<Li> Lax regulation also led to predatory lending in the private sector, especially after the federal government overrode anti-predatory state laws in 2004 . </Li> <P> The accumulation and subsequent high default rate of these subprime mortgages led to the financial crisis and the consequent damage to the world economy . </P> <P> High mortgage approval rates led to a large pool of homebuyers, which drove up housing prices . This appreciation in value led large numbers of homeowners (subprime or not) to borrow against their homes as an apparent windfall . This "bubble" would be burst by a rising single - family residential mortgages delinquency rate beginning in August 2006 and peaking in the first quarter, 2010 . </P> <P> The high delinquency rates led to a rapid devaluation of financial instruments (mortgage - backed securities including bundled loan portfolios, derivatives and credit default swaps). As the value of these assets plummeted, the market (buyers) for these securities evaporated and banks who were heavily invested in these assets began to experience a liquidity crisis . Freddie Mac and Fannie Mae were taken over by the federal government on September 7, 2008 . Lehman Brothers filed for bankruptcy on September 15, 2008 . Merrill Lynch, AIG, HBOS, Royal Bank of Scotland, Bradford & Bingley, Fortis, Hypo Real Estate, and Alliance & Leicester were all expected to follow--with a US federal bailout announced the following day beginning with $85 billion to AIG . In spite of trillions paid out by the US federal government, it became much more difficult to borrow money . The resulting decrease in buyers caused housing prices to plummet . </P>

When did the financial crisis start in 2008