Business & Finance homework assistance| Business & Finance homework help
A lesson from subprime is that lenders must be more selective about approving mortgages. Many people could get mortgages before the crisis even though their income was not sufficient to pay them. Some borrowers received misleading information about their terms and hidden charges later. Lenders and borrowers need to be fully informed about all details before they sign any contract.
A second lesson was the necessity of banks and financial institutions using responsible lending. Many firms engaged in irresponsible behavior in order to increase profits without understanding—or simply ignoring—the risks involved. The result was a unsustainable bubble, which ultimately burst, leading to huge losses in many sectors.
Last but not least, regulators need to increase their efforts in ensuring that the appropriate laws are followed and actively monitoring markets for potential problems. This will allow them to catch issues before they can become major economic threats.