With reference to the strategic management literature, discuss the extent to which the events associated with the "credit crunch" and the banking crisis of 2008 witnessed a fundamental reassessment of the organizational objective of banks and building societies. and corporate governance. Over the past 10 months, there has been a global credit crisis that has affected every individual and organization. A good definition of the credit crunch would be that provided by Simon Nixon (2008): "The credit crunch began in August 2007. The term refers to the sudden contraction of credit throughout the financial system as banks are become increasingly reluctant to lend. This has left individuals and businesses facing potentially higher interest costs, or even struggling to access them. Credit crunch can occur for several reasons such as: “sudden increase in interest rates, direct government control of money or drying up of capital market funding” (www.thismoney.co.uk). According to the Times Online, “years of lending have increased a huge debt bubble; people borrowed “cheap money” and properties. The crisis began in the summer of 2007, when lending to low-income Americans triggered a wave of financial problems. As a result, banks no longer lent money to consumers or to each other. Moreover, it has become a global phenomenon; “The way the debt was resold to investors gave the crisis global significance. The U.S. banking industry groups subprime mortgages into mortgage-backed securities called CDOs (collateralized Debt Obligations). These were resold to hedge funds and investment banks who decided they were a great way to generate high returns (and big bonuses for the oh-so-smart bankers who bought them). When borrowers began defaulting on their loans, the value of these investments plummeted, causing huge losses for banks around the world” (timesonline.co.uk). At the same time, consumers felt the effect of rising prices for basic necessities. Some of the problems resulting from the credit crunch are: Shortage of loans: Banks have reduced their lending of money to consumers. “In the UK, mortgage approvals have fallen to their lowest levels since records began. This shortage of consumer credit is at the origin; falling demand for housing and falling prices, falling consumer confidence as people struggle to be able to borrow, falling bank profitability and falling stock values” (www.nomicshelp.com). Tighter credit conditions – “Credit shortages are pushing banks to increase the cost of mortgage products. The gap between base rates and bank rates has widened as banks seek to increase the profitability of their loans..