Learn Italian: Pensavo che i tassi alti non ti facessero paura. - I thought the high rates did not scare you.

Fare is an irregular, stem-shortened verb. Its imperfect subjunctive is actually built from its older Latin infinitive, facere. Because of this, you use the stem fac- and add the regular imperfect subjunctive endings. For the "they" form, you add -essero to get facessero.

Why do we need the subjunctive here at all?

The main verb is pensavo (I thought). Verbs expressing thoughts, opinions, or doubts always trigger the subjunctive in the dependent clause. Since the main verb is in the past (the imperfect tense), it forces the dependent verb into the past too, using the imperfect subjunctive.

Literally, how does ti facessero paura translate?

It literally means "they made fear to you". The Italian expression for "to scare someone" is fare paura a qualcuno (to make fear to someone). The ti is an indirect object pronoun meaning "to you".

I learned that tasso means "badger". What does it mean in this context?

While tasso is indeed the word for the animal "badger", in financial or statistical contexts it means a "rate" (such as an interest rate or inflation rate). Here, i tassi alti translates perfectly to "the high rates".