The Crisis of Credit Visualized

I summarized this video for an English class:

The task was to condense this about 11-minute long video into 200 words, explaining the causes for the credit crisis logically without losing any relevant information.

And this is my first final version:

The video The Crisis of Credit Visualised explains the reasons for the big financial fiasco of 2007/2008, commonly known as the credit crisis. It starts with describing how the dot.com crash enabled banks to borrow money cheaply from the Federal Reserve. In order to receive even more money, banks had the idea to connect families and investors by buying mortgages.

For this, bankers used the principle of leverage, which means that they bought many mortgages, so as to gain money from the homeowners as well as from the investors. In the end, the bank paid back its debts to the investors and still owned a considerable amount of money.

The problem was that bankers craved for more. They started to buy subprime mortgages from homeowners who were likely to default; and they eventually did. The bank ended up with a large number of houses but no reliable people who would buy them. The house prices sank and therefore people who could afford the mortgages stopped paying as well.

In conclusion, the financial system froze. The entire line of brokers, lenders, banks and investors went bankrupt and was unable to keep the economy growing. The crisis of credit took its course.

[200 words]

Alright. You may have noticed that there are a few mistakes in there.

- I didn't mention the name of the creator of the video

- I left out some important information but wrote a lot of unnecessary words

- It's much too informal

I wrote this second version, trying to correct some of the mistakes. You have to be patient with me when it comes to formal English, though, I am slowly improving on it.

The video The Crisis of Credit Visualized by Jonathan Jarvis explains the reasons for the 2008 credit crisis. It starts by describing the dot.com bust, an economic downturn resulting in low interest rates that were undesirable for investors. Bankers solved the investors’ problem by connecting them with families through mortgages.

Brokers sold houses to reliable families, lenders provided the mortgages and banks purchased them. Bankers then divided the collection of mortgages called Collateralized Debt Obligation, abbreviated as CDO, into three slices; the safe, okay and risky slice. Investors bought the AAA rated safe slice that was additionally protected with a low-cost insurance, the Credit Default Swap, abbreviated as CDS. Bankers used this example of the principle of leverage to accumulate wealth.

Avarice that overcame bankers caused the system to collapse. They began to purchase subprime mortgages from homeowners whose default was foreseeable. As a result, the bank was left with many unwanted houses. The house prices sank and therefore people who could afford their mortgages stopped paying as well.

In conclusion, the financial system froze. The line of brokers, lenders, banks and investors went bankrupt and was unable to keep the economy growing. The crisis of credit took its course.

[200 words]

I hope you think that the text is actually better now. 

Thanks for reading and cheers!