Credit Crunch
In 2008, the U.S. faced a liquidity crisis. Companies were unable to access capital on a grand scale.
When investment capital is difficult to access on a wide level, an economy is dealing with what is known as a Credit Crunch. During this period (one that can happen overnight), banks and other investment firms are cautious about the people to whom they lend money.
The lack of available capital also can drive up the cost of borrowing, as companies compete for whatever capital is available to borrow. When lenders tighten lending and focus only on borrowers with high credit scores and history of paying back debt, this is known as "flight to quality."
Related or Semi-related Video
Finance: What is the Equal Credit Opport...6 Views
Finance a la shmoop what is the Equal Credit Opportunity Act? alright people while the
federal government thinks everyone should have the equal opportunity to get [Men in Federal Government appear]
into debt isn't that sweet of them you know that Uncle Sam well he sure does
have a heart of gold this federal law makes it illegal to discriminate against
people who are applying for financing on pretty much anything legal based on
their age gender marital status religious affiliation ethnic or national
background or public assistance benefits your credit score however well that
still matters sorry just keeping it real
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