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| Boilerpipe Text | The
bankruptcy of Lehman Brothers
(
headquarters
pictured), the fourth-largest U.S. investment bank (behind
Goldman Sachs
,
Morgan Stanley
, and
Merrill Lynch
), on September 15, 2008, is often considered the climax of the 2008 financial crisis.
The
TED spread
, an indicator of perceived
credit risk
in the financial system, increased significantly during the crisis. It spiked sharply in August 2007, remained volatile for a year, and spiked even higher in September 2008 to reach a record 4.65% on October 10, 2008.
A major worldwide
financial crisis
centered in the United States took place in 2008. The causes included excessive
speculation
on property values by both homeowners and
financial institutions
, leading to the
2000s United States housing bubble
. This was exacerbated by
predatory lending
for
subprime mortgages
and by deficiencies in
regulation
.
Cash out refinancings
had fueled an increase in consumption that could no longer be sustained when home prices declined. The first phase of the crisis was the
subprime mortgage crisis
, which began in early 2007, as
mortgage-backed securities
(MBS) tied to U.S.
real estate
, and a vast web of
derivatives
linked to those MBS, collapsed in value. A
liquidity crisis
spread to global institutions by mid-2007 and climaxed with the
bankruptcy of Lehman Brothers
in September 2008, which triggered a
stock market crash
and
bank runs
in several countries.
[
1
]
The crisis exacerbated the
Great Recession
, a
global recession
that began in mid-2007, as well as the
United States bear market of 2007â2009
. It was also a contributor to the
2008â2011 Icelandic financial crisis
and the
euro area crisis
.
During the 1990s, the
U.S. Congress
had passed legislation that intended to expand
affordable housing
through looser financing rules, and in 1999, parts of the
1933 Banking Act
(GlassâSteagall Act) were
repealed
, enabling institutions to mix low-risk operations, such as
commercial banking
and
insurance
, with higher-risk operations such as
investment banking
and
proprietary trading
.
[
2
]
As the
Federal Reserve
("Fed") lowered the
federal funds rate
from 2000 to 2003, institutions increasingly targeted low-income homebuyers, largely belonging to
racial minorities
, with high-risk loans;
[
3
]
this development went unattended by regulators.
[
4
]
As interest rates rose from 2004 to 2006, the cost of
mortgages
rose and the demand for housing fell; in early 2007, as more U.S. subprime mortgage holders began
defaulting
on their repayments, lenders went bankrupt, culminating in the bankruptcy of
New Century Financial
in April. As demand and prices continued to fall, the
financial contagion
spread to global
credit markets
by August 2007, and
central banks
began injecting
liquidity
. In March 2008,
Bear Stearns
, the fifth-largest U.S. investment bank, was sold to
JPMorgan Chase
in a "
fire sale
" backed by Fed financing.
In response to the growing crisis, governments around the world deployed massive
bailouts
of financial institutions and used
monetary policy
and
fiscal policies
to prevent an
economic collapse
of the
global financial system
.
[
5
]
By July 2008,
Fannie Mae
and
Freddie Mac
, companies which together owned or guaranteed half of the U.S. housing market, verged on collapse; the
Housing and Economic Recovery Act of 2008
enabled the federal government to seize them on September 7.
Lehman Brothers
(the fourth-largest U.S. investment bank) filed for the largest bankruptcy in U.S. history on September 15, which was followed by a Fed bail-out of
American International Group
(the country's largest insurer) the next day, and the seizure of
Washington Mutual
in the largest bank failure in U.S. history on September 25. On October 3, Congress passed the
Emergency Economic Stabilization Act
, authorizing the
Treasury Department
to purchase
toxic assets
and bank stocks through the $700 billion
Troubled Asset Relief Program
(TARP). The Fed began a program of
quantitative easing
by buying treasury bonds and other assets, such as MBS, and the
American Recovery and Reinvestment Act
, signed in February 2009 by newly elected president
Barack Obama
, included a range of measures intended to preserve existing jobs and create new ones. These initiatives combined, coupled with actions taken in other countries, ended the worst of the
Great Recession
by mid-2009.
Assessments of the crisis's impact in the U.S. vary, but suggest that some 8.7 million jobs were lost, causing unemployment to rise from 5% in 2007 to a high of 10% in October 2009. The percentage of citizens living in poverty rose from 12.5% in 2007 to 15.1% in 2010. The
Dow Jones Industrial Average
fell by 53% between October 2007 and March 2009, and some estimates suggest that one in four households lost 75% or more of their
net worth
. In 2010, the
DoddâFrank Wall Street Reform and Consumer Protection Act
was passed, overhauling financial regulations.
[
6
]
It was opposed by many
Republicans
, and it was weakened by the
Economic Growth, Regulatory Relief, and Consumer Protection Act
in 2018. The
Basel III
capital and liquidity standards were also adopted by countries around the world.
[
7
]
[
8
]
World map showing
real GDP growth rates
for 2009 (countries in brown were in recession)
Share in GDP of U.S. financial sector since 1860
[
9
]
The crisis exacerbated the
Great Recession
, a
global recession
that began in mid-2007.
[
10
]
[
11
]
[
12
]
[
13
]
[
14
]
It was also followed by the
euro area crisis
, which began with the start of the
Greek government-debt crisis
in late 2009, and the
2008â2011 Icelandic financial crisis
, which involved the
bank failure
of all three of the major banks in Iceland and, relative to the size of its economy, was the largest economic collapse suffered by any country in history.
[
15
]
It was among the five worst financial crises the world had experienced and led to a loss of more than $2 trillion from the global economy.
[
16
]
[
17
]
U.S. home mortgage debt relative to
GDP
increased from an average of 46% during the 1990s to 73% during 2008, reaching $10.5 (~$15Â trillion in 2024) trillion.
[
18
]
The increase in
cash out refinancings
, as home values rose, fueled an increase in consumption that could no longer be sustained when home prices declined.
[
20
]
[
21
]
Many financial institutions owned investments whose value was based on home mortgages such as
mortgage-backed securities
, or
credit derivatives
used to insure them against failure, which declined in value significantly.
[
22
]
[
23
]
[
24
]
The
International Monetary Fund
estimated that large U.S. and European banks lost more than $1 trillion on
toxic assets
and from bad loans from January 2007 to September 2009.
[
25
]
Lack of investor confidence in bank
solvency
and declines in credit availability led to plummeting stock and
commodity
prices in late 2008 and early 2009.
[
26
]
The crisis rapidly spread into a global economic shock, resulting in several
bank failures
.
[
27
]
Economies worldwide slowed during this period since credit tightened and international trade declined.
[
28
]
Housing markets suffered and unemployment soared, resulting in
evictions
and
foreclosures
. Several businesses failed.
[
29
]
[
30
]
From its peak in the second quarter of 2007 at $61.4 trillion, household wealth in the United States fell $11 trillion, to $50.4 trillion by the end of the first quarter of 2009, resulting in a decline in consumption, then a decline in business investment.
[
31
]
[
32
]
In the fourth quarter of 2008, the quarter-over-quarter decline in real GDP in the U.S. was 8.4%.
[
33
]
The U.S. unemployment rate peaked at 11.0% in October 2009, the highest rate since 1983 and roughly twice the pre-crisis rate. The average hours per work week declined to 33, the lowest level since the government began collecting the data in 1964.
[
34
]
[
35
]
The economic crisis started in the U.S. but spread to the rest of the world.
[
29
]
U.S. consumption accounted for more than a third of the growth in global consumption between 2000 and 2007 and the rest of the world depended on the U.S. consumer as a source of demand.
[
36
]
[
37
]
Toxic securities were owned by corporate and institutional investors globally. Derivatives such as
credit default swaps
also increased the linkage between large financial institutions. The
de-leveraging
of financial institutions, as assets were sold to pay back obligations that could not be refinanced in frozen credit markets, further accelerated the solvency crisis and caused a decrease in international trade. Reductions in the growth rates of
developing countries
were due to falls in trade, commodity prices, investment and
remittances
sent from migrant workers (example: Armenia
[
38
]
). States with fragile political systems feared that investors from Western states would withdraw their money because of the crisis.
[
39
]
As part of
national fiscal policy response to the Great Recession
, governments and central banks, including the
Federal Reserve
, the
European Central Bank
and the
Bank of England
, provided then-unprecedented trillions of dollars in
bailouts
and
stimulus
, including expansive
fiscal policy
and
monetary policy
to offset the decline in consumption and lending capacity, avoid a further collapse, encourage lending, restore faith in the integral
commercial paper
markets, avoid the risk of a
deflationary spiral
, and provide banks with enough funds to allow customers to make withdrawals.
[
40
]
In effect, the central banks went from being the "
lender of last resort
" to the "lender of only resort" for a significant portion of the economy. In some cases the Fed was considered the "buyer of last resort".
[
41
]
[
42
]
[
43
]
[
44
]
[
45
]
During the fourth quarter of 2008, these central banks purchased US$2.5 trillion (~$3.57Â trillion in 2024) of government debt and troubled private assets from banks. This was the largest liquidity injection into the credit market, and the largest monetary policy action in world history. Following a model initiated by the
2008 United Kingdom bank rescue package
,
[
46
]
[
47
]
the governments of European nations and the United States guaranteed the debt issued by their banks and raised the capital of their national banking systems, ultimately purchasing $1.5 trillion newly issued
preferred stock
in major banks.
[
32
]
The
Federal Reserve
created then-significant amounts of new currency as a method to combat the
liquidity trap
.
[
48
]
Bailouts came in the form of trillions of dollars of loans, asset purchases, guarantees, and direct spending.
[
49
]
Significant controversy accompanied the bailouts, such as in the case of the
AIG bonus payments controversy
, leading to the development of a variety of "decision making frameworks", to help balance competing policy interests during times of financial crisis.
[
50
]
Alistair Darling
, the U.K.'s
Chancellor of the Exchequer
at the time of the crisis, stated in 2018 that Britain came within hours of "a breakdown of law and order" the day that
Royal Bank of Scotland
was bailed-out.
[
51
]
Instead of financing more domestic loans, some banks instead spent some of the stimulus money in more profitable areas such as investing in emerging markets and foreign currencies.
[
52
]
In July 2010, the
DoddâFrank Wall Street Reform and Consumer Protection Act
was enacted in the United States to "promote the financial stability of the United States".
[
53
]
The
Basel III
capital and liquidity standards were adopted worldwide.
[
54
]
Since the 2008 financial crisis, consumer regulators in America have more closely supervised sellers of credit cards and home mortgages in order to deter anticompetitive practices that led to the crisis.
[
55
]
At least two major reports on the causes of the crisis were produced by the U.S. Congress: the
Financial Crisis Inquiry Commission
report, released January 2011, and a report by the
United States Senate Homeland Security Permanent Subcommittee on Investigations
entitled
Wall Street and the Financial Crisis: Anatomy of a Financial Collapse
, released April 2011.
In total, 47 bankers served jail time as a result of the crisis, over half of whom were from Iceland, where the crisis was the most severe and led to the collapse of all three major Icelandic banks.
[
56
]
In April 2012,
Geir Haarde
of Iceland became the only politician to be convicted as a result of the crisis.
[
57
]
[
58
]
Only one banker in the United States served jail time as a result of the crisis,
Kareem Serageldin
, a banker at
Credit Suisse
who was sentenced to 30 months in jail and returned $24.6 million in compensation for manipulating bond prices to hide $1 billion of losses.
[
59
]
[
56
]
No individuals in the United Kingdom were convicted as a result of the crisis.
[
60
]
[
61
]
In
SEC v. Goldman Sachs
,
Goldman Sachs
paid a $550 million civil penalty and acknowledged that its marketing materials for CDO contained incomplete information, settling
securities fraud
charges after allegedly anticipating the financial crisis and selling toxic investments to its clients.
[
62
]
[
63
]
[
64
]
With fewer resources to risk in
creative destruction
, the number of patent applications was flat, compared to exponential increases in patent application in prior years.
[
65
]
Share of income going to the top 1% of earners, one measure of economic inequality in the US from 1913 to 2008.
Typical American families did not fare well, nor did the "wealthy-but-not-wealthiest" families just beneath the pyramid's top.
[
66
]
[
67
]
[
68
]
However, half of the poorest families in the United States did not have wealth declines at all during the crisis because they generally did not own financial investments whose value could fluctuate. The Federal Reserve surveyed 4,000 households from 2007 to 2009, and found that the total wealth of 63% of all Americans declined in that period and 77% of the richest families had a decrease in total wealth, while only 50% of those on the bottom of the pyramid suffered a decrease.
[
69
]
[
70
]
[
71
]
The following is a timeline of the major events of the financial crisis, including government responses, and the subsequent economic recovery.
[
72
]
[
73
]
[
74
]
[
75
]
Cost of housing by state from the year 2000 to 2022
April 28, 2004: Meeting is held in the basement of the Federal Reserve with the Gang of Five (Goldman Sachs, Lehman Brothers, Merrill Lynch, Bear Stearns and Morgan Stanley) and the five members of the Securities and Exchange Commission to create an exemption for the five largest investment banks in the U.S. from having to adhere to the
Net Capital Rule
.
[
76
]
May 19, 2005: Fund manager
Michael Burry
closed a
credit default swap
against subprime mortgage bonds with
Deutsche Bank
valued at $60 million â the first such CDS. He projected they would become volatile within two years of the low "teaser rate" of the mortgages expiring.
[
77
]
[
78
]
2006: After years of above-average price increases, housing prices peaked and
mortgage loan
delinquency roseâthe first sign of the bursting of the
United States housing bubble
.
[
79
]
[
80
]
Due to increasingly lax underwriting standards, one-third of all mortgages in 2006 were subprime or no-documentation loans,
[
81
]
which comprised 17% of home purchases that year.
[
82
]
May 2006:
JPMorgan
warned clients of a housing downturn, especially in sub-prime housing.
[
83
]
August 2006: The
yield curve
inverted, signaling a recession was likely within a year or two.
[
84
]
November 2006:
UBS
warned of "an impending crisis in the U.S. housing market".
[
83
]
2007 (JanuaryâAugust)
[
edit
]
February 27, 2007: Stock prices in China and the U.S. fell by the most since 2003 as reports of a decline in home prices and
durable goods
orders stoked growth fears, with
Alan Greenspan
predicting a recession.
[
85
]
Due to increased delinquency rates in
subprime lending
,
Freddie Mac
said that it would stop investing in certain subprime loans.
[
86
]
April 2, 2007:
New Century
, an American
real estate investment trust
specializing in
subprime lending
and
securitization
, filed for
Chapter 11 bankruptcy protection
. This propagated the
subprime mortgage crisis
.
[
87
]
[
88
]
[
82
]
[
89
]
[
90
]
June 20, 2007: After receiving
margin calls
,
Bear Stearns
bailed out two of its hedge funds with $20 billion of exposure to
collateralized debt obligations
including subprime mortgages.
[
91
]
July 19, 2007:
The Dow Jones Industrial Average (DJIA)
closed above 14,000 for the first time, at 14,000.41.
[
92
]
July 30, 2007:
IKB Deutsche Industriebank
, the first banking casualty of the crisis, announces its bailout by German public financial institution
KfW
.
[
93
]
July 31, 2007:
Bear Stearns
liquidated the two hedge funds.
[
89
]
August 6, 2007:
American Home Mortgage
filed for bankruptcy.
[
89
]
August 9, 2007:
BNP Paribas
blocked withdrawals from three of its
hedge funds
with a total of $2.2 billion in
assets under management
, due to "a complete evaporation of liquidity", making valuation of the funds impossible â a clear sign that banks were refusing to do business with each other.
[
90
]
[
94
]
[
95
]
August 16, 2007: The DJIA closes at 12,945.78 after falling on 12 out of the previous 20 trading days following its peak. It had fallen 1,164.63 or 8.3%.
[
92
]
2007 (SeptemberâDecember)
[
edit
]
People queueing outside a
Northern Rock
branch in the United Kingdom to withdraw their savings during the financial crisis
September 14, 2007:
Northern Rock
, a medium-sized and highly
leveraged
British bank, received support from the
Bank of England
.
[
96
]
This led to investor panic and a
bank run
.
[
97
]
September 18, 2007: The
Federal Open Market Committee
began reducing the
federal funds rate
from its peak of 5.25% in response to worries about liquidity and confidence.
[
98
]
[
99
]
September 28, 2007:
NetBank
suffered from
bank failure
and filed bankruptcy due to exposure to home loans.
[
100
]
October 9, 2007: The DJIA hit its peak closing price of 14,164.53.
[
101
]
October 15, 2007:
Citigroup
,
Bank of America
, and
JPMorgan Chase
announced plans for the $80 billion
Master Liquidity Enhancement Conduit
to provide liquidity to
structured investment vehicles
. The plan was abandoned in December.
[
102
]
November 26, 2007: US markets enter a correction as worries about the financial sector continued to mount.
[
103
]
December 2007: Unemployment in the US hit 5%.
[
104
]
December 12, 2007: The
Federal Reserve
instituted the
Term auction facility
to supply short-term credit to banks with sub-prime mortgages.
