The financial crisis that started in the U.S. housing market in 2007 spread worldwide, causing a severe recession. The main reason for financial crises is failures in legal, regulatory, and political institutions. If these institutions were stronger, fewer financial firms would need rescuing during crises. Lessons from past crises in Nordic countries, like Sweden's crisis resolution model, can help policymakers deal with current crises. The European Union's approach to the crisis is also discussed, along with policy implications for emerging markets.