The subprime mortgage crisis was caused by hedge funds, banks, and insurance companies. The first two created mortgage-backed securities. The insurance companies covered them with credit default swaps. Demand for mortgages led to an asset bubble in housing. When the Federal Reserve raised the Fed funds rate, it sent adjustable mortgage interest rates skyrocketing. That sent home prices plummeting, and borrowers defaulting. Derivatives then spread the risk into every corner of the globe. That