Thise paper discusses the causes and impacts of the financial crisis of 2007-2010 and examines the reforms aimed at the prevention of its recurrence. The causes to be discussed include housing and commodity bubbles, easy credit conditions, subprime lending. predatory lending, deregulation and lax regulation, incorrect risk pricing, collapse of the shadow banking system and systemic risk. The impacts to be examined include the major financial institutions, the financial wealth, the economies of the U.S. and other countries-Iceland, Hungary, Russia, Spain, Ukraine, Dubai, and Greece. The paper further discusses emergency policy responses, principles of financial reforms and various, regulatory proposals. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the Basel III accord are also discussed. Concluding remarks provide a brief discussion of the latest economic problems in 2011.
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