In 2008, the global financial markets were devastated by the collapse of several major commercial banks and investment banks. Some banks were in such serious financial difficulty that they had to be rescued by the government, or taken over by another bank. There were many different views and opinions about who or what was to blame for the crisis, but many commentators agreed that senior bankers had not recognised the signs of trouble before it was too late.

Identify the main causes of the crisis and explain how proper creditrisk and assessment could have diverted the course of unfortunateevents.