And it involved a crash in home prices, because everyone was poor.
They couldn't pay as much to buy a house any more.
And secondly, it produced 25% unemployment.
So now in two years, you bought a house in 1929.
It's now 1931, you're underwater.
You go back to the bank and say, I'd like to renew my mortgage.
And the bank would say, no way.
You don't have a job.
Your house isn't worth as much as the mortgage.
So they would they foreclose on you.
So millions of houses were foreclosed in the early 1930s.
That lead to the Roosevelt administration.
They created the federal housing administration in 1934,
that would ensure mortgages.
That is insure the bank against your default.
So the government was taking on the risk that had formerly ban on homeowners.
That's because the whole thing was a total mess.
Houses were worth much less.
Nobody could buy them, they were crashing.
And that made banks fearful of lending to anybody.
So Roosevelt took a big gamble.
He said, we're going to just insure them, we, the government.
And if there's further defaults and further crashes, well,
we're going to take it out of taxpayers, and we're going to pay you off.