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Financial crisis of 2007–2008

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Subprime lending: proper ellipses spacing
Countering Krugman, Peter J. Wallison wrote: "It is not true that every bubble—even a large bubble—has the potential to cause a financial crisis when it deflates." Wallison notes that other developed countries had "large bubbles during the 1997–2007 period" but "the losses associated with mortgage delinquencies and defaults when these bubbles deflated were far lower than the losses suffered in the United States when the 1997–2007 [bubble] deflated." According to Wallison, the reason the US ''residential housing'' bubble (as opposed to other types of bubbles) led to financial crisis was that it was supported by a huge number of substandard loans—generally with low or no downpayments.<ref name="Wallison 1">{{cite web|author=Peter J. Wallison|title=Dissent from the Majority Report of the Financial Crisis Inquiry Commission|publisher=American Enterprise Institute|date=January 2011|url=|accessdate=November 20, 2012}}</ref>
Krugman's contention (that the growth of a commercial real estate bubble indicates that US housing policy was not the cause of the crisis) is challenged by additional analysis. After researching the default of commercial loans during the financial crisis, Xudong An and Anthony B. Sanders reported (in December 2010): "We find limited evidence that substantial deterioration in CMBS [commercial mortgage-backed securities] loan underwriting occurred prior to the crisis."<ref>Sanders, Anthony B. and An, Xudong, Default of CMBS Loans During the Crisis (November 29, 2010). 46th Annual AREUEA Conference Paper. Available at SSRN:</ref> Other analysts support the contention that the crisis in commercial real estate and related lending took place ''after'' the crisis in residential real estate. Business journalist Kimberly Amadeo reported: "The first signs of decline in residential real estate occurred in 2006. Three years later, commercial real estate started feeling the effects.<ref>Amadeo, Kimberly, "Commercial Real Estate Lending" in News & Issues – US Economy(, November 2013),</ref> Denice A. Gierach, a real estate attorney and CPA, wrote:<blockquote>... most of the commercial real estate loans were good loans destroyed by a really bad economy. In other words, the borrowers did not cause the loans to go bad, it was the economy.<ref>Gierach, Denice A., "Waiting for the other shoe to drop in commercial real estate," (Chicago, IL, The Business Ledger, March 4, 2010)</ref></blockquote>
===Growth of the housing bubble===