[
105
]
December 17, 2007:
Delta Financial Corporation
filed bankruptcy after failing to
securitize
subprime loans.
[
106
]
December 19, 2007: the
Standard and Poor's
rating agency downgrades the ratings of many monoline insurers which pay out bonds that fail.
[
107
]
December 31, 2007: Despite volatility through the last part of the year, markets close above where they started the year, with the DJIA closing at 13,264.82, up 6.4% for the year.
[
108
]
2008 (JanuaryâAugust)
[
edit
]
January 11, 2008:
Bank of America
agreed to buy
Countrywide Financial
for $4 billion in stock.
[
109
]
January 18, 2008: Stock markets fell to a yearly low as the credit rating of
Ambac
, a
bond insurance
company, was downgraded. Meanwhile, an increase in the amount of withdrawals caused Scottish Equitable to implement delays of up to 12 months on people wishing to withdraw money.
[
110
]
January 21, 2008: As US markets were closed for
Martin Luther King Jr. Day
, the
FTSE 100 Index
in the United Kingdom tumbled 323.5 points or 5.5% in its largest crash since the
September 11 attacks
.
[
111
]
January 22, 2008: The US Federal Reserve cut interest rates by 0.75% to stimulate the economy, the largest drop in 25 years and the first emergency cut since 2001.
[
111
]
January 2008: U.S. stocks had the worst January since 2000 over concerns about the exposure of companies that issue
bond insurance
.
[
112
]
February 13, 2008: The
Economic Stimulus Act of 2008
was enacted, which included a tax rebate.
[
113
]
[
114
]
February 22, 2008: The
nationalisation of Northern Rock
was completed.
[
97
]
March 5, 2008:
The Carlyle Group
received
margin calls
on its mortgage bond fund.
[
115
]
March 17, 2008:
Bear Stearns
, with $46 billion of
mortgage
assets that had not been written down and $10 trillion in total assets, faced bankruptcy; instead, in its first emergency meeting in 30 years, the Federal Reserve agreed to guarantee its bad loans to facilitate its acquisition by
JPMorgan Chase
for $2/share. A week earlier, the stock was trading at $60/share and a year earlier it traded for $178/share. The buyout price was increased to $10/share the following week.
[
116
]
[
117
]
[
118
]
March 18, 2008: In a contentious meeting, the Federal Reserve cut the
federal funds rate
by 75 basis points, its 6th cut in 6 months.
[
119
]
It also allowed
Fannie Mae
&
Freddie Mac
to buy $200 billion in subprime mortgages from banks. Officials thought this would contain the possible crisis. The
U.S. dollar
weakened and commodity prices soared.
[
data missing
]
[
120
]
[
121
]
[
122
]
Late June 2008: Despite the U.S. stock market falling to 20% below its highs, commodity-related stocks soared as oil traded above $140/barrel for the first time and steel prices rose above $1,000 per ton. Worries about
inflation
combined with strong demand from China encouraged people to invest in
commodities
during the
2000s commodities boom
.
[
123
]
[
124
]
July 11, 2008:
IndyMac
failed. Oil prices peaked at $147.50
[
125
]
[
111
]
July 30, 2008: The
Housing and Economic Recovery Act of 2008
was enacted.
[
126
]
August 2008: Unemployment hit 6% in the US.
[
104
]
September 7, 2008: The
Federal takeover of Fannie Mae and Freddie Mac
was implemented.
[
127
]
September 15, 2008: After the Federal Reserve declined to guarantee its loans as it did for Bear Stearns, the
bankruptcy of Lehman Brothers
led to a 504.48-point (4.42%) drop in the DJIA, its worst decline in seven years. To avoid bankruptcy,
Merrill Lynch
was acquired by
Bank of America
for $50 billion in a transaction facilitated by the government.
[
128
]
Lehman had been in talks to be sold to either Bank of America or
Barclays
but neither bank wanted to acquire the entire company.
[
129
]
September 16, 2008: The
Federal Reserve
took over
American International Group
with $85 billion in debt and equity funding. The
Reserve Primary Fund
"
broke the buck
" as a result of its exposure to
Lehman Brothers
securities.
[
130
]
September 17, 2008: Investors withdrew $144 billion from U.S.
money market funds
, the equivalent of a
bank run
on
money market funds
, which frequently invest in
commercial paper
issued by corporations to fund their operations and payrolls, causing the short-term lending market to freeze. The withdrawal compared to $7.1 billion in withdrawals the week prior. This interrupted the ability of corporations to rollover their
short-term debt
. The U.S. government extended insurance for money market accounts analogous to bank
deposit insurance
via a temporary guarantee
[
131
]
and with Federal Reserve programs to purchase commercial paper.
September 18, 2008: In a dramatic meeting,
United States Secretary of the Treasury
Henry Paulson
and
Chair of the Federal Reserve
Ben Bernanke
met with
Speaker of the United States House of Representatives
Nancy Pelosi
and warned that the credit markets were close to a complete meltdown. Bernanke requested a $700 billion fund to acquire toxic mortgages and reportedly told them: "If we don't do this, we may not have an economy on Monday".
[
132
]
September 19, 2008: The Federal Reserve created the
Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility
to temporarily insure money market funds and allow the credit markets to continue operating.
[
133
]
September 20, 2008: Paulson requested the U.S. Congress authorize a $700 billion fund to acquire toxic mortgages, telling Congress "If it doesn't pass, then heaven help us all".
[
134
]
September 21, 2008:
Goldman Sachs
and
Morgan Stanley
converted from
investment banks
to
bank holding companies
to increase their protection by the Federal Reserve.
[
135
]
[
136
]
[
137
]
[
138
]
September 22, 2008:
MUFG Bank
acquired 20% of
Morgan Stanley
.
[
139
]
September 23, 2008:
Berkshire Hathaway
made a $5 billion investment in
Goldman Sachs
.
[
140
]
September 26, 2008:
Washington Mutual
went bankrupt and was seized by the
Federal Deposit Insurance Corporation
after a
bank run
in which panicked depositors withdrew $16.7 billion in 10 days.
[
141
]
September 29, 2008: By a vote of 225â208, with most Democrats in support and Republicans against, the House of Representatives rejected the
Emergency Economic Stabilization Act of 2008
, which included the $700 billion
Troubled Asset Relief Program
. In response, the DJIA dropped 777.68 points, or 6.98%, then the largest point drop in history. The S&P 500 Index fell 8.8% and the Nasdaq Composite fell 9.1%.
[
142
]
Several stock market indices worldwide fell 10%. Gold prices soared to $900/ounce. The Federal Reserve doubled its credit swaps with foreign central banks as they all needed to provide liquidity.
Wachovia
reached a deal to sell itself to Citigroup; however, the deal would have made shares worthless and required government funding.
[
143
]
September 30, 2008: President
George W. Bush
addressed the country, saying "Congress must act. ... Our economy is depending on decisive action from the government. The sooner we address the problem, the sooner we can get back on the path of growth and job creation". The DJIA rebounded 4.7%.
[
144
]
October 1, 2008: The U.S. Senate passed the
Emergency Economic Stabilization Act of 2008
.
[
145
]
October 2, 2008: Stock market indices fell 4% as investors were nervous ahead of a vote in the U.S. House of Representatives on the
Emergency Economic Stabilization Act of 2008
.
[
146
]
October 3, 2008: The House of Representatives passed the
Emergency Economic Stabilization Act of 2008
and the $700 billion Troubled Asset Relief Program.
[
147
]
Bush signed the legislation that same day.
[
148
]
Wachovia reached a deal to be acquired by
Wells Fargo
in a deal that did not require government funding.
[
149
]
October 6â10, 2008: From October 6â10, 2008, the Dow Jones Industrial Average (DJIA) closed lower in all five sessions. Volume levels were record-breaking. The DJIA fell 1,874.19 points, or 18.2%, in its worst weekly decline ever on both a points and percentage basis. The S&P 500 fell more than 20%.
[
150
]
October 7, 2008: In the U.S., per the Emergency Economic Stabilization Act of 2008, the
Federal Deposit Insurance Corporation
increased deposit insurance coverage to $250,000 per depositor.
[
151
]
During the 2008 global financial crisis, the
BSE SENSEX
experienced a sharp decline. It dropped from over 21,000 points in January 2008 to below 8,000 points in October 2008.
[
152
]
October 8, 2008: The
Indonesian stock market
halted trading after a 10% drop in one day.
[
153
]
Global central banks held emergency meetings and coordinated interest rate cuts before the US stock markets opened.
[
154
]
October 11, 2008: The head of the
International Monetary Fund
(IMF) warned that the world financial system was teetering on the "brink of systemic meltdown".
[
155
]
October 14, 2008: Having been suspended for three successive trading days (October 9, 10 and 13), the Icelandic stock market reopened on October 14, with the main index, the
OMX Iceland 15
, closing at 678.4, which was about 77% lower than the 3,004.6 at the close on October 8, after the value of the three big banks, which had formed 73.2% of the value of the OMX Iceland 15, had been set to zero, leading to the
2008â2011 Icelandic financial crisis
.
[
156
]
The
Federal Deposit Insurance Corporation
created the
Temporary Liquidity Guarantee Program
to guarantee the senior debt of all FDIC-insured institutions through June 30, 2009.
[
157
]
October 16, 2008: A rescue plan was unveiled for Swiss banks
UBS AG
and
Credit Suisse
.
[
158
]
October 24, 2008: Many of the world's stock exchanges experienced the worst declines in their history, with drops of around 10% in most indices.
[
159
]
In the U.S., the DJIA fell 3.6%, although not as much as other markets.
[
160
]
The
United States dollar
, the
Japanese yen
and the
Swiss franc
soared against other major currencies, particularly the
British pound
and
Canadian dollar
, as world investors sought safe havens. A
currency crisis
developed, with investors transferring vast capital resources into stronger currencies, leading many governments of emerging economies to seek aid from the
International Monetary Fund
.
[
161
]
[
162
]
Later that day, the deputy governor of the
Bank of England
,
Charlie Bean
, suggested that "This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history".
[
163
]
In a transaction pushed by regulators,
PNC Financial Services
agreed to acquire
National City Corp.
[
164
]
2008 (NovemberâDecember)
[
edit
]
Restaurant in
Bristol
, United Kingdom, advertising cheap "Credit Crunch Lunch"
November 6, 2008: The IMF predicted a worldwide recession of â0.3% for 2009. On the same day, the
Bank of England
and the
European Central Bank
, respectively, reduced their interest rates from 4.5% to 3%, and from 3.75% to 3.25%.
[
165
]
November 10, 2008:
American Express
converted to a
bank holding company
.
[
166
]
November 20, 2008: Iceland obtained an emergency loan from the
International Monetary Fund
after the failure of banks in Iceland resulted in a devaluation of the
Icelandic krĂłna
and threatened the government with bankruptcy.
[
167
]
November 25, 2008: The
Term Asset-Backed Securities Loan Facility
was announced.
[
168
]
November 29, 2008: Economist
Dean Baker
observed:
There is a really good reason for tighter credit. Tens of millions of homeowners who had substantial equity in their homes two years ago have little or nothing today. Businesses are facing the worst downturn since the
Great Depression
. This matters for credit decisions. A homeowner with equity in her home is very unlikely to default on a car loan or credit card debt. They will draw on this equity rather than lose their car and/or have a default placed on their credit record. On the other hand, a homeowner who has no equity is a serious default risk. In the case of businesses, their creditworthiness depends on their future profits. Profit prospects look much worse in November 2008 than they did in November 2007Â ... While many banks are obviously at the brink, consumers and businesses would be facing a much harder time getting credit right now even if the financial system were rock solid. The problem with the economy is the loss of close to $6 trillion in housing wealth and an even larger amount of stock wealth.
[
169
]
December 1, 2008: The NBER announced the US was in a recession and had been since December 2007. The Dow tumbled 679.95 points or 7.8% on the news.
[
170
]
[
92
]
December 6, 2008: The
2008 Greek riots
began, sparked in part by economic conditions in the country.
[
citation needed
]
December 16, 2008: The federal funds rate was lowered to 0%.
[
171
]
December 20, 2008: Financing under the
Troubled Asset Relief Program
was made available to
General Motors
and
Chrysler
.
[
172
]
The
American Recovery and Reinvestment Act of 2009
provided a
payroll tax
credit repealed in late 2010.
January 6, 2009: Citi claimed that Singapore would experience "the most severe recession in [its] history" in 2009. In the end, the economy grew in 2009 by 0.1% and in 2010 by 14.5%.
[
173
]
[
174
]
[
175
]
January 20â26, 2009: The
2009 Icelandic financial crisis protests
intensified and the Icelandic government collapsed.
[
176
]
February 13, 2009: Congress approved the
American Recovery and Reinvestment Act of 2009
, a $787 billion economic stimulus package. President Barack Obama signed it February 17.
[
177
]
[
178
]
[
179
]
[
180
]
February 20, 2009: The DJIA closed at a six-year low, amidst worries that the largest banks in the United States would have to be
nationalized
.
[
181
]
February 27, 2009: The
DJIA
closed at its lowest value since 1997 as the U.S. government increased its stake in
Citigroup
to 36%, raising further fears of nationalization and a report showed that GDP shrank at the sharpest pace in 26 years.
[
182
]
Early March 2009: The drop in stock prices was compared to that of the
Great Depression
.
[
183
]
[
184
]
March 3, 2009: President Obama stated that "Buying stocks is a potentially good deal if you've got a long-term perspective on it".
[
185
]
March 6, 2009: The Dow Jones hit its lowest level of 6,469.95, a drop of 54% from its peak of 14,164 on October 9, 2007, over a span of 17 months, before beginning to recover.
[
186
]
March 10, 2009: Shares of
Citigroup
rose 38% after the CEO said that the company was profitable in the first two months of the year and expressed optimism about its capital position going forward. Major stock market indices rose 5â7%, marking the bottom of the stock market decline.
[
187
]
March 12, 2009: Stock market indices in the U.S. rose another 4% after
Bank of America
said it was profitable in January and February and would likely not need more government funding.
Bernie Madoff
was convicted.
[
188
]
First quarter of 2009: For the first quarter of 2009, the annualized rate of decline in GDP was 14.4% in Germany, 15.2% in Japan, 7.4% in the UK, 18% in Latvia,
[
189
]
9.8% in the Euro area and 21.5% for Mexico.
[
29
]
April 2, 2009: Unrest over
economic policy
and bonuses paid to bankers resulted in the
2009 G20 London summit protests
.
April 10, 2009:
Time
magazine declared "More Quickly Than It Began, The Banking Crisis Is Over".
[
190
]
April 29, 2009: The Federal Reserve projected GDP growth of 2.5â3% in 2010; an unemployment plateau in 2009 and 2010 around 10% with moderation in 2011; and inflation rates around 1â2%.
[
191
]
May 1, 2009: People protested economic conditions globally during the
2009 May Day protests
.
May 20, 2009: President Obama signed the
Fraud Enforcement and Recovery Act of 2009
.
June 2009: The
National Bureau of Economic Research
(NBER) declared June 2009 as the end date of the U.S. recession.
[
192
]
The
Federal Open Market Committee
release in June 2009 stated:
... the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable
economic growth
in a context of price stability.
[
193
]
June 17, 2009:
Barack Obama
and key advisers introduced a series of regulatory proposals that addressed
consumer protection
,
executive pay
, bank capital requirements, expanded regulation of the
shadow banking system
and
derivatives
, and enhanced authority for the Federal Reserve to safely wind down systemically important institutions.
[
194
]
[
195
]
[
196
]
December 11, 2009:
United States House of Representatives
passed bill H.R. 4173, a precursor to what became the
DoddâFrank Wall Street Reform and Consumer Protection Act
.
[
197
]
January 22, 2010: President Obama introduced "The
Volcker Rule
" limiting the ability of banks to engage in
proprietary trading
, named after
Paul Volcker
, who publicly argued for the proposed changes.
[
198
]
[
199
]
Obama also proposed a
Financial Crisis Responsibility Fee
on large banks.
January 27, 2010: President Obama declared on "the markets are now stabilized, and we've recovered most of the money we spent on the banks".
[
200
]
First quarter 2010: Delinquency rates in the United States peaked at 11.54%.
[
201
]
April 15, 2010: U.S. Senate introduced bill S.3217,
Restoring American Financial Stability Act of 2010
.
[
202
]
May 2010: The U.S. Senate passed the
Dodd-Frank Wall Street Reform and Consumer Protection Act
. The Volcker Rule against proprietary trading was not part of the legislation.
[
203
]
July 21, 2010:
DoddâFrank Wall Street Reform and Consumer Protection Act
enacted.
[
204
]
[
205
]
September 12, 2010: European regulators introduced
Basel III
regulations for banks, which increased capital ratios, limits on leverage, narrowed the definition of capital to exclude subordinated debt, limited counter-party risk, and added liquidity requirements.
