But life was fine. With the American economy doing well at that time and housing prices soaring on the back of huge demand for real estate and bigger and better homes, financial institutions saw a mouthwatering opportunity in the mortgage market.
In their zeal to make a quick buck, these institutions relaxed the strict regulatory procedures before extending housing loans to people with unstable jobs and weak credit standing.
Few controls were put in place to handle the situation in case the housing ‘bubble' burst. And when the US economy began to slow down, the house of cards began to fall.
The crisis began with the bursting of the United States housing bubble.
Image: A long exposure view of the floor of the New York Stock Exchange. | Photograph: Stan Honda/AFP/Getty Images
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