Final answer:
Bank failures generally happen during or after financial crises, often due to exposure to declining asset values. The 2008-2009 financial crisis caused by subprime mortgage assets led to 318 bank failures in the U.S. Critics argue that the risks were masked by record profits and inadequate regulatory response.
Step-by-step explanation:
Bank failures typically occur during or after a financial crisis when banks are exposed to significant losses. Financial assets based on subprime mortgages were a major factor in the financial crisis of 2008. During that period, as housing prices fell and a recession deepened, banks' mortgage-backed assets declined in value, leading to financial instability and bankruptcy. This crisis resulted in a significant number of bank failures, with 318 banks failing in the United States between 2008 and 2011. Laws in the U.S. require bank supervisors to be transparent and intervene promptly when issues are detected, but the system did not prevent the large losses that materialized during the 2008-2009 recession. Furthermore, the record profits prior to the crisis masked underlying risks, as seen with the bankruptcy of Bear Stearns in 2008, and regulatory warnings were frequently dismissed.
Bank failures generally occur during or after financial crises. In the case of the 2008 financial crisis, a large number of bank failures occurred in the years 2008-2011. This was due to the collapse of the housing market, causing many banks to see a significant decrease in the value of their mortgage-backed assets. This resulted in a number of banks facing bankruptcy.