Board of Governors of the Federal Reserv

Statement by Ben S. Bernanke Chairman Board of Governors of the Federal Reserve System before the Financial Crisis Inquiry Commission

In discussing the causes of the crisis, it is essential to distinguish between triggers (the particular events or factors that touched off the crisis) and vulnerabilities (the structural weaknesses in the financial system and in regulation and supervision that propagated and amplified the initial shocks). Although a number of developments helped trigger the crisis, the most prominent one was the prospect of significant losses on residential mortgage loans to subprime borrowers that became apparent shortly after house prices began to decline.