The term "Unlimited Personal Liability" refers to a concept of law in the business world. It is related to the sole proprietorship business scheme: that is to say a form of business owned by one person. This concept holds a business owner personally responsible for all debts and financial failures of the business. In this scheme there is no intermediary between the owner and the company and they are legally considered one single person. It mostly refers to small size businesses.
[...] The increase of supply in houses on the market led to the decrease of their prices, the lenders were no longer covered. Hence the CDOs turned to be so risky that no one wanted to buy it. It led to a complete freeze of the credit market and more generally to the paralysis of the whole financial system. We can indeed say that the new banking products: the derivatives are partly causes of the crisis especially a specific kind of derivative, the mortgage- pass-through security (mortgages were bundled into pools with tranches of risk), [...]
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