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Financial institutions worldwide suffered severe damage, [3] reaching a climax with the bankruptcy of Lehman Brothers on September 15, 2008, and a subsequent international banking crisis. [4] The preconditioning for the financial crisis was complex and multi-causal.
- The American Dream Was Sold on Too-Easy Credit
- Mortgages Were Transformed Into Ever-Riskier Investments
- Post-Depression Bank Regulations Were Slowly Chipped Away
- Investment Banks Jumped Neck-Deep Into Risk
- The Bush Administration, Criticized For Earlier Bailouts, Cut Lehman Loose
The 2008 financial crisis had its origins in the housing market, for generations the symbolic cornerstone of American prosperity. Federal policy conspicuously supported the American dream of homeownership since at least the 1930s, when the U.S. government began to back the mortgage market. It went further after WWII, offering veterans cheap home lo...
The salesmen could make these deals without investigating a borrower's fitness or a property's value because the lenders they represented had no intention of keeping the loans. Lenders would sell these mortgages onward; bankers would bundle them into securities and peddle them to institutional investors eager for the returns the American housing ma...
To prevent the Great Depression from ever happening again, the U.S. government subjected banks to stringent regulation. Franklin Roosevelt had campaigned on this issue as part of his New Dealin 1932, telling voters his administration would closely regulate securities trading: "Investment banking is a legitimate concern. Commercial banking is anothe...
These nimbler firms, crowded by bigger brethren out of deals they might once have made, now had to seek riskier and more complicated ways to make money. Congress gave them one way to do so in 2000, with the Commodity Futures Modernization Act, deregulating over-the-counter derivatives—securities that were essentially bets that two parties could pri...
In March 2008, the investment bank Bear Stearns began to go under, so the U.S. treasury and the Federal Reserve system brokered, and partly financed, a deal for its acquisition by JPMorgan Chase. In September, the treasury announced it would rescue the government-supervised mortgage underwriters almost universally known as Fannie Mae and Freddie Ma...
- Eric Rauchway
- 3 min
Dec 18, 2023 · In March, global investment bank Bear Stearns, a pillar of Wall Street that dated to 1923, collapsed and was acquired by JPMorgan Chase for pennies on the dollar. September 2008: The Fall of ...
- 2 min
Sep 13, 2018 · How the 2008 financial crisis crashed the economy and changed the world | PBS NewsHour. Sep 13, 2018 6:20 PM EDT. Paul Solman. Transcript Audio. Ten years ago this week, the collapse of Lehman...
- 8 min
- Paul Solman
Jan 11, 2015 · last updated 11 January 2015. The Federal Reserve took extraordinary steps to prevent a major meltdown of the global banking system after the panic-inducing September 2008 implosion of investment...
Apr 15, 2021 · The 2008 crash was the greatest jolt to the global financial system in almost a century – it pushed the world's banking system towards the edge of collapse. We explore the causes and consequences of the crash, consider its historical parallels, and ask – how will history remember the crisis? Published: April 15, 2021 at 2:15 PM.
Aug 17, 2017 · August 2007 marked the beginning of worst financial crisis since the great depression. A decade later, WSJ's finance and banking editors break down the events that led to the 2008 financial...
