This document outlines how the subprime mortgage crisis occurred through a network of connected players. Mortgage brokers and banks provided loans to subprime borrowers, which were then packaged into securities and sold to investors with the help of investment banks. Credit rating agencies certified these securities, and insurers provided insurance for them. However, this system was flawed as it relied on continually rising housing prices. When housing prices declined, subprime borrowers defaulted, causing losses for investors, banks, and other players. The crisis led to bankruptcies, government bailouts, and a major loss of wealth in global equity markets.