[
206
]
[
207
]
Critics argued that Basel III didn't address the problem of faulty risk-weightings. Major banks suffered losses from AAA-rated created by
financial engineering
(which creates apparently risk-free assets out of high risk collateral) that required less capital according to Basel II. Lending to AA-rated sovereigns has a risk-weight of zero, thus increasing lending to governments and leading to the next crisis.
[
208
]
Johan Norberg
argued that regulations (Basel III among others) have indeed led to excessive lending to risky governments (see
Euro area crisis
) and the
European Central Bank
pursues even more lending as the solution.
[
209
]
November 3, 2010: To improve economic growth, the Federal Reserve announced another round of
quantitative easing
, dubbed QE2, which included the purchase of $600 billion in long-term
Treasuries
over the following eight months.
[
210
]
March 2011: Two years after the
nadir
of the crisis, many stock market indices were 75% above their lows set in March 2009. Nevertheless, the lack of fundamental changes in banking and financial markets worried many market participants, including the
International Monetary Fund
.
[
211
]
2011: Median household wealth fell 35% in the U.S., from $106,591 to $68,839 between 2005 and 2011.
[
212
]
May 2012: The
Manhattan District Attorney
indicted
Abacus Federal Savings Bank
and 19 employees for selling fraudulent mortgages to
Fannie Mae
. The bank was acquitted in 2015. Abacus was the only bank prosecuted for misbehavior that precipitated the crisis.
July 26, 2012: During the
European debt crisis
,
President of the European Central Bank
Mario Draghi
announced that "The ECB is ready to do whatever it takes to preserve the euro".
[
213
]
August 2012: In the United States, many homeowners still faced foreclosure and could not refinance or modify their mortgages. Foreclosure rates remained high.
[
214
]
September 13, 2012: To improve lower interest rates, support mortgage markets, and make financial conditions more accommodative, the Federal Reserve announced another round of
quantitative easing
, dubbed QE3, which included the purchase of $40 billion in long-term
Treasuries
each month.
[
215
]
2014: A report showed that the distribution of household incomes in the United States became more unequal during the post-2008
economic recovery
, a first for the United States but in line with the trend over the last ten economic recoveries since 1949.
[
216
]
[
217
]
Income inequality in the United States
grew from 2005 to 2012 in more than 2 out of 3 metropolitan areas.
[
218
]
June 2015: A study commissioned by the
ACLU
found that white home-owning households recovered from the financial crisis faster than black home-owning households, widening the
racial wealth gap
in the U.S.
[
219
]
2017: Per the
International Monetary Fund
, from 2007 to 2017, "advanced" economies accounted for only 26.5% of global
GDP
(
PPP
) growth while emerging and developing economies accounted for 73.5% of global GDP (PPP) growth.
[
220
]
August 2023:
UBS
reaches an agreement with the
United States Department of Justice
to pay a combined $1.435 billion in civil penalties to settle a legacy matter from 2006â2007 related to the issuance, underwriting and sale of residential mortgage-backed securities.
[
221
]
In 2023, the failure of
Silicon Valley Bank
kicked off a banking crisis in the United States, triggering a sharp decline in global bank stock prices and swift response by regulators to prevent potential global contagion. Many investors feared it would evolve into a global financial crisis. Fears of âtoo big to failâ US banks were reminiscent of the 2008 crisis.
In the table, the names of emerging and developing economies are shown in boldface type, while the names of developed economies are in Roman (regular) type.
The top twenty growing economies (by increase in GDP (PPP) from 2007 to 2017)
Economy
Incremental GDP (billions in USD)
(01)
Â
China
14,147
(02)
Â
India
5,348
(03)
Â
United States
4,913
(â)
Â
European Union
4,457
(04)
Â
Indonesia
1,632
(05)
Â
Turkey
1,024
(06)
Â
Japan
1,003
(07)
Â
Germany
984
(08)
Â
Russia
934
(09)
Â
Brazil
919
(10)
Â
South Korea
744
(11)
Â
Mexico
733
(12)
Â
Saudi Arabia
700
(13)
Â
United Kingdom
671
(14)
Â
France
566
(15)
Â
Nigeria
523
(16)
Â
Egypt
505
(17)
Â
Canada
482
(18)
Â
Iran
462
(19)
Â
Thailand
447
(20)
Â
Philippines
440
The twenty largest economies contributing to global GDP (PPP) growth (2007â2017)
[
222
]
Federal actions towards the crisis
[
edit
]
Housing Finance Reform Bill
The expansion of central bank lending in response to the crisis was not confined to the
Federal Reserve
's provision of aid to individual financial institutions. The Federal Reserve has also conducted several innovative lending programs to improve liquidity and strengthen different financial institutions and markets, such as
Freddie Mac
and
Fannie Mae
. In this case, the major problem in the market is the lack of free cash reserves and flows to secure the loans. The Federal Reserve took many steps to deal with financial market liquidity worries. One of these steps was a credit line for major traders, who act as the Fed's partners in open market activities.
[
223
]
Also, loan programs were set up to make the money market mutual funds and commercial paper market more flexible. Also, the
Term Asset-Backed Securities Loan Facility
(TALF) was put in place thanks to a joint effort with the US Department of the Treasury. This plan made it easier for consumers and businesses to get credit by giving Americans who owned high-quality asset-backed securities more credit.
Before the crisis, the Federal Reserve's stocks of Treasury securities were sold to pay for the increase in credit. This method was meant to keep banks from trying to give out their extra savings, which could cause the federal funds rate to drop below where it was supposed to be.
[
224
]
However, in October 2008, the Federal Reserve was granted the power to provide banks with interest payments on their surplus reserves. This created a motivation for banks to retain their reserves instead of disbursing them, thus reducing the need for the Federal Reserve to hedge its increased lending by decreases in alternative assets.
[
225
]
Money market funds also went through runs when people lost faith in the market. To keep it from getting worse, the Fed said it would give money to mutual fund companies. Also, the
Department of Treasury
said that it would briefly cover the assets of the fund. Both of these things helped get the fund market back to normal, which helped the commercial paper market, which most businesses use to run. The
FDIC
also did several things, such as raising the insurance cap from $100,000 to $250,000, to boost customer trust.
Headquarters of the United States Federal Reserve System
They engaged in
quantitative easing
, which added more than $4 trillion to the financial system and got banks to start lending again, both to each other and to people. Many homeowners who were trying to keep their homes from going into default got housing credits. A package of policies was passed that let borrowers refinance their loans even though the value of their homes was less than what they still owed on their
mortgages
.
[
226
]
The
Federal Reserve
raised the
Federal funds rate
causing an
Inverted yield curve
to slow inflation and get prices and
commodity
prices down, that usually puts the economy into a
recession
.
Â
 10 Year Treasury Bond
Â
 2 Year Treasury Bond
Â
 3 month Treasury Bond
Â
 Effective Federal Funds Rate
Â
Recessions
While the causes of the bubble and subsequent crash are disputed, the precipitating factor for the Financial Crisis of 2007â2008 was the bursting of the
United States housing bubble
and the subsequent
subprime mortgage crisis
, which occurred due to a high default rate and resulting foreclosures of
mortgage loans
, particularly
adjustable-rate mortgages
. Some or all of the following factors contributed to the crisis:
[
227
]
[
79
]
[
80
]
In its January 2011 report, the
Financial Crisis Inquiry Commission
(FCIC, a committee of U.S. congressmen) concluded that the financial crisis was avoidable and was caused by:
[
228
]
[
229
]
[
230
]
[
231
]
[
232
]
"widespread failures in
financial regulation
and supervision", including the Federal Reserve's failure to stem the tide of
toxic assets
.
"dramatic failures of
corporate governance
and
risk management
at many systemically important
financial institutions
" including too many financial firms acting recklessly and taking on too much risk.
"a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions and by households that put the financial system on a collision course with crisis.
ill preparation and inconsistent action by government and key policy makers lacking a full understanding of the financial system they oversaw that "added to the uncertainty and panic".
a "systemic breakdown in accountability and ethics" at all levels.
"collapsing mortgage-lending standards and the mortgage securitization pipeline".
deregulation of '
over-the-counter
'
derivatives
, especially
credit default swaps
.
"the failures of credit rating agencies" to correctly price risk.
"
Wall Street and the Financial Crisis: Anatomy of a Financial Collapse
" (known as the LevinâCoburn Report) by the
United States Senate
concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street".
[
233
]
The high delinquency and default rates by homeowners, particularly those with subprime credit, led to a rapid devaluation of mortgage-backed securities including bundled loan portfolios, derivatives and credit default swaps. As the value of these assets plummeted, buyers for these securities evaporated and banks who were heavily invested in these assets began to experience a liquidity crisis.
Securitization
, a process in which many mortgages were bundled together and formed into new financial instruments called
mortgage-backed securities
, allowed for shifting of risk and lax underwriting standards. These bundles could be sold as (ostensibly) low-risk securities partly because they were often backed by
credit default swap
insurance.
[
234
]
Because mortgage lenders could pass these mortgages (and the associated risks) on in this way, they could and did adopt loose underwriting criteria.
Lax regulation allowed
predatory lending
in the private sector,
[
235
]
[
236
]
especially after the federal government overrode anti-predatory state laws in 2004.
[
237
]
The
Community Reinvestment Act
(CRA),
[
238
]
a 1977 U.S. federal law designed to help low- and moderate-income Americans get mortgage loans required banks to grant mortgages to higher risk families.
[
239
]
[
240
]
[
241
]
[
242
]
Granted, in 2009, Federal Reserve economists found that "only a small portion of subprime mortgage originations [related] to the CRA", and that "CRA-related loans appear[ed] to perform comparably to other types of subprime loans". These findings "run counter to the contention that the CRA contributed in any substantive way to the [mortgage crisis]."
[
243
]
Reckless lending by lenders such as Bank of America's
Countrywide Financial
unit was increasingly incentivized and even mandated by government regulation.
[
244
]
[
245
]
[
246
]
This may have caused
Fannie Mae
and
Freddie Mac
to lose market share and to respond by lowering their own standards.
[
247
]
Mortgage guarantees by Fannie Mae and Freddie Mac, quasi-government agencies, which purchased many subprime loan securitizations.
[
248
]
The implicit guarantee by the U.S. federal government created a
moral hazard
and contributed to a glut of risky lending.
Government policies that encouraged home ownership, providing easier access to loans for subprime borrowers; overvaluation of bundled subprime mortgages based on the theory that housing prices would continue to escalate; questionable trading practices on behalf of both buyers and sellers; compensation structures by banks and mortgage originators that prioritize short-term deal flow over long-term value creation; and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making.
[
249
]
[
250
]
The 1999
Gramm-Leach-Bliley Act
, which partially repealed the
Glass-Steagall Act
, effectively removed the separation between
investment banks
and depository banks in the United States and increased speculation on the part of depository banks.
[
251
]
Credit rating agencies
and investors failed to accurately price the
financial risk
involved with
mortgage loan
-related financial products, and governments did not adjust their regulatory practices to address changes in financial markets.
[
252
]
[
253
]
[
254
]
Variations in the cost of borrowing.
[
255
]
Fair value accounting
was issued as U.S. accounting standard
SFAS 157
in 2006 by the privately run
Financial Accounting Standards Board
(FASB)âto which the SEC had delegated the task of establishing financial reporting standards.
[
256
]
This required that tradable assets such as
mortgage securities
be valued according to their current market value rather than their historic cost or some future expected value. When the market for such securities became volatile and collapsed, the resulting loss of value had a major financial effect upon the institutions holding them even if they had no immediate plans to sell them.
[
257
]
Easy availability of credit in the US, fueled by large inflows of foreign funds after the
1998 Russian financial crisis
and
1997 Asian financial crisis
of the 1997â1998 period, led to a housing construction boom and facilitated debt-financed consumer spending. As banks began to give out more loans to potential home owners, housing prices began to rise. Lax lending standards and rising real estate prices also contributed to the real estate bubble. Loans of various types (e.g., mortgage, credit card, and auto) were easy to obtain and consumers assumed an unprecedented debt load.
[
258
]
[
227
]
[
259
]
As part of the housing and credit booms, the number of
mortgage-backed securities
(MBS) and
collateralized debt obligations
(CDO), which derived their value from mortgage payments and housing prices, greatly increased. Such
financial innovation
enabled institutions and investors to invest in the U.S. housing market. As housing prices declined, these investors reported significant losses.
[
260
]
Falling prices also resulted in homes worth less than the mortgage loans, providing borrowers with a financial incentive to enter foreclosure. Foreclosure levels were elevated until early 2014.
[
261
]
drained significant wealth from consumers, losing up to $4.2
trillion
[
262
]
Defaults and losses on other loan types also increased significantly as the crisis expanded from the housing market to other parts of the economy. Total losses were estimated in the trillions of U.S. dollars globally.
[
260
]
Financialization
â the increased use of leverage in the financial system.
Financial institutions such as investment banks and hedge funds, as well as certain, differently regulated banks, assumed significant debt burdens while providing the loans described above and did not have a financial cushion sufficient to absorb large loan defaults or losses.
[
263
]
These losses affected the ability of financial institutions to lend, slowing economic activity.
Some critics contend that government mandates forced banks to extend loans to borrowers previously considered uncreditworthy, leading to increasingly lax underwriting standards and high mortgage approval rates.
[
264
]
[
244
]
[
265
]
[
245
]
These, in turn, led to an increase in the number of homebuyers, which drove up housing prices. This appreciation in value led many homeowners to borrow against the equity in their homes as an apparent windfall, leading to over-leveraging.
US subprime lending expanded dramatically 2004â2006
The relaxing of credit lending standards by investment banks and commercial banks allowed for a significant increase in
subprime lending
. Subprime had not become less risky; Wall Street just accepted this higher risk.
[
266
]
Due to competition between mortgage lenders for revenue and market share, and when the supply of creditworthy borrowers was limited, mortgage lenders relaxed underwriting standards and originated riskier mortgages to less creditworthy borrowers. In the view of some analysts, the relatively conservative
government-sponsored enterprises
(GSEs) policed mortgage originators and maintained relatively high underwriting standards prior to 2003. However, as market power shifted from securitizers to originators, and as intense competition from private securitizers undermined GSE power, mortgage standards declined and risky loans proliferated. The riskiest loans were originated in 2004â2007, the years of the most intense competition between securitizers and the lowest market share for the GSEs. The GSEs eventually relaxed their standards to try to catch up with the private banks.
[
267
]
[
268
]
A contrarian view is that
Fannie Mae
and
Freddie Mac
led the way to relaxed underwriting standards, starting in 1995, by advocating the use of easy-to-qualify automated underwriting and appraisal systems, by designing no-down-payment products issued by lenders, by the promotion of thousands of small mortgage brokers, and by their close relationship to subprime loan aggregators such as
Countrywide
.
[
269
]
[
270
]
Depending on how "subprime" mortgages are defined, they remained below 10% of all mortgage originations until 2004, when they rose to nearly 20% and remained there through the 2005â2006 peak of the
United States housing bubble
.
[
271
]
Role of affordable housing programs
[
edit
]
The majority report of the
Financial Crisis Inquiry Commission
, written by the six Democratic appointees, the minority report, written by three of the four Republican appointees, studies by
Federal Reserve
economists, and the work of several independent scholars generally contend that government
affordable housing
policy was not the primary cause of the financial crisis. Although they concede that governmental policies had some role in causing the crisis, they contend that GSE loans performed better than loans securitized by private investment banks, and performed better than some loans originated by institutions that held loans in their own portfolios.
In his dissent to the majority report of the Financial Crisis Inquiry Commission, conservative
American Enterprise Institute
fellow
Peter J. Wallison
[
272
]
stated his belief that the roots of the financial crisis can be traced directly and primarily to affordable housing policies initiated by the
United States Department of Housing and Urban Development
(HUD) in the 1990s and to massive risky loan purchases by government-sponsored entities Fannie Mae and Freddie Mac. Based upon information in the SEC's December 2011 securities fraud case against six former executives of Fannie and Freddie, Peter Wallison and Edward Pinto estimated that, in 2008, Fannie and Freddie held 13 million substandard loans totaling over $2 trillion.
[
273
]
In the early and mid-2000s, the
Bush administration
called numerous times for investigations into the safety and soundness of the GSEs and their swelling portfolio of subprime mortgages
[
citation needed
]
. On September 10, 2003, the
United States House Committee on Financial Services
held a hearing, at the urging of the administration, to assess safety and soundness issues and to review a recent report by the
Office of Federal Housing Enterprise Oversight
(OFHEO) that had uncovered accounting discrepancies within the two entities.
[
274
]
[
275
]
The hearings never resulted in new legislation or formal investigation of Fannie Mae and Freddie Mac, as many of the committee members refused to accept the report and instead rebuked OFHEO for their attempt at regulation.
[
276
]
Some, such as Wallison, believe this was an early warning to the systemic risk that the growing market in subprime mortgages posed to the U.S. financial system that went unheeded.
[
277
]
A 2000
United States Department of the Treasury
study of lending trends for 305 cities from 1993 to 1998 showed that $467 billion of mortgage lending was made by
Community Reinvestment Act
(CRA)-covered lenders into low and mid-level income (LMI) borrowers and neighborhoods, representing 10% of all U.S. mortgage lending during the period. The majority of these were prime loans. Sub-prime loans made by CRA-covered institutions constituted a 3% market share of LMI loans in 1998,
[
278
]
but in the run-up to the crisis, fully 25% of all subprime lending occurred at CRA-covered institutions and another 25% of subprime loans had some connection with CRA.
[
279
]
However, most sub-prime loans were not made to the LMI borrowers targeted by the CRA,
[
280
]
[
281
]
especially in the years 2005â2006 leading up to the crisis,
[
282
]
[
281
]
[
283
]
nor did it find any evidence that lending under the CRA rules increased delinquency rates or that the CRA indirectly influenced independent mortgage lenders to ramp up sub-prime lending.
[
284
]
[
verification needed
]
To other analysts the delay between CRA rule changes in 1995 and the explosion of subprime lending is not surprising, and does not exonerate the CRA. They contend that there were two, connected causes to the crisis: the relaxation of underwriting standards in 1995 and the ultra-low interest rates initiated by the Federal Reserve after the terrorist attack on September 11, 2001. Both causes had to be in place before the crisis could take place.
[
285
]
Critics also point out that publicly announced CRA loan commitments were massive, totaling $4.5 trillion in the years between 1994 and 2007.
[
286
]
They also argue that the Federal Reserve's classification of CRA loans as "prime" is based on the faulty and self-serving assumption that high-interest-rate loans (3 percentage points over average) equal "subprime" loans.
[
287
]
Others have pointed out that there were not enough of these loans made to cause a crisis of this magnitude. In an article in
Portfolio
magazine,
Michael Lewis
spoke with one trader who noted that "There weren't enough Americans with [bad] credit taking out [bad loans] to satisfy investors' appetite for the end product." Essentially, investment banks and hedge funds used financial innovation to enable large wagers to be made, far beyond the actual value of the underlying mortgage loans, using
derivatives
called credit default swaps, collateralized debt obligations and
synthetic CDOs
.
By March 2011, the FDIC had paid out $9 billion (c. $12.3 billion in 2024
[
288
]
) to cover losses on bad loans at 165 failed financial institutions.
[
289
]
[
290
]
The Congressional Budget Office estimated, in June 2011, that the bailout to Fannie Mae and Freddie Mac exceeds $300 billion (c. $411 billion in 2024
[
288
]
) (calculated by adding the fair value deficits of the entities to the direct bailout funds at the time).
[
291
]
Economist
Paul Krugman
argued in January 2010 that the simultaneous growth of the residential and commercial real estate pricing bubbles and the global nature of the crisis undermines the case made by those who argue that Fannie Mae, Freddie Mac, CRA, or predatory lending were primary causes of the crisis. In other words, bubbles in both markets developed even though only the residential market was affected by these potential causes.
[
292
]
Countering Krugman, Wallison wrote: "It is not true that every bubbleâeven a large bubbleâhas the potential to cause a financial crisis when it deflates." Wallison notes that other developed countries had "large bubbles during the 1997â2007 period" but "the losses associated with mortgage delinquencies and defaults when these bubbles deflated were far lower than the losses suffered in the United States when the 1997â2007 [bubble] deflated." According to Wallison, the reason the U.S.
residential housing
bubble (as opposed to other types of bubbles) led to financial crisis was that it was supported by a huge number of substandard loansâgenerally with low or no downpayments.
[
293
]
Krugman's contention (that the growth of a commercial real estate bubble indicates that U.S. housing policy was not the cause of the crisis) is challenged by additional analysis. After researching the default of commercial loans during the financial crisis, Xudong An and Anthony B. Sanders reported (in December 2010): "We find limited evidence that substantial deterioration in
CMBS
[commercial mortgage-backed securities] loan underwriting occurred prior to the crisis."
[
294
]
Other analysts support the contention that the crisis in commercial real estate and related lending took place
after
the crisis in residential real estate. Business journalist Kimberly Amadeo reported: "The first signs of decline in residential real estate occurred in 2006. Three years later, commercial real estate started feeling the effects."
[
verification needed
]
[
295
]
Denice A. Gierach, a real estate attorney and CPA, wrote:
... most of the commercial real estate loans were good loans destroyed by a really bad economy. In other words, the borrowers did not cause the loans to go bad-it was the economy.
[
296
]
Growth of the housing bubble
[
edit
]
A graph showing the median and average sales prices of new homes sold in the United States between 1963 and 2016 (not adjusted for inflation)
[
79
]
Between 1998 and 2006, the price of the typical American house increased by 124%.
[
297
]
During the 1980s and 1990s, the national median home price ranged from 2.9 to 3.1 times median household income. By contrast, this ratio increased to 4.0 in 2004, and 4.6 in 2006.
[
298
]
This
housing bubble
resulted in many homeowners refinancing their homes at lower interest rates, or financing consumer spending by taking out
second mortgages
secured by the price appreciation.
In a
Peabody Award
-winning program,
NPR
correspondents argued that a "Giant Pool of Money" (represented by $70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. This pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with products such as the
mortgage-backed security
and the
collateralized debt obligation
that were assigned safe
ratings
by the
credit rating agencies
.
[
299
]
In effect, Wall Street connected this pool of money to the mortgage market in the US, with enormous fees accruing to those throughout the mortgage
supply chain
, from the mortgage broker selling the loans to small banks that funded the brokers and the large investment banks behind them. By approximately 2003, the supply of mortgages originated at traditional lending standards had been exhausted, and continued strong demand began to drive down lending standards.
[
299
]
The collateralized debt obligation in particular enabled financial institutions to obtain investor funds to finance subprime and other lending, extending or increasing the housing bubble and generating large fees. This essentially places cash payments from multiple mortgages or other debt obligations into a single pool from which specific securities draw in a specific sequence of priority. Those securities first in line received investment-grade ratings from rating agencies. Securities with lower priority had lower credit ratings but theoretically a higher rate of return on the amount invested.
[
300
]
By September 2008, average U.S. housing prices had declined by over 20% from their mid-2006 peak.
[
301
]
[
302
]
As prices declined, borrowers with
adjustable-rate mortgages
could not refinance to avoid the higher payments associated with rising interest rates and began to default. During 2007, lenders began foreclosure proceedings on nearly 1.3 million properties, a 79% increase over 2006.
[
303
]
This increased to 2.3 million in 2008, an 81% increase vs. 2007.
[
304
]
By August 2008, approximately 9% of all U.S. mortgages outstanding were either delinquent or in foreclosure.
[
305
]
By September 2009, this had risen to 14.4%.
[
306
]
[
307
]
After the bubble burst, Australian economist
John Quiggin
wrote: "And, unlike the Great Depression, this crisis was entirely the product of financial markets. There was nothing like the postwar turmoil of the 1920s, the struggles over gold convertibility and reparations, or the
Smoot-Hawley tariff
, all of which have shared the blame for the Great Depression." Instead, Quiggin lays the blame for the 2008 near-meltdown on financial markets, on political decisions to lightly regulate them, and on rating agencies which had self-interested incentives to give good ratings.
[
308
]
Easy credit conditions
[
edit
]
Lower interest rates encouraged borrowing. From 2000 to 2003, the
Federal Reserve
lowered the
federal funds rate
target from 6.5% to 1.0%.
[
309
]
[
310
]
This was done to soften the effects of the collapse of the
dot-com bubble
and the
September 11 attacks
, as well as to combat a perceived risk of
deflation
.
[
311
]
As early as 2002, it was apparent that credit was fueling housing instead of business investment as some economists went so far as to advocate that the Fed "needs to create a housing bubble to replace the Nasdaq bubble".
[
312
]
Moreover, empirical studies using data from advanced countries show that excessive credit growth contributed greatly to the severity of the crisis.
[
313
]
US current account deficit
Additional downward pressure on interest rates was created by a growing U.S.
current account
deficit, which peaked along with the housing bubble in 2006. Federal Reserve chairman
Ben Bernanke
explained how trade deficits required the U.S. to borrow money from abroad, in the process bidding up bond prices and lowering interest rates.
[
314
]
Bernanke explained that between 1996 and 2004, the U.S. current account deficit increased by $650 billion, from 1.5% to 5.8% of GDP. Financing these deficits required the country to borrow large sums from abroad, much of it from countries running trade surpluses. These were mainly the emerging economies in Asia and oil-exporting nations. The
balance of payments
identity
requires that a country (such as the US) running a
current account
deficit also have a
capital account
(investment) surplus of the same amount. Hence large and growing amounts of foreign funds (capital) flowed into the U.S. to finance its imports.
All of this created demand for various types of financial assets, raising the prices of those assets while lowering interest rates. Foreign investors had these funds to lend either because they had very high personal savings rates (as high as 40% in China) or because of high oil prices.
Ben Bernanke
referred to this as a "
saving glut
".
[
315
]
A flood of funds (
capital
or
liquidity
) reached the U.S. financial markets. Foreign governments supplied funds by purchasing
Treasury bonds
and thus avoided much of the direct effect of the crisis. U.S. households used funds borrowed from foreigners to finance consumption or to bid up the prices of housing and financial assets. Financial institutions invested foreign funds in
mortgage-backed securities
.
[
citation needed
]
The Fed then raised the Fed funds rate significantly between July 2004 and July 2006.
[
316
]
This contributed to an increase in one-year and five-year
adjustable-rate mortgage
(ARM) rates, making ARM interest rate resets more expensive for homeowners.
[
317
]
This may have also contributed to the deflation of the housing bubble, as asset prices generally move inversely to interest rates. It became riskier to speculate in housing.
[
318
]
[
319
]
U.S. housing and financial assets dramatically declined in value after the housing bubble burst.
[
320
]
[
32
]
Weak and fraudulent underwriting practices
[
edit
]
Subprime lending standards declined in the U.S.: in early 2000, a subprime borrower had a FICO score of 660 or less. By 2005, many lenders dropped the required FICO score to 620, making it much easier to qualify for prime loans and making subprime lending a riskier business. Proof of income and assets were de-emphasized. Loans at first required full documentation, then low documentation, then no documentation. One subprime mortgage product that gained wide acceptance was the no income, no job, no asset verification required (NINJA) mortgage. Informally, these loans were aptly referred to as "
liar loans
" because they encouraged borrowers to be less than honest in the loan application process.
[
321
]
Testimony given to the
Financial Crisis Inquiry Commission
by
whistleblower
Richard M. Bowen III
on events during his tenure as the Business Chief Underwriter for Correspondent Lending in the Consumer Lending Group for
Citigroup
, where he was responsible for over 220 professional underwriters, suggests that by 2006 and 2007, the collapse of
mortgage underwriting
standards was endemic. His testimony stated that by 2006, 60% of mortgages purchased by
Citigroup
from some 1,600 mortgage companies were "defective" (were not underwritten to policy, or did not contain all policy-required documents). This, despite the fact that each of these 1,600 originators was contractually responsible (certified via representations and warrantees) that its mortgage originations met
Citigroup
standards. Moreover, during 2007, "defective mortgages (from mortgage originators contractually bound to perform underwriting to
Citi's
standards) increased to over 80% of production".
[
322
]
In separate testimony to the
Financial Crisis Inquiry Commission
, officers of Clayton Holdings, the largest residential loan due diligence and securitization surveillance company in the United States and Europe, testified that Clayton's review of over 900,000 mortgages issued from January 2006 to June 2007 revealed that scarcely 54% of the loans met their originators' underwriting standards. The analysis, conducted on behalf of 23 investment and commercial banks, including 7 "
too big to fail
" banks, additionally showed that 28% of the sampled loans did not meet the minimal standards of any issuer. Clayton's analysis further showed that 39% of these loans (i.e. those not meeting
any
issuer's minimal underwriting standards) were subsequently securitized and sold to investors.
[
323
]
[
324
]
Predatory lending
refers to the practice of unscrupulous lenders enticing borrowers to enter into unfair or abusive secured loans for inappropriate purposes.
[
325
]
[
326
]
[
327
]
In June 2008,
Countrywide Financial
was sued by then
California Attorney General
Jerry Brown
for unfair business practices and false advertising, alleging that Countrywide used "deceptive tactics to push homeowners into complicated, risky, and expensive loans so that the company could sell as many loans as possible to third-party investors".
[
328
]
In May 2009, Bank of America modified 64,000 Countrywide loans as a result.
[
329
]
When housing prices decreased, homeowners in ARMs then had little incentive to pay their monthly payments, since their home equity had disappeared. This caused Countrywide's financial condition to deteriorate, ultimately resulting in a decision by the
Office of Thrift Supervision
to seize the lender. One Countrywide employee, who would later plead guilty to two counts of
wire fraud
and spent 18 months in prison, stated that, "If you had a pulse, we gave you a loan."
[
330
]
Former employees from
Ameriquest
, which was the United States' leading wholesale lender, described a system in which they were pushed to falsify mortgage documents and then sell the mortgages to Wall Street banks eager to make fast profits. There is growing evidence that such
mortgage frauds
may be a cause of the crisis.
[
331
]
Deregulation and lack of regulation
[
edit
]
According to Barry Eichengreen, the roots of the financial crisis lay in the deregulation of financial markets.
[
332
]
A 2012 OECD study
[
333
]
suggested that bank regulation based on the Basel accords encouraged unconventional business practices and contributed to or reinforced the financial crisis. In other cases, laws were changed or enforcement weakened in parts of the financial system. Key examples include:
Jimmy Carter
's
Depository Institutions Deregulation and Monetary Control Act
of 1980 (DIDMCA), which phased out several restrictions on banks' financial practices, broadened their lending powers, allowed
credit unions
and
savings and loans
to offer
checkable deposits
, and raised the
deposit insurance
limit from $40,000 to $100,000 (thereby potentially lessening depositor scrutiny of lenders' risk management policies).
[
334
]
In October 1982, U.S. President
Ronald Reagan
signed into law the
GarnâSt. Germain Depository Institutions Act
, which provided for
adjustable-rate mortgage
loans, began the process of banking deregulation, and contributed to the
savings and loan crisis
of the late 1980s/early 1990s.
[
335
]
[
336
]
In November 1999, U.S. President Bill Clinton signed into law the Republican-sponsored
GrammâLeachâBliley Act
, which repealed provisions of the Glass-Steagall Act that prohibited a
bank holding company
from owning other financial companies. The repeal effectively removed the separation that previously existed between Wall Street investment banks and depository banks, providing a government stamp of approval for a universal risk-taking banking model. Investment banks such as Lehman became competitors with commercial banks.
[
337
]
Some analysts say that this repeal directly contributed to the severity of the crisis, while others downplay its impact since the institutions that were greatly affected did not fall under the jurisdiction of the act itself.
[
338
]
[
339
]
In 2004, the
U.S. Securities and Exchange Commission
relaxed the
net capital rule
, which enabled investment banks to substantially increase the level of debt they were taking on, fueling the growth in mortgage-backed securities supporting subprime mortgages. The SEC conceded that self-regulation of investment banks contributed to the crisis.
[
340
]
[
341
]
Financial institutions in the
shadow banking system
are not subject to the same regulation as depository banks, allowing them to assume additional debt obligations relative to their financial cushion or capital base.
[
342
]
This was despite the
Long-Term Capital Management
debacle in 1998, in which a highly leveraged shadow institution failed with systemic implications and was bailed out.
Regulators and accounting standard-setters allowed depository banks like
Citigroup
to move significant assets and liabilities off-balance sheet into complex legal entities called
structured investment vehicles
, masking the weakness of the capital base of the firm or degree of
leverage
or risk taken.
Bloomberg News
estimated that the top four U.S. banks will have to return between $500 billion and $1 trillion to their balance sheets during 2009.
[
343
]
This increased uncertainty during the crisis regarding the financial position of the major banks.
[
344
]
Off-balance sheet entities were also used in the
Enron scandal
, which brought down
Enron
in 2001.
[
345
]
As early as 1997, Federal Reserve chairman
Alan Greenspan
fought to keep the derivatives market unregulated.
[
346
]
With the advice of the
Working Group on Financial Markets
,
[
347
]
the U.S. Congress and President Bill Clinton and the Republican-controlled U.S. Congress allowed the self-regulation of the
over-the-counter
derivatives market when they enacted the
Commodity Futures Modernization Act of 2000
. Written by Congress with lobbying from the financial industry, it banned the further regulation of the derivatives market. Derivatives such as
credit default swaps
(CDS) could be used to hedge or speculate against particular credit risks without necessarily owning the underlying debt instruments. The volume of CDS outstanding increased 100-fold from 1998 to 2008, with estimates of the debt covered by CDS contracts, as of November 2008, ranging from US$33 to $47 trillion. Total over-the-counter (OTC) derivative
notional value
rose to $683 trillion by June 2008.
[
348
]
Warren Buffett
famously referred to derivatives as "financial weapons of mass destruction" in early 2003.
[
349
]
[
350
]
A 2011 paper suggested that Canada's avoidance of a banking crisis in 2008 (as well as in prior eras) could be attributed to Canada possessing a single, powerful, overarching regulator, while the United States had a weak, crisis prone and fragmented banking system with multiple competing regulatory bodies.
[
351
]
Increased debt burden or overleveraging
[
edit
]
Leverage ratios of investment banks increased significantly between 2003 and 2007
Household debt
relative to disposable income and GDP
Prior to the crisis, financial institutions became highly leveraged, increasing their appetite for risky investments and reducing their resilience in case of losses. Much of this leverage was achieved using complex financial instruments such as off-balance sheet securitization and derivatives, which made it difficult for creditors and regulators to monitor and try to reduce financial institution risk levels.
[
352
]
[
verification needed
]
U.S. households and financial institutions became increasingly indebted or
overleveraged
during the years preceding the crisis.
[
353
]
This increased their vulnerability to the collapse of the housing bubble and worsened the ensuing economic downturn.
[
354
]
Key statistics include:
Free cash used by consumers from home equity extraction doubled from $627 billion in 2001 to $1,428 billion in 2005 as the housing bubble built, a total of nearly $5 trillion over the period, contributing to economic growth worldwide.
[
20
]
[
21
]
U.S. home mortgage debt relative to GDP increased from an average of 46% during the 1990s to 73% during 2008, reaching $10.5 trillion (c. $15 trillion in 2024
[
288
]
).
[
18
]
U.S. household debt as a percentage of annual
disposable personal income
was 127% at the end of 2007, versus 77% in 1990.
[
353
]
In 1981, U.S. private debt was 123% of GDP; by the third quarter of 2008, it was 290%.
[
355
]
From 2004 to 2007, the top five U.S.
investment banks
each significantly increased their financial leverage, which increased their vulnerability to a financial shock. Changes in capital requirements, intended to keep U.S. banks competitive with their European counterparts, allowed lower
risk weightings
for AAA-rated securities. The shift from first-loss
tranches
to AAA-rated tranches was seen by regulators as a risk reduction that compensated the higher leverage.
[
356
]
These five institutions reported over $4.1 trillion in debt for fiscal year 2007, about 30% of U.S. nominal GDP for 2007.
Lehman Brothers
went bankrupt and was liquidated
,
Bear Stearns
and
Merrill Lynch
were sold at fire-sale prices, and
Goldman Sachs
and
Morgan Stanley
became commercial banks, subjecting themselves to more stringent regulation. With the exception of Lehman, these companies required or received government support.
[
357
]
Fannie Mae and Freddie Mac, two U.S.
government-sponsored enterprises
, owned or guaranteed nearly $5 trillion (c. $7.13 trillion in 2024
[
288
]
) trillion in mortgage obligations at the time they were placed into
conservatorship
by the U.S. government in September 2008.
[
358
]
[
359
]
These seven entities were highly leveraged and had $9 trillion in debt or guarantee obligations; yet they were not subject to the same regulation as depository banks.
[
342
]
[
360
]
Behavior that may be optimal for an individual, such as saving more during adverse economic conditions, can be detrimental if too many individuals pursue the same behavior, as ultimately one person's consumption is another person's income. Too many consumers attempting to save or pay down debt simultaneously is called the
paradox of thrift
and can cause or deepen a recession. Economist
Hyman Minsky
also described a "paradox of deleveraging" as financial institutions that have too much leverage (debt relative to equity) cannot all de-leverage simultaneously without significant declines in the value of their assets.
[
354
]
In April 2009,
Federal Reserve
vice-chair
Janet Yellen
discussed these paradoxes:
Once this massive credit crunch hit, it didn't take long before we were in a recession. The recession, in turn, deepened the credit crunch as demand and employment fell, and credit losses of financial institutions surged. Indeed, we have been in the grips of precisely this adverse feedback loop for more than a year. A process of balance sheet deleveraging has spread to nearly every corner of the economy. Consumers are pulling back on purchases, especially on durable goods, to build their savings. Businesses are cancelling planned investments and laying off workers to preserve cash. And financial institutions are shrinking assets to bolster capital and improve their chances of weathering the current storm. Once again, Minsky understood this dynamic. He spoke of the paradox of deleveraging, in which precautions that may be smart for individuals and firmsâand indeed essential to return the economy to a normal stateânevertheless magnify the distress of the economy as a whole.
[
354
]
Financial innovation and complexity
[
edit
]
IMF Diagram of CDO and RMBS
The term
financial innovation
refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the
adjustable-rate mortgage
; the bundling of subprime mortgages into
mortgage-backed securities
(MBS) or
collateralized debt obligations
(CDO) for sale to investors, a type of
securitization
; and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.
[
citation needed
]
CDO issuance grew from an estimated $20 billion in Q1 2004 to its peak of over $180 billion by Q1 2007, then declined back under $20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets. As described in the section on subprime lending, the CDS and portfolio of CDS called
synthetic CDO
enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.
[
361
]
Diagram of CMLTI 2006 â NC2
This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse.
[
362
]
Economists have studied the crisis as an instance of
cascades in financial networks
, where institutions' instability destabilized other institutions and led to knock-on effects.
[
363
]
[
364
]
Martin Wolf
, chief economics commentator at the
Financial Times
, wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "an enormous part of what banks did in the early part of this decadeâthe off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itselfâwas to find a way round regulation."
[
365
]
Incorrect pricing of risk
[
edit
]
A protester on
Wall Street
in the wake of the
AIG bonus payments controversy
is interviewed by news media.
Mortgage risks were underestimated by almost all institutions in the chain from originator to investor by underweighting the possibility of falling housing prices based on historical trends of the past 50 years. Limitations of default and prepayment models, the heart of pricing models, led to overvaluation of mortgage and asset-backed products and their derivatives by originators, securitizers, broker-dealers, rating-agencies, insurance underwriters and the vast majority of investors (with the exception of certain hedge funds).
[
366
]
[
367
]
While financial derivatives and structured products helped partition and shift risk between financial participants, it was the underestimation of falling housing prices and the resultant losses that led to aggregate risk.
[
367
]
For a variety of reasons, market participants did not accurately measure the risk inherent with financial innovation such as MBS and CDOs or understand its effect on the overall stability of the financial system.
[
254
]
The pricing model for CDOs clearly did not reflect the level of risk they introduced into the system. Banks estimated that $450 billion of CDO were sold between "late 2005 to the middle of 2007"; among the $102 billion of those that had been liquidated, JPMorgan estimated that the average recovery rate for "high quality" CDOs was approximately 32 cents on the dollar, while the recovery rate for
mezzanine capital
CDO was approximately five cents for every dollar.
AIG
insured obligations of various financial institutions through the usage of
credit default swaps
. The basic CDS transaction involved AIG receiving a premium in exchange for a promise to pay money to party A in the event party B defaulted. However, AIG did not have the financial strength to support its many CDS commitments as the crisis progressed and was taken over by the government in September 2008. U.S. taxpayers provided over $180 billion in government loans and investments in AIG during 2008 and early 2009, through which the money flowed to various counterparties to CDS transactions, including many large global financial institutions.
[
368
]
[
unreliable source?
]
[
369
]
The
Financial Crisis Inquiry Commission
(FCIC) made the major government study of the crisis. It concluded in January 2011:
The Commission concludes
AIG
failed and was rescued by the government primarily because its enormous sales of credit default swaps were made without putting up the initial collateral, setting aside capital reserves, or hedging its exposureâa profound failure in corporate governance, particularly its risk management practices. AIG's failure was possible because of the sweeping deregulation of over-the-counter (OTC) derivatives, including credit default swaps, which effectively eliminated federal and state regulation of these products, including capital and margin requirements that would have lessened the likelihood of AIG's failure.
[
370
]
[
371
]
[
372
]
The limitations of a widely used financial model also were not properly understood.
[
373
]
[
374
]
This formula assumed that the price of CDS was correlated with and could predict the correct price of mortgage-backed securities. Because it was highly tractable, it rapidly came to be used by a huge percentage of CDO and CDS investors, issuers, and rating agencies.
[
374
]
According to one
Wired
article:
Then the model fell apart. Cracks started appearing early on, when financial markets began behaving in ways that users of
Li's
formula hadn't expected. The cracks became full-fledged canyons in 2008âwhen ruptures in the financial system's foundation swallowed up trillions of dollars and put the survival of the global banking system in serious peril ... Li's
Gaussian copula
formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees.
[
374
]
As financial assets became more complex and harder to value, investors were reassured by the fact that the international
bond rating
agencies and bank regulators accepted as valid some complex mathematical models that showed the risks were much smaller than they actually were.
[
375
]
George Soros
commented that "The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility."
[
376
]
A
conflict of interest
between
investment management
professional and
institutional investors
, combined with a global glut in investment capital, led to bad investments by asset managers in over-priced credit assets. Professional investment managers generally are compensated based on the volume of client
assets under management
. There is, therefore, an incentive for asset managers to expand their assets under management in order to maximize their compensation. As the glut in global investment capital caused the yields on credit assets to decline, asset managers were faced with the choice of either investing in assets where returns did not reflect true credit risk or returning funds to clients. Many asset managers continued to invest client funds in over-priced (under-yielding) investments, to the detriment of their clients, so they could maintain their assets under management. They supported this choice with a "plausible deniability" of the risks associated with subprime-based credit assets because the loss experience with early "vintages" of subprime loans was so low.
[
377
]
Despite the dominance of the above formula, there are documented attempts of the financial industry, occurring before the crisis, to address the formula limitations, specifically the lack of dependence dynamics and the poor representation of extreme events.
[
378
]
The volume
Credit Correlation: Life After Copulas
, published in 2007 by
World Scientific
, summarizes a 2006 conference held by Merrill Lynch in London where several practitioners attempted to propose models rectifying some of the copula limitations. See also the article by Donnelly and Embrechts
[
379
]
and the book by Brigo, Pallavicini and Torresetti, that reports relevant warnings and research on CDOs appeared in 2006.
[
380
]
Boom and collapse of the shadow banking system
[
edit
]
Securitization markets were impaired during the crisis
There is strong evidence that the riskiest, worst performing mortgages were funded through the "
shadow banking system
" and that competition from the
shadow banking system
may have pressured more traditional institutions to lower their underwriting standards and originate riskier loans.
In a June 2008 speech, President and CEO of the
Federal Reserve Bank of New York
Timothy Geithner
âwho in 2009 became
United States Secretary of the Treasury
âplaced significant blame for the freezing of credit markets on a
run
on the entities in the "parallel" banking system, also called the
shadow banking system
. These entities became critical to the credit markets underpinning the financial system, but were not subject to the same regulatory controls. Further, these entities were vulnerable because of
assetâliability mismatch
, meaning that they borrowed short-term in liquid markets to purchase long-term, illiquid and risky assets. This meant that disruptions in credit markets would force them to engage in rapid deleveraging, selling their long-term assets at depressed prices. He described the significance of these entities:
In early 2007, asset-backed commercial paper conduits, in structured investment vehicles, in auction-rate preferred securities, tender option bonds and variable rate demand notes, had a combined asset size of roughly $2.2 trillion. Assets financed overnight in tri-party repo grew to $2.5 trillion. Assets held in hedge funds grew to roughly $1.8 trillion. The combined balance sheets of the five largest investment banks totaled $4 trillion. In comparison, the total assets of the top five bank holding companies in the United States at that point were just over $6 trillion, and total assets of the entire banking system were about $10 trillion. The combined effect of these factors was a financial system vulnerable to self-reinforcing asset price and credit cycles.
[
381
]
Economist
Paul Krugman
, laureate of the
Nobel Memorial Prize in Economic Sciences
, described the run on the shadow banking system as the "core of what happened" to cause the crisis. He referred to this lack of controls as "
malign neglect
" and argued that regulation should have been imposed on all banking-like activity.
[
342
]
Without the ability to obtain investor funds in exchange for most types of
mortgage-backed securities
or
asset-backed commercial paper
, investment banks and other entities in the
shadow banking
system could not provide funds to mortgage firms and other corporations.
[
381
]
[
342
]
This meant that nearly one-third of the U.S. lending mechanism was frozen and continued to be frozen into June 2009.
[
382
]
According to the
Brookings Institution
, at that time the traditional banking system did not have the capital to close this gap: "It would take a number of years of strong profits to generate sufficient capital to support that additional lending volume." The authors also indicate that some forms of
securitization
were "likely to vanish forever, having been an artifact of excessively loose credit conditions". While traditional banks raised their lending standards, it was the collapse of the shadow banking system that was the primary cause of the reduction in funds available for borrowing.
[
29
]
Global copper prices
Fertilizer prices
In a 2008 paper,
Ricardo J. Caballero
,
Emmanuel Farhi
, and
Pierre-Olivier Gourinchas
argued that the financial crisis was attributable to "global asset scarcity, which led to large capital flows toward the United States and to the creation of asset bubbles that eventually burst".
[
383
]
Caballero, Farhi, and Gourinchas argued "that the sharp rise in oil prices following the subprime crisis â nearly 100 percent in just a matter of months and on the face of recessionary shocks â was the result of a speculative response to the financial crisis itself, in an attempt to rebuild asset supply. That is, the global economy was subject to one shock with multiple implications rather than to two separate shocks (financial and oil)."
[
383
]
Long-only commodity index funds became popular â by one estimate investment increased from $90 billion in 2006 to $200 billion at the end of 2007, while commodity prices increased 71% â which raised concern as to whether these index funds caused the commodity bubble. The empirical research has been mixed.
[
384
]
The Globals Savings Glut
[
edit
]
The cause of the global asset bubble can be partially attributable to the global savings glut. As theorized by
Andrew Metrick
, the demand for safe assets following the Asian Financial Crisis coupled with the lack of circulating treasuries created an unmet demand for "risk free" assets. Thus, institutional investors like sovereign wealth funds and pension funds began purchasing synthetic safe assets like Triple-A Mortgage Backed Securities.
[
385
]
As a consequence, the demand for so-called safe assets fueled the free flow of capital into housing in the United States. This greatly worsened the crisis as banks and other financial institutions were incentivized to issue more mortgages than before.
Some commentators and economists associated with the
Austrian School of economics
, including former
U.S. Congressman Ron Paul
and historian
Tom Woods
, have offered a
libertarian
interpretation of the crisis which differs from the explanations centered on deregulation and government oversight. In Ron Paul's book,
End the Fed
,
Paul argues that the
Federal Reserve's
prolonged policy of
artificially low interest rates
in the early 2000s created a
credit bubble
that allowed for speculative investments and unsustainable levels of debt, particularly in housing.
[
386
]
[
387
]
[
388
]
In Tom Woods' book
Meltdown
, he also contends that Federal Reserve manipulation of the money supply and credit markets distorted normal price signals, leading to widespread malinvestment, resulting in an inevitable correction.
[
389
]
[
390
]
Paul and Woods also criticized
Fannie Mae
's and
Freddie Mac
's role in the crisis, asserting that the entities engaged in excessive risk-taking by expanding homeownership beyond sustainable levels.
[
391
]
[
392
]
[
386
]
In doing this, the government intervention created
moral hazard
by assuring large financial institutions that they would receive government support in times of crisis, which Paul and Woods believe encouraged riskier behavior.
[
389
]
[
393
]
Systemic crisis of capitalism
[
edit
]
In a 1998 book,
John McMurtry
suggested that a financial crisis is a systemic crisis of
capitalism
itself.
[
394
]
In his 1978 book,
The Downfall of Capitalism and Communism
,
Ravi Batra
suggests that growing inequality of
financial capitalism
produces speculative bubbles that burst and result in depression and major political changes. He also suggested that a "demand gap" related to differing wage and productivity growth explains deficit and debt dynamics important to stock market developments.
[
395
]
John Bellamy Foster
, a political economy analyst and editor of the
Monthly Review
, believed that the decrease in GDP growth rates since the early 1970s is due to increasing
market saturation
.
[
396
]
Marxian economics
followers
Andrew Kliman
, Michael Roberts, and Guglielmo Carchedi, in contradistinction to the
Monthly Review
school represented by Foster, pointed to capitalism's long-term tendency of the
rate of profit
to fall as the underlying cause of crises generally. From this point of view, the problem was the inability of capital to grow or accumulate at sufficient rates through productive investment alone. Low rates of profit in productive sectors led to speculative investment in riskier assets, where there was potential for greater return on investment. The speculative frenzy of the late 1990s and 2000s was, in this view, a consequence of a rising organic composition of capital, expressed through the fall in the rate of profit. According to Michael Roberts, the fall in the rate of profit "eventually triggered the credit crunch of 2007 when credit could no longer support profits".
[
397
]
In 2005 book,
The Battle for the Soul of Capitalism
,
John C. Bogle
wrote that "Corporate America went astray largely because the power of managers went virtually unchecked by our gatekeepers for far too long". Echoing the central thesis of
James Burnham
's 1941 seminal book,
The Managerial Revolution
, Bogle cites issues, including:
[
398
]
that "manager's capitalism" replaced "owner's capitalism", meaning management runs the firm for its benefit rather than for the shareholders, a variation on the
principalâagent problem
;
the burgeoning executive compensation;
the management of earnings, mainly a focus on share price rather than the creation of genuine value; and
the failure of gatekeepers, including auditors, boards of directors, Wall Street analysts, and career politicians.
In his book
The Big Mo
,
Mark Roeder
, a former executive at the Swiss-based
UBS
Bank, suggested that large-scale momentum, or
The Big Mo
, "played a pivotal role" in the financial crisis. Roeder suggested that "recent technological advances, such as computer-driven trading programs, together with the increasingly interconnected nature of markets, has magnified the momentum effect. This has made the financial sector inherently unstable."
[
399
]
Robert Reich
attributed the economic downturn to the stagnation of wages in the United States, particularly those of the hourly workers who comprise 80% of the workforce. This stagnation forced the population to borrow to meet the cost of living.
[
400
]
Economists
Ailsa McKay
and
Margunn Bjørnholt
argued that the financial crisis and the response to it revealed a crisis of ideas in mainstream economics and within the economics profession, and call for a reshaping of both the economy, economic theory and the economics profession.
[
401
]
Wrong banking model: resilience of credit unions
[
edit
]
A report by the
International Labour Organization
concluded that
cooperative banking
institutions were less likely to fail than their competitors during the crisis. The cooperative banking sector had 20% market share of the European banking sector, but accounted for only 7% of all the write-downs and losses between the third quarter of 2007 and first quarter of 2011.
[
402
]
In 2008, in the U.S., the rate of commercial bank failures was almost triple that of
credit unions
, and almost five times the credit union rate in 2010.
[
403
]
Credit unions increased their lending to small- and medium-sized businesses while overall lending to those businesses decreased.
[
404
]
Prediction by economists
[
edit
]
Economists, particularly followers of
mainstream economics
, mostly failed to predict the crisis.
[
405
]
The
Wharton School of the University of Pennsylvania
's online business journal examined why economists failed to predict a major global financial crisis and concluded that economists used mathematical models that failed to account for the critical roles that banks and other financial institutions, as opposed to producers and consumers of goods and services, play in the economy.
[
406
]
Several followers of
heterodox economics
predicted the crisis, with varying arguments.
Dirk Bezemer
[
407
]
credits 12 economists with predicting the crisis:
Dean Baker
(US),
Wynne Godley
(UK),
Fred Harrison
(UK),
Michael Hudson
(US),
Eric Janszen
(US),
Steve Keen
(Australia),
Jakob Broechner Madsen
& Jens Kjaer Sørensen (Denmark),
Med Jones
(US)
[
408
]
Kurt Richebächer
(US),
Nouriel Roubini
(US),
Peter Schiff
(US), and
Robert Shiller
(US).
Shiller, a founder of the
CaseâShiller index
that measures home prices, wrote an article a year before the collapse of Lehman Brothers in which he predicted that a slowing U.S. housing market would cause the housing bubble to burst, leading to financial collapse.
[
409
]
Peter Schiff regularly appeared on television in the years before the crisis and warned of the impending real estate collapse.
[
410
]
The
Austrian School
regarded the crisis as a vindication and classic example of a predictable credit-fueled bubble caused by laxity in monetary supply.
[
411
]
There were other economists that did warn of a pending crisis.
[
412
]
The former Governor of the
Reserve Bank of India
,
Raghuram Rajan
, had predicted the crisis in 2005 when he became chief economist at the
International Monetary Fund
. In 2005, at a celebration honoring
Alan Greenspan
, who was about to retire as chairman of the
US Federal Reserve
, Rajan delivered a controversial paper that was critical of the financial sector.
[
413
]
In that paper, Rajan "argued that disaster might loom".
[
414
]
Rajan argued that financial sector managers were encouraged to "take risks that generate severe adverse consequences with small probability but, in return, offer generous compensation the rest of the time. These risks are known as tail risks. But perhaps the most important concern is whether banks will be able to provide liquidity to financial markets so that if the tail risk does materialize, financial positions can be unwound and losses allocated so that the consequences to the real economy are minimized."
Stock trader and financial risk engineer
Nassim Nicholas Taleb
, author of the 2007 book
The Black Swan
, spent years warning against the breakdown of the banking system in particular and the economy in general owing to their use of and reliance on bad risk models and reliance on forecasting, and framed the problem as part of "robustness and fragility".
[
415
]
[
416
]
He also took action against the establishment view by making a big financial bet on banking stocks and making a fortune from the crisis ("They didn't listen, so I took their money").
[
417
]
According to
David Brooks
from
The New York Times
, "Taleb not only has an explanation for what's happening, he saw it coming."
[
418
]
Popular articles published in the mass media have led the general public to believe that the majority of economists have failed in their obligation to predict the financial crisis. For example, an article in
The New York Times
noted that economist
Nouriel Roubini
warned of such crisis as early as September 2006, and stated that the profession of economics is bad at predicting recessions.
[
419
]
According to
The Guardian
, Roubini was ridiculed for predicting a collapse of the housing market and worldwide recession, while
The New York Times
labelled him "Dr. Doom".
[
420
]
In a 2012 article in the journal
Japan and the World Economy
, Andrew K. Rose and Mark M. Spiegel used a Multiple Indicator Multiple Cause (MIMIC) model on a cross-section of 107 countries to evaluate potential causes of the 2008 crisis. The authors examined various economic indicators, ignoring
contagion effects
across countries. The authors concluded: "We include over sixty potential causes of the crisis, covering such categories as: financial system policies and conditions; asset price appreciation in real estate and equity markets; international imbalances and foreign reserve adequacy; macroeconomic policies; and institutional and geographic features. Despite the fact that we use a wide number of possible causes in a flexible statistical framework, we are unable to link most of the commonly cited causes of the crisis to its incidence across countries. This negative finding in the cross-section makes us skeptical of the accuracy of 'early warning' systems of potential crises, which must also predict their timing."
[
421
]
The first visible institution to run into trouble in the United States was the Southern Californiaâbased
IndyMac
, a spin-off of
Countrywide Financial
. Before its failure, IndyMac Bank was the largest
savings and loan association
in the Los Angeles market and the seventh-largest
mortgage loan
originator in the United States.
[
422
]
The failure of IndyMac Bank on July 11, 2008, was (until the crisis precipitated even larger failures) the fourth-largest
bank failure
in United States history,
[
423
]
and the second-largest failure of a regulated
thrift
.
[
424
]
IndyMac Bank's parent corporation was IndyMac Bancorp until the FDIC seized IndyMac Bank.
[
425
]
IndyMac Bancorp filed for
Chapter 7 bankruptcy
in July 2008.
[
425
]
IndyMac Bank was founded as Countrywide Mortgage Investment in 1985 by
David S. Loeb
and
Angelo Mozilo
[
426
]
[
427
]
as a means of
collateralizing
Countrywide Financial
loans too big to be sold to Freddie Mac and Fannie Mae. In 1997, Countrywide spun off IndyMac as an independent company run by Mike Perry, who remained its CEO until the downfall of the bank in July 2008.
[
428
]
The primary causes of its failure were largely associated with its business strategy of originating and securitizing
Alt-A
loans on a large scale. This strategy resulted in rapid growth and a high concentration of risky assets. From its inception as a savings association in 2000, IndyMac grew to the seventh largest savings and loan and ninth largest originator of mortgage loans in the United States. During 2006, IndyMac originated over $90 billion (~$134Â billion in 2024) of mortgages.
IndyMac's aggressive growth strategy, use of Alt-A and other nontraditional loan products, insufficient underwriting, credit concentrations in residential real estate in the
California
and
Florida
marketsâstates, alongside Nevada and Arizona, where the
housing bubble
was most pronouncedâand heavy reliance on costly funds borrowed from a
Federal Home Loan Bank
(FHLB) and from brokered deposits, led to its demise when the mortgage market declined in 2007.
IndyMac often made loans without verification of the borrower's income or assets, and to borrowers with poor credit histories. Appraisals obtained by IndyMac on underlying collateral were often questionable as well. As an Alt-A lender, IndyMac's business model was to offer loan products to fit the borrower's needs, using an extensive array of risky option-
adjustable-rate mortgages
(option ARMs), subprime loans, 80/20 loans, and other nontraditional products. Ultimately, loans were made to many borrowers who simply could not afford to make their payments. The thrift remained profitable only as long as it was able to sell those loans in the
secondary mortgage market
. IndyMac resisted efforts to regulate its involvement in those loans or tighten their issuing criteria: see the comment by Ruthann Melbourne, Chief Risk Officer, to the regulating agencies.
[
429
]
[
430
]
[
431
]
On May 12, 2008, in the "Capital" section of its last 10-Q,
IndyMac
revealed that it may not be well capitalized in the future.
[
432
]
IndyMac reported that during April 2008,
Moody's
and
Standard & Poor's
downgraded the ratings on a significant number of
Mortgage-backed security
(MBS) bondsâincluding $160 million (~$228Â million in 2024) issued by IndyMac that the bank retained in its MBS portfolio. IndyMac concluded that these downgrades would have harmed its risk-based capital ratio as of June 30, 2008. Had these lowered ratings been in effect on March 31, 2008, IndyMac concluded that the bank's capital ratio would have been 9.27% total risk-based. IndyMac warned that if its regulators found its capital position to have fallen below "well capitalized" (minimum 10% risk-based capital ratio) to "adequately capitalized" (8â10% risk-based capital ratio) the bank might no longer be able to use brokered deposits as a source of funds.
Senator
Charles Schumer
(D-NY) later pointed out that brokered deposits made up more than 37% of IndyMac's total deposits, and asked the
Federal Deposit Insurance Corporation
(FDIC) whether it had considered ordering IndyMac to reduce its reliance on these deposits.
[
433
]
With $18.9 billion in total deposits reported on March 31,
[
432
]
Senator Schumer would have been referring to a little over $7 billion in brokered deposits. While the breakout of maturities of these deposits is not known exactly, a simple averaging would have put the threat of brokered deposits loss to IndyMac at $500 million a month, had the regulator disallowed IndyMac from acquiring new brokered deposits on June 30.
IndyMac was taking new measures to preserve capital, such as deferring interest payments on some preferred securities. Dividends on common shares had already been suspended for the first quarter of 2008, after being cut in half the previous quarter. The company still had not secured a significant capital infusion nor found a ready buyer.
[
434
]
IndyMac reported that the bank's risk-based capital was only $47 million above the minimum required for this 10% mark. But it did not reveal some of that $47 million (~$67Â million in 2024) capital it claimed it had, as of March 31, 2008, was fabricated.
[
435
]
When home prices declined in the latter half of 2007 and the secondary mortgage market collapsed, IndyMac was forced to hold $10.7 billion (~$15.5Â billion in 2024) of loans it could not sell in the secondary market. Its reduced liquidity was further exacerbated in late June 2008 when account holders withdrew $1.55 billion (~$2.21Â billion in 2024) or about 7.5% of IndyMac's deposits.
[
432
]
This
bank run
on the thrift followed the public release of a letter from Senator Charles Schumer to the FDIC and OTS. The letter outlined the Senator's concerns with IndyMac. While the run was a contributing factor in the timing of IndyMac's demise, the underlying cause of the failure was the unsafe and unsound way it was operated.
[
429
]
On June 26, 2008, Senator
Charles Schumer
(D-NY), a member of the
Senate Banking Committee
, chairman of Congress'
Joint Economic Committee
and the third-ranking Democrat in the Senate, released several letters he had sent to regulators, in which he was"concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers." Some worried depositors began to withdraw money.
[
436
]
[
437
]
On July 7, 2008, IndyMac announced on the company blog that it:
Had failed to raise
capital
since its May 12, 2008, quarterly earnings report;
Had been notified by bank and thrift regulators that IndyMac Bank was no longer deemed "well-capitalized".
IndyMac announced the closure of both its retail lending and wholesale divisions, halted new loan submissions, and cut 3,800 jobs.
[
438
]
On July 11, 2008, citing liquidity concerns, the FDIC put IndyMac Bank into
conservatorship
. A
bridge bank
, IndyMac Federal Bank, FSB, was established to assume control of IndyMac Bank's assets, its secured liabilities, and its insured deposit accounts. The FDIC announced plans to open IndyMac Federal Bank, FSB on July 14, 2008. Until then, depositors would have access to their insured deposits through ATMs, their existing checks, and their existing debit cards. Telephone and Internet account access was restored when the bank reopened.
[
125
]
[
439
]
[
440
]
The FDIC guarantees the funds of all insured accounts up to US$100,000, and declared a special advance dividend to the roughly 10,000 depositors with funds in excess of the insured amount, guaranteeing 50% of any amounts in excess of $100,000.
[
424
]
Yet, even with the pending sale of Indymac to IMB Management Holdings, an estimated 10,000 uninsured depositors of Indymac are still at a loss of over $270 million.
[
441
]
[
442
]
With $32 billion in assets, IndyMac Bank was one of the largest bank failures in American history.
[
443
]
IndyMac Bancorp filed for
Chapter 7 bankruptcy
on July 31, 2008.
[
425
]
Initially the companies affected were those directly involved in home construction and mortgage lending such as Northern Rock and
Countrywide Financial
, as they could no longer obtain financing through the credit markets. Over 100 mortgage lenders went bankrupt during 2007 and 2008. Concerns that investment bank
Bear Stearns
would collapse in March 2008 resulted in its fire-sale to
JP Morgan Chase
. The financial institution crisis hit its peak in September and October 2008. Several major institutions either failed, were acquired under duress, or were subject to government takeover. These included
Lehman Brothers
,
Merrill Lynch
, Fannie Mae, Freddie Mac,
Washington Mutual
,
Wachovia
,
Citigroup
, and
AIG
.
[
32
]
On October 6, 2008, three weeks after Lehman Brothers filed the largest bankruptcy in U.S. history, Lehman's former CEO
Richard S. Fuld Jr.
found himself before Representative
Henry A. Waxman
, the California Democrat who chaired the
House Committee on Oversight and Government Reform
. Fuld said he was a victim of the collapse, blaming a "crisis of confidence" in the markets for dooming his firm.
[
444
]
Notable books and movies
[
edit
]
In 2006,
Peter Schiff
authored a book titled
Crash Proof: How to Profit From the Coming Economic Collapse
, which was published in February 2007 by
Wiley
. The book describes various features of the economy and housing market that led to the
United States housing bubble
, and warns of the impending decline. After many of the predictions came to pass, a second edition titled
Crash Proof 2.0
was published in 2009, which included a "2009 update" addendum at the end of each chapter. It was featured on
The New York Times Best Seller list
.
Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and the Government Bailout Will Make Things Worse
, by
Tom Woods
, was published in February 2009 by
Regnery Publishing
. It was featured on
The New York Times Best Seller list
for 10 weeks.
The American documentary program
Frontline
produced several episodes investigating various aspects of the crisis:
"
Inside the Meltdown
" (Season 2009: Episode 8)
"
Ten Trillion and Counting
" (Season 2009: Episode 9)
"
Breaking the Bank
" (Season 2009: Episode 15)
"
The Warning
" (Season 2009: Episode 2)
A 2010 documentary film,
Overdose: A Film about the Next Financial Crisis
, describes how the financial crisis came about and how the solutions that have been applied by many governments are setting the stage for the next crisis. The film is based on the book
Financial Fiasco
by
Johan Norberg
and features
Alan Greenspan
, with funding from the
libertarian
think tank
Cato Institute
.
[
445
]
In October 2010, a documentary film about the crisis,
Inside Job
directed by
Charles Ferguson
, was released by
Sony Pictures Classics
. In 2011, it won the
Academy Award for Best Documentary Feature
at the
83rd Academy Awards
.
[
446
]
Set on the night before the crisis broke, the 2011 film
Margin Call
is a movie that follows traders through a sleepless 24 hours as they try to contain the damage after an analyst discovers information that is likely to ruin their firm, and possibly the whole economy.
[
447
]
The 2011 film
Too Big to Fail
is based on
Andrew Ross Sorkin
's 2009 non-fiction book
Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System â and Themselves
.
Michael Lewis
authored a best-selling non-fiction book about the crisis, entitled
The Big Short
. In 2015, it was adapted into a
film of the same name
, which won the
Academy Award
,
BAFTA Award
,
Critics' Choice Movie Award
, and
Writers Guild of America Award
, all for Best Adapted Screenplay. One point raised is to what extent those outside of the markets themselves (i.e., not working for a mainstream investment bank) could forecast the events and be generally less myopic.
Simon Reid-Henry's 2019 book
Empire of Democracy
describes how liberal norms
[
which?
]
in the West were replaced by populism as a consequence of the 2007â08 financial crisis, as well as
neoliberal
policies
[
which?
]
that had emerged in previous decades which hollowed out government and changed voter expectations.
VirĂĄg Blazsek
's book,
Banking Bailout Law: A Comparative Study of the United States, United Kingdom and the European Union
(Routledge, 2020) examines the 2008 Global Financial Crisis-related bank bailout and resolution techniques through case studies from the United States, the EU, the United Kingdom, Spain and Hungary. The book identifies the advantages and disadvantages of different legal and regulatory approaches and proposes a regulatory framework intended to better address future financial crises.
[
448
]
Banking (Special Provisions) Act 2008
(United Kingdom)
2008â2009 Keynesian resurgence
2010 United States foreclosure crisis
2012 May Day protests
2000s commodities boom
Crisis theory
Kondratiev wave
List of acronyms associated with the eurozone crisis
List of bank failures in the United States (2008âpresent)
List of banks acquired or bankrupted during the Great Recession
List of banks acquired or bankrupted in the United States during the 2008 financial crisis
List of economic crises
List of entities involved in 2007â2008 financial crises
List of largest bank failures in the United States
Stock market crashes in India
Low-Income Countries Under Stress
Mark-to-market accounting
Neoliberalism
Occupy movement
Pessimism porn
PIGS (economics)
Private equity in the 2000s
Subprime crisis impact timeline
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foreign direct investment
decreased from 2008 until 2021 (see
"Foreign direct investment, net inflows (% of GDP) â Armenia"
.
data.worldbank.org
. Retrieved
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.
). Moreover, the remittances also decreased after 2007/08, then fluctuated (see
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.
data.worldbank.org
. Retrieved
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2021
.
). This led to a dramatic rise in the number of households living below the poverty line (see
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(PDF)
.
Overseas Development Institute
. September 2009. Archived from
the original
(PDF)
on July 12, 2020
. Retrieved
June 17,
2022
.
). The poverty headcount ratio at $1.90 (~$3.00 in 2025) a day increased after 2007/08, from 0.9% to 1.2% (see
"Poverty headcount ratio at $1.90 a day (2011 PPP) (% of population) â Armenia"
.
data.worldbank.org
. Retrieved
May 12,
2021
.
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,
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, August 5 & 12, 2019, pp. 28â31
Julien Mercille & Enda Murphy, 2015,
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,
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Patterson, Laura A.; Koller, Cynthia A. (2011). "Diffusion of Fraud Through Subprime Lending: The Perfect Storm".
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.
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.
Palais-Royal Initiative
[
1
]
(8 February 2011):
Reform of the International Monetary System: A Cooperative Approach for the 21st Century
(pdf, 20 p)
Reports on causes
Final Report
of the
Financial Crisis Inquiry Commission
Archived website
of the
Financial Crisis Inquiry Commission
(maintained by the
Stanford University
and the
Stanford Law School
)
Wall Street and the Financial Crisis: Anatomy of a Financial Collapse
Archived
April 18, 2011, at the
Wayback Machine
, Majority and Minority Staff Report,
United States Senate Homeland Security Permanent Subcommittee on Investigations
, April 13, 2011
What Caused the Crisis
: A collection of papers at the
Federal Reserve Bank of St. Louis
Journalism and interviews
Inside the Meltdown
â PBS
Frontline
documentation including additional background article and in-depth interviews
"Money, Power & Wall Street"
â PBS
Frontline
documentation including additional background article and in-depth interviews
Stewart, James B.
,
Eight Days: the battle to save the American financial system
,
The New Yorker
magazine, September 21, 2009. pp. 58â81. Summarizing September 15â23, 2008, with interviews of Paulson, Bernanke, and Geithner by James Stewart
Panic, Fear, and Regret
â audio interviews with Timothy Geithner, Ben Bernanke and Henry Paulson from
Marketplace
^
18 high-ranking former ministers, Central Bank governors and/or officials in national or international institutions:
Sergey_Aleksashenko
Former Deputy Governor, Central Bank of Russia.
Hamad_Al_Sayari
Former Governor, Saudi Arabian Monetary Agency.
Jack_T._Boorman
Former Department Director and Special Advisor to the Managing Director, IMF.
Michel_Camdessus
Former Managing Director, IMF.
Andrew Crockett
Former General Manager, BIS.
Guillermo_De_la_Dehesa
Former State Secretary of Economy and Finance, Spain.
Arminio_Fraga
Former Governor, Central Bank of Brazil.
Toyoo_Gyohten
Former Vice Minister of Finance, Japan.
Xiaolian_Hu
Vice President of China Society of Finance and Banking.
AndrĂŠ_Icard
Former Deputy General Manager, BIS.
Horst_Koehler
Former Managing Director, IMF.
Alexandre_Lamfalussy
Former General Manager, BIS.
Guillermo Ortiz
Former Governor, Banco de MĂŠxico.
Tommaso_Padoa-Schioppa
(â ) Former Minister of Finance, Italy.
Maria Ramos
Former Director General, National Treasury, South Africa.
Y. Venugopal Reddy
Former Governor, Reserve Bank of India.
Edwin_M._Truman
Former Assistant Secretary for International Affairs of the U.S. Treasury.
Paul_A._Volcker
Former Chairman, Federal Reserve Board.
Joined by Isabelle Mateos y Lago Advisor, IMF.
Pietro Catte Director, International Research Department, Banca dâItalia.
Corrinne Ho Senior Economist, BIS.
Irena Asmundson Economist, IMF. |
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## Contents
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- [(Top)](https://en.wikipedia.org/wiki/2008_financial_crisis)
- [1 Background](https://en.wikipedia.org/wiki/2008_financial_crisis#Background)
- [2 Timeline](https://en.wikipedia.org/wiki/2008_financial_crisis#Timeline)
Toggle Timeline subsection
- [2\.1 Pre-2007](https://en.wikipedia.org/wiki/2008_financial_crisis#Pre-2007)
- [2\.2 2007 (JanuaryâAugust)](https://en.wikipedia.org/wiki/2008_financial_crisis#2007_\(January%E2%80%93August\))
- [2\.3 2007 (SeptemberâDecember)](https://en.wikipedia.org/wiki/2008_financial_crisis#2007_\(September%E2%80%93December\))
- [2\.4 2008 (JanuaryâAugust)](https://en.wikipedia.org/wiki/2008_financial_crisis#2008_\(January%E2%80%93August\))
- [2\.5 2008 (September)](https://en.wikipedia.org/wiki/2008_financial_crisis#2008_\(September\))
- [2\.6 2008 (October)](https://en.wikipedia.org/wiki/2008_financial_crisis#2008_\(October\))
- [2\.7 2008 (NovemberâDecember)](https://en.wikipedia.org/wiki/2008_financial_crisis#2008_\(November%E2%80%93December\))
- [2\.8 2009](https://en.wikipedia.org/wiki/2008_financial_crisis#2009)
- [2\.9 2010](https://en.wikipedia.org/wiki/2008_financial_crisis#2010)
- [2\.10 Post-2010](https://en.wikipedia.org/wiki/2008_financial_crisis#Post-2010)
- [3 Federal actions towards the crisis](https://en.wikipedia.org/wiki/2008_financial_crisis#Federal_actions_towards_the_crisis)
- [4 Causes](https://en.wikipedia.org/wiki/2008_financial_crisis#Causes)
Toggle Causes subsection
- [4\.1 Subprime lending](https://en.wikipedia.org/wiki/2008_financial_crisis#Subprime_lending)
- [4\.1.1 Role of affordable housing programs](https://en.wikipedia.org/wiki/2008_financial_crisis#Role_of_affordable_housing_programs)
- [4\.2 Growth of the housing bubble](https://en.wikipedia.org/wiki/2008_financial_crisis#Growth_of_the_housing_bubble)
- [4\.3 Easy credit conditions](https://en.wikipedia.org/wiki/2008_financial_crisis#Easy_credit_conditions)
- [4\.4 Weak and fraudulent underwriting practices](https://en.wikipedia.org/wiki/2008_financial_crisis#Weak_and_fraudulent_underwriting_practices)
- [4\.5 Predatory lending](https://en.wikipedia.org/wiki/2008_financial_crisis#Predatory_lending)
- [4\.6 Deregulation and lack of regulation](https://en.wikipedia.org/wiki/2008_financial_crisis#Deregulation_and_lack_of_regulation)
- [4\.7 Increased debt burden or overleveraging](https://en.wikipedia.org/wiki/2008_financial_crisis#Increased_debt_burden_or_overleveraging)
- [4\.8 Financial innovation and complexity](https://en.wikipedia.org/wiki/2008_financial_crisis#Financial_innovation_and_complexity)
- [4\.9 Incorrect pricing of risk](https://en.wikipedia.org/wiki/2008_financial_crisis#Incorrect_pricing_of_risk)
- [4\.10 Boom and collapse of the shadow banking system](https://en.wikipedia.org/wiki/2008_financial_crisis#Boom_and_collapse_of_the_shadow_banking_system)
- [4\.11 Commodity prices](https://en.wikipedia.org/wiki/2008_financial_crisis#Commodity_prices)
- [4\.12 The Globals Savings Glut](https://en.wikipedia.org/wiki/2008_financial_crisis#The_Globals_Savings_Glut)
- [4\.13 Monetary policy](https://en.wikipedia.org/wiki/2008_financial_crisis#Monetary_policy)
- [4\.14 Systemic crisis of capitalism](https://en.wikipedia.org/wiki/2008_financial_crisis#Systemic_crisis_of_capitalism)
- [4\.15 Wrong banking model: resilience of credit unions](https://en.wikipedia.org/wiki/2008_financial_crisis#Wrong_banking_model:_resilience_of_credit_unions)
- [5 Prediction by economists](https://en.wikipedia.org/wiki/2008_financial_crisis#Prediction_by_economists)
- [6 IndyMac](https://en.wikipedia.org/wiki/2008_financial_crisis#IndyMac)
- [7 Notable books and movies](https://en.wikipedia.org/wiki/2008_financial_crisis#Notable_books_and_movies)
- [8 See also](https://en.wikipedia.org/wiki/2008_financial_crisis#See_also)
- [9 References](https://en.wikipedia.org/wiki/2008_financial_crisis#References)
- [10 Further reading](https://en.wikipedia.org/wiki/2008_financial_crisis#Further_reading)
- [11 External links](https://en.wikipedia.org/wiki/2008_financial_crisis#External_links)
Toggle the table of contents
# 2008 financial crisis
70 languages
- [اŮؚعبŮŘŠ](https://ar.wikipedia.org/wiki/%D8%A7%D9%84%D8%A3%D8%B2%D9%85%D8%A9_%D8%A7%D9%84%D9%85%D8%A7%D9%84%D9%8A%D8%A9_\(2008\) "اŮأزŮ
ŘŠ اŮŮ
اŮŮŘŠ (2008) â Arabic")
- [Ů
ؾعŮ](https://arz.wikipedia.org/wiki/%D8%A7%D9%84%D8%A7%D8%B2%D9%85%D9%87_%D8%A7%D9%84%D9%85%D8%A7%D9%84%D9%8A%D9%87_2007-2008 "اŮازŮ
٠اŮŮ
اŮŮŮ 2007-2008 â Egyptian Arabic")
- [Asturianu](https://ast.wikipedia.org/wiki/Crisis_financiera_de_2008 "Crisis financiera de 2008 â Asturian")
- [AzÉrbaycanca](https://az.wikipedia.org/wiki/Maliyy%C9%99_b%C3%B6hran%C4%B1_\(2007%E2%80%932008\) "MaliyyÉ bĂśhranÄą (2007â2008) â Azerbaijani")
- [ĐŃНгаŃŃки](https://bg.wikipedia.org/wiki/%D0%A1%D0%B2%D0%B5%D1%82%D0%BE%D0%B2%D0%BD%D0%B0_%D1%84%D0%B8%D0%BD%D0%B0%D0%BD%D1%81%D0%BE%D0%B2%D0%B0_%D0%BA%D1%80%D0%B8%D0%B7%D0%B0_\(2007_%E2%80%93_2008\) "ХвоŃОвна ŃинанŃОва ĐşŃиСа (2007 â 2008) â Bulgarian")
- [বাŕŚŕŚ˛ŕŚž](https://bn.wikipedia.org/wiki/%E0%A7%A8%E0%A7%A6%E0%A7%A6%E0%A7%AD-%E0%A7%A8%E0%A7%A6%E0%A7%A6%E0%A7%AE_%E0%A6%86%E0%A6%B0%E0%A7%8D%E0%A6%A5%E0%A6%BF%E0%A6%95_%E0%A6%B8%E0%A6%82%E0%A6%95%E0%A6%9F "২ৌৌŕ§-২ৌৌৎ ŕŚŕŚ°ŕ§ŕŚĽŕŚżŕŚ সŕŚŕŚŕŚ â Bangla")
- [Bosanski](https://bs.wikipedia.org/wiki/Svjetska_finansijska_kriza_od_2007. "Svjetska finansijska kriza od 2007. â Bosnian")
- [CatalĂ ](https://ca.wikipedia.org/wiki/Crisi_financera_global_del_2007-2012 "Crisi financera global del 2007-2012 â Catalan")
- [ÄeĹĄtina](https://cs.wikipedia.org/wiki/Sv%C4%9Btov%C3%A1_finan%C4%8Dn%C3%AD_krize_2008 "SvÄtovĂĄ finanÄnĂ krize 2008 â Czech")
- [Dansk](https://da.wikipedia.org/wiki/Finanskrisen_2007-2009 "Finanskrisen 2007-2009 â Danish")
- [Deutsch](https://de.wikipedia.org/wiki/Weltfinanzkrise_2007%E2%80%932008 "Weltfinanzkrise 2007â2008 â German")
- [ÎΝΝΡνΚκΏ](https://el.wikipedia.org/wiki/%CE%94%CE%B9%CE%B5%CE%B8%CE%BD%CE%AE%CF%82_%CF%87%CF%81%CE%B7%CE%BC%CE%B1%CF%84%CE%BF%CF%80%CE%B9%CF%83%CF%84%CF%89%CF%84%CE%B9%CE%BA%CE%AE_%CE%BA%CF%81%CE%AF%CF%83%CE%B7_2007-2008 "ÎÎšÎľÎ¸Î˝ÎŽĎ ĎĎΡΟιĎÎżĎΚĎĎĎĎΚκΎ ÎşĎÎŻĎΡ 2007-2008 â Greek")
- [Esperanto](https://eo.wikipedia.org/wiki/Financa_krizo_de_2008 "Financa krizo de 2008 â Esperanto")
- [EspaĂąol](https://es.wikipedia.org/wiki/Crisis_financiera_de_2007-2008 "Crisis financiera de 2007-2008 â Spanish")
- [Eesti](https://et.wikipedia.org/wiki/2007.%E2%80%932008._aasta_finantskriis "2007.â2008. aasta finantskriis â Estonian")
- [Euskara](https://eu.wikipedia.org/wiki/2007-2008ko_finantza-krisia "2007-2008ko finantza-krisia â Basque")
- [ŮاعسŰ](https://fa.wikipedia.org/wiki/%D8%A8%D8%AD%D8%B1%D8%A7%D9%86_%D9%85%D8%A7%D9%84%DB%8C_%DB%B2%DB%B0%DB%B0%DB%B8 "بŘعا٠Ů
اŮŰ Ű˛Ű°Ű°Ű¸ â Persian")
- [Suomi](https://fi.wikipedia.org/wiki/Finanssikriisi_\(2007%E2%80%932009\) "Finanssikriisi (2007â2009) â Finnish")
- [Føroyskt](https://fo.wikipedia.org/wiki/F%C3%ADggjarkreppan_2007-2009 "FĂggjarkreppan 2007-2009 â Faroese")
- [Français](https://fr.wikipedia.org/wiki/Crise_financi%C3%A8re_mondiale_de_2007-2008 "Crise financière mondiale de 2007-2008 â French")
- [Frysk](https://fy.wikipedia.org/wiki/Kredytkrisis "Kredytkrisis â Western Frisian")
- [Gaeilge](https://ga.wikipedia.org/wiki/G%C3%A9arch%C3%A9im_airgeadais_2007-2008 "GĂŠarchĂŠim airgeadais 2007-2008 â Irish")
- [Galego](https://gl.wikipedia.org/wiki/Crise_financeira_de_2007-2008 "Crise financeira de 2007-2008 â Galician")
- [ŕŞŕŤŕŞŕŞ°ŕŞžŕŞ¤ŕŤ](https://gu.wikipedia.org/wiki/%E0%AB%A8%E0%AB%A6%E0%AB%A6%E0%AB%AD-%E0%AB%A8%E0%AB%A6%E0%AB%A6%E0%AB%AF%E0%AA%A8%E0%AB%80_%E0%AA%A8%E0%AA%BE%E0%AA%A3%E0%AA%BE%E0%AA%95%E0%AB%80%E0%AA%AF_%E0%AA%95%E0%AA%9F%E0%AB%8B%E0%AA%95%E0%AA%9F%E0%AB%80 "૨૦૦ŕŤ-૨૦૦૯નૠનાણાŕŞŕŤŕŞŻ ŕŞŕŞŕŤŕŞŕŞŕŤ â Gujarati")
- [ע×ר×ת](https://he.wikipedia.org/wiki/%D7%94%D7%9E%D7%A9%D7%91%D7%A8_%D7%94%D7%9B%D7%9C%D7%9B%D7%9C%D7%99_%D7%94%D7%A2%D7%95%D7%9C%D7%9E%D7%99_\(2008\) "××׊×ר ×××××× ×ע×××× (2008) â Hebrew")
- [चिनŕĽŕ¤ŚŕĽ](https://hi.wikipedia.org/wiki/2007-2009_%E0%A4%95%E0%A4%BE_%E0%A4%B5%E0%A4%BF%E0%A4%A4%E0%A5%8D%E0%A4%A4%E0%A5%80%E0%A4%AF_%E0%A4%B8%E0%A4%82%E0%A4%95%E0%A4%9F "2007-2009 ŕ¤ŕ¤ž ाितŕĽŕ¤¤ŕĽŕ¤Ż सŕ¤ŕ¤ŕ¤ â Hindi")
- [Hrvatski](https://hr.wikipedia.org/wiki/Svjetska_financijska_kriza_2007._%E2%80%93_2008. "Svjetska financijska kriza 2007. â 2008. â Croatian")
- [Magyar](https://hu.wikipedia.org/wiki/2008-as_p%C3%A9nz%C3%BCgyi_v%C3%A1ls%C3%A1g "2008-as pĂŠnzĂźgyi vĂĄlsĂĄg â Hungarian")
- [ŐŐĄŐľŐĽÖŐĽŐś](https://hy.wikipedia.org/wiki/2007-2008_%D5%A9%D5%BE%D5%A1%D5%AF%D5%A1%D5%B6%D5%B6%D5%A5%D6%80%D5%AB_%D6%86%D5%AB%D5%B6%D5%A1%D5%B6%D5%BD%D5%A1%D5%AF%D5%A1%D5%B6_%D5%B3%D5%A3%D5%B6%D5%A1%D5%AA%D5%A1%D5%B4 "2007-2008 ŐŠŐžŐĄŐŻŐĄŐśŐśŐĽÖŐŤ ÖŐŤŐśŐĄŐśŐ˝ŐĄŐŻŐĄŐś ŐłŐŁŐśŐĄŐŞŐĄŐ´ â Armenian")
- [Bahasa Indonesia](https://id.wikipedia.org/wiki/Krisis_keuangan_2008 "Krisis keuangan 2008 â Indonesian")
- [Ido](https://io.wikipedia.org/wiki/Mondala_financala_krizo_2007-2011 "Mondala financala krizo 2007-2011 â Ido")
- [Ăslenska](https://is.wikipedia.org/wiki/Lausafj%C3%A1rkreppan_2007%E2%80%932008 "LausafjĂĄrkreppan 2007â2008 â Icelandic")
- [Italiano](https://it.wikipedia.org/wiki/Crisi_finanziaria_del_2007-2008 "Crisi finanziaria del 2007-2008 â Italian")
- [ćĽćŹčŞ](https://ja.wikipedia.org/wiki/%E4%B8%96%E7%95%8C%E9%87%91%E8%9E%8D%E5%8D%B1%E6%A9%9F_\(2007%E5%B9%B4-2010%E5%B9%B4\) "ä¸çéčĺąćŠ (2007ĺš´-2010ĺš´) â Japanese")
- [ŕ˛ŕ˛¨ŕłŕ˛¨ŕ˛Ą](https://kn.wikipedia.org/wiki/%E0%B2%86%E0%B2%B0%E0%B3%8D%E0%B2%A5%E0%B2%BF%E0%B2%95_%E0%B2%AC%E0%B2%BF%E0%B2%95%E0%B3%8D%E0%B2%95%E0%B2%9F%E0%B3%8D%E0%B2%9F%E0%B3%81_2007-2009 "ŕ˛ŕ˛°ŕłŕ˛Ľŕ˛żŕ˛ ಏಿŕ˛ŕłŕ˛ŕ˛ŕłŕ˛ŕł 2007-2009 â Kannada")
- [íęľě´](https://ko.wikipedia.org/wiki/%EC%84%B8%EA%B3%84_%EA%B8%88%EC%9C%B5_%EC%9C%84%EA%B8%B0_\(2007%EB%85%84~2008%EB%85%84\) "ě¸ęł ę¸ěľ ě기 (2007ë
~2008ë
) â Korean")
- [Ripoarisch](https://ksh.wikipedia.org/wiki/Zsammebroch_van_dr_Finanzmaat_em_Joohr_2007_un_2008 "Zsammebroch van dr Finanzmaat em Joohr 2007 un 2008 â Colognian")
- [LĂŤtzebuergesch](https://lb.wikipedia.org/wiki/Finanzkris_2007/2008 "Finanzkris 2007/2008 â Luxembourgish")
- [Limburgs](https://li.wikipedia.org/wiki/Globaole_financiescrisis "Globaole financiescrisis â Limburgish")
- [LietuviĹł](https://lt.wikipedia.org/wiki/2007%E2%80%932008_m._finans%C5%B3_kriz%C4%97 "2007â2008 m. finansĹł krizÄ â Lithuanian")
- [LatvieĹĄu](https://lv.wikipedia.org/wiki/2007.%E2%80%942010._gada_glob%C4%81l%C4%81_finan%C5%A1u_kr%C4%ABze "2007.â2010. gada globÄlÄ finanĹĄu krÄŤze â Latvian")
- [ĐакодОнŃки](https://mk.wikipedia.org/wiki/%D0%A4%D0%B8%D0%BD%D0%B0%D0%BD%D1%81%D0%B8%D1%81%D0%BA%D0%B0_%D0%BA%D1%80%D0%B8%D0%B7%D0%B0_2007%E2%80%932008 "ФинанŃиŃка ĐşŃиСа 2007â2008 â Macedonian")
- [ऎरञठŕĽ](https://mr.wikipedia.org/wiki/%E0%A5%A8%E0%A5%A6%E0%A5%A6%E0%A5%AD-%E0%A5%A8%E0%A5%A6%E0%A5%A6%E0%A5%AE%E0%A4%9A%E0%A5%87_%E0%A4%9C%E0%A4%BE%E0%A4%97%E0%A4%A4%E0%A4%BF%E0%A4%95_%E0%A4%86%E0%A4%B0%E0%A5%8D%E0%A4%A5%E0%A4%BF%E0%A4%95_%E0%A4%B8%E0%A4%82%E0%A4%95%E0%A4%9F "༨༌༌ŕĽ-༨༌༌༎ŕ¤ŕĽ ŕ¤ŕ¤žŕ¤ŕ¤¤ŕ¤żŕ¤ ŕ¤ŕ¤°ŕĽŕ¤Ľŕ¤żŕ¤ सŕ¤ŕ¤ŕ¤ â Marathi")
- [Bahasa Melayu](https://ms.wikipedia.org/wiki/Krisis_kewangan_2007%E2%80%932008 "Krisis kewangan 2007â2008 â Malay")
- [Plattdßßtsch](https://nds.wikipedia.org/wiki/Finanzkrise_2007/2008 "Finanzkrise 2007/2008 â Low German")
- [नŕĽŕ¤Şŕ¤žŕ¤˛ŕĽ](https://ne.wikipedia.org/wiki/%E0%A4%B8%E0%A4%A8%E0%A5%8D_%E0%A5%A8%E0%A5%A6%E0%A5%A6%E0%A5%AD%E2%80%93%E0%A5%A8%E0%A5%A6%E0%A5%A6%E0%A5%AE_%E0%A4%95%E0%A5%8B_%E0%A4%B5%E0%A4%BF%E0%A4%A4%E0%A5%8D%E0%A4%A4%E0%A5%80%E0%A4%AF_%E0%A4%B8%E0%A4%99%E0%A5%8D%E0%A4%95%E0%A4%9F "सन༠༨༌༌ŕĽâ༨༌༌༎ ŕ¤ŕĽ ाितŕĽŕ¤¤ŕĽŕ¤Ż सŕ¤ŕĽŕ¤ŕ¤ â Nepali")
- [Nederlands](https://nl.wikipedia.org/wiki/Kredietcrisis "Kredietcrisis â Dutch")
- [Norsk bokmĂĽl](https://no.wikipedia.org/wiki/Finanskrisen_i_2008 "Finanskrisen i 2008 â Norwegian BokmĂĽl")
- [ਪੰŕ¨ŕ¨žŕ¨ŹŕŠ](https://pa.wikipedia.org/wiki/2007%E2%80%932008_%E0%A8%A6%E0%A8%BE_%E0%A8%AE%E0%A8%BE%E0%A8%B2%E0%A9%80_%E0%A8%B8%E0%A9%B0%E0%A8%95%E0%A8%9F "2007â2008 ਌ਞ ਮਾਲ੠ਸੰŕ¨ŕ¨ â Punjabi")
- [Polski](https://pl.wikipedia.org/wiki/Globalny_kryzys_finansowy "Globalny kryzys finansowy â Polish")
- [ŮžŮ؏ابŰ](https://pnb.wikipedia.org/wiki/%DB%B2%DB%B0%DB%B0%DB%B8_%D8%AF%D8%A7_%D9%85%D8%A7%D9%84%DB%8C%D8%A7%D8%AA%DB%8C_%D8%A8%D8%AD%D8%B1%D8%A7%D9%86 "۲۰۰۸ دا Ů
اŮŰŘ§ŘŞŰ Ř¨Řعا٠â Western Punjabi")
- [ŮžÚŘŞŮ](https://ps.wikipedia.org/wiki/%D8%AF_%DB%B2%DB%B0%DB%B0%DB%B7-%DB%B2%DB%B0%DB%B0%DB%B8_%D8%B2_%DA%A9%D8%A7%D9%84_%D9%85%D8%A7%D9%84%D9%8A_%DA%A9%DA%93%DA%A9%DB%90%DA%86 "ŘŻ ۲۰۰ۡ-۲۰۰۸ ز ڊا٠Ů
اŮŮ ÚŠÚÚŠŰÚ â Pashto")
- [PortuguĂŞs](https://pt.wikipedia.org/wiki/Crise_financeira_de_2007%E2%80%932008 "Crise financeira de 2007â2008 â Portuguese")
- [Đ ŃŃŃкиК](https://ru.wikipedia.org/wiki/%D0%A4%D0%B8%D0%BD%D0%B0%D0%BD%D1%81%D0%BE%D0%B2%D1%8B%D0%B9_%D0%BA%D1%80%D0%B8%D0%B7%D0%B8%D1%81_2007%E2%80%942008_%D0%B3%D0%BE%D0%B4%D0%BE%D0%B2 "ФинанŃОвŃĐš ĐşŃĐ¸ĐˇĐ¸Ń 2007â2008 гОдОв â Russian")
- [ŕˇŕˇŕśŕˇŕś˝](https://si.wikipedia.org/wiki/%D8%A7%D9%84%D8%A3%D8%B2%D9%85%D8%A9_%D8%A7%D9%84%D9%85%D8%A7%D9%84%D9%8A%D8%A9_2007-2008 "اŮأزŮ
ŘŠ اŮŮ
اŮŮŘŠ 2007-2008 â Sinhala")
- [Simple English](https://simple.wikipedia.org/wiki/Financial_crisis_of_2007%E2%80%932008 "Financial crisis of 2007â2008 â Simple English")
- [Shqip](https://sq.wikipedia.org/wiki/Kriza_financiare_2007-2008 "Kriza financiare 2007-2008 â Albanian")
- [ĐĄŃĐżŃки / srpski](https://sr.wikipedia.org/wiki/Svetska_finansijska_kriza_2007. "Svetska finansijska kriza 2007. â Serbian")
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اŮŰŘ§ŘŞŰ Ř¨Řعا٠â Urdu")
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From Wikipedia, the free encyclopedia
Worldwide economic crisis
[](https://en.wikipedia.org/wiki/File:Lehman_Brothers_Times_Square_by_David_Shankbone.jpg)
The [bankruptcy of Lehman Brothers](https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers "Bankruptcy of Lehman Brothers") ([headquarters](https://en.wikipedia.org/wiki/745_Seventh_Avenue "745 Seventh Avenue") pictured), the fourth-largest U.S. investment bank (behind [Goldman Sachs](https://en.wikipedia.org/wiki/Goldman_Sachs "Goldman Sachs"), [Morgan Stanley](https://en.wikipedia.org/wiki/Morgan_Stanley "Morgan Stanley"), and [Merrill Lynch](https://en.wikipedia.org/wiki/Merrill_Lynch "Merrill Lynch")), on September 15, 2008, is often considered the climax of the 2008 financial crisis.
[](https://en.wikipedia.org/wiki/File:TED_Spread.png)
The [TED spread](https://en.wikipedia.org/wiki/TED_spread "TED spread"), an indicator of perceived [credit risk](https://en.wikipedia.org/wiki/Credit_risk "Credit risk") in the financial system, increased significantly during the crisis. It spiked sharply in August 2007, remained volatile for a year, and spiked even higher in September 2008 to reach a record 4.65% on October 10, 2008.
| |
|---|
| Part of a series on the |
| [Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession") |
| Major aspects [Subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis") [2000s energy crisis](https://en.wikipedia.org/wiki/2000s_energy_crisis "2000s energy crisis") [2000s United States housing bubble](https://en.wikipedia.org/wiki/2000s_United_States_housing_bubble "2000s United States housing bubble") [2000s United States housing market correction](https://en.wikipedia.org/wiki/2000s_United_States_housing_market_correction "2000s United States housing market correction") [2008 financial crisis]() [2008â2010 automotive industry crisis](https://en.wikipedia.org/wiki/2008%E2%80%932010_automotive_industry_crisis "2008â2010 automotive industry crisis") [DoddâFrank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act "DoddâFrank Wall Street Reform and Consumer Protection Act") [Euro area crisis](https://en.wikipedia.org/wiki/Euro_area_crisis "Euro area crisis") |
| [Causes](https://en.wikipedia.org/wiki/Causes_of_the_Great_Recession "Causes of the Great Recession") [Causes of the European debt crisis](https://en.wikipedia.org/wiki/Causes_of_the_European_debt_crisis "Causes of the European debt crisis") [Causes of the 2000s United States housing bubble](https://en.wikipedia.org/wiki/Causes_of_the_2000s_United_States_housing_bubble "Causes of the 2000s United States housing bubble") [Credit rating agencies and the subprime crisis](https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis "Credit rating agencies and the subprime crisis") [Government policies and the subprime mortgage crisis](https://en.wikipedia.org/wiki/Government_policies_and_the_subprime_mortgage_crisis "Government policies and the subprime mortgage crisis") |
| [Summit meetings](https://en.wikipedia.org/wiki/Summit_meetings "Summit meetings") [34th G8 summit](https://en.wikipedia.org/wiki/34th_G8_summit "34th G8 summit") (July 2008) [G-20 Washington summit](https://en.wikipedia.org/wiki/2008_G-20_Washington_summit "2008 G-20 Washington summit") (November 2008) [APEC Peru](https://en.wikipedia.org/wiki/APEC_Peru_2008 "APEC Peru 2008") (November 2008) [ChinaâJapanâSouth Korea trilateral summit](https://en.wikipedia.org/wiki/China%E2%80%93Japan%E2%80%93South_Korea_trilateral_summit "ChinaâJapanâSouth Korea trilateral summit") (December 2008) [G-20 London Summit](https://en.wikipedia.org/wiki/2009_G-20_London_Summit "2009 G-20 London Summit") (April 2009) |
| Government response and policy proposals [2008 European Union stimulus plan](https://en.wikipedia.org/wiki/2008_European_Union_stimulus_plan "2008 European Union stimulus plan") [2008â2009 Keynesian resurgence](https://en.wikipedia.org/wiki/2008%E2%80%932009_Keynesian_resurgence "2008â2009 Keynesian resurgence") [American Recovery and Reinvestment Act of 2009](https://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009 "American Recovery and Reinvestment Act of 2009") [Banking (Special Provisions) Act 2008](https://en.wikipedia.org/wiki/Banking_\(Special_Provisions\)_Act_2008 "Banking (Special Provisions) Act 2008") [Chinese economic stimulus program](https://en.wikipedia.org/wiki/Chinese_economic_stimulus_program "Chinese economic stimulus program") [Economic Stimulus Act of 2008](https://en.wikipedia.org/wiki/Economic_Stimulus_Act_of_2008 "Economic Stimulus Act of 2008") [Emergency Economic Stabilization Act of 2008](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 "Emergency Economic Stabilization Act of 2008") [Federal Reserve responses to the subprime crisis](https://en.wikipedia.org/wiki/Federal_Reserve_responses_to_the_subprime_crisis "Federal Reserve responses to the subprime crisis") [Government intervention during the subprime mortgage crisis](https://en.wikipedia.org/wiki/Government_intervention_during_the_subprime_mortgage_crisis "Government intervention during the subprime mortgage crisis") [Green New Deal](https://en.wikipedia.org/wiki/Green_New_Deal "Green New Deal") [Housing and Economic Recovery Act of 2008](https://en.wikipedia.org/wiki/Housing_and_Economic_Recovery_Act_of_2008 "Housing and Economic Recovery Act of 2008") [National fiscal policy response to the Great Recession](https://en.wikipedia.org/wiki/National_fiscal_policy_response_to_the_Great_Recession "National fiscal policy response to the Great Recession") [Regulatory responses to the