The financial crisis that started in the summer of 2007 in the subprime mortgage market in the U.S. and spread quickly both to other financial sectors and throughout much of the globe was the most severe such crisis since the Great Depression of the early 1930s with similar but less-severe adverse consequences for the domestic and global macroeconomies. The depth and breadth of the meltdowns in terms of the costly failure of large banks and bank-like institutions and the resulting reductions in aggregate wealth have intensified the search for public policy strategies that will mitigate the probability and minimize the cost of experiencing similar crises in the future.
The design and enactment of effective corrective public policies require the correct identification and understanding of the root causes of the crisis and the means by which it was transmitted. That is, getting it right requires knowing what went wrong!
Based on the available analyses of the causes and growth of the crisis, George Kaufman in this paper identifies the main culprits or sinners in the United States and the more major sins they committed. Although this paper limits itself to the U.S., the crisis was global, and many of the sinners in the U.S. have similar guilty counterparties abroad. Thus, much of the analysis herein applies also to other countries.