November 15, 2008

The crisis in world financial markets has its roots in declining home values in the US real estate market which began in late 2006 and led to a wave of foreclosures and defaults on home loans. The loans, many to borrowers with poor credit, were bundled into assets that began to way heavily on banks' balance sheets around the world. Earlier efforts to assist homeowners, and the sale of several major financial institutions did little to stem the flood, and the international crisis rapidly expanded after the fall of financial giant Lehman Brothers in September. Banks worldwide may be forced to write down a total of $1.4 trillion in assets by the end of the year, according to the International Monetary Fund.