The financial crisis of 2006-2009 was years in the making. By the summer of 2007 , financial markets around the world were showing signs that the reckoning was overdue for a years-long binge on cheap credit. Two Bear Stearns hedge funds had collapsed, BNP Paribas was warning investors that they might not be able to withdrav money from three of its funds, and the British bank Northern Rock was about to seek emergency funding from the Bank of England. Yet despite the warning signs, few investors suspected that the worst crisis in nearly eight decades was about to engulf the global financial system, bringing Wall Street's giants to their knees and triggering the Great Recession. It was an epic financial and economic collapse that cost many ordinary people their jobs, their life savings, their homes, or all three. KEY TAKEAWAYS The 2006-2009 financial crisis developed gradually. Home prices began to fall in early 2006. In early 2007 , subprime lenders began to file for bankruptcy. In June 2007, two big hedge funds failed, weighed down by investments in subprime loans. In August 2007, losses from subprime loan investments caused a panic that froze the global lending system. In September 2007, Lehman Brothers collapsed in the biggest U.S. bankruptcy ever. When the bubble burst, financial institutions were left holding trillions of dollars worth of near-worthless investments in subprime mortgages. A change in bank investing regulations allowed banks to invest customers' money in derivatives. Derivatives were created from subprime residential mortgages, and demand for homes skyrocketed. When the Federal Reserve raised interest rates, subprime mortgage borrowers could no longer afford their mortgages. The supply of houses outran demand, borrowers defaulted on their mortgages, and the derivatives and all other investments tied to them lost value. The financial crisis was caused by unscrupulous investment banking and insurance practices that passed all the risks to investors. Comment: 50 to 80 words