial health of America; specifically what was TARP and why did TARP receive bipartisan support in Congress as a panacea to correct America’s financial woes.
6. Discuss the praise/criticism of TARP by some of America’s leading financial minds and government leaders.
7. Discuss why the financial crisis worsened as America faced increasing unemployment.
8. Discuss how the exposure of more corrupt business practices in investment cost the American taxpayer billions of dollars and how the government handling of the crisis led to disillusionment of government leadership by the people and the fear of the United States becoming a second-rate financial powerhouse.
9. Write a concise and effective conclusion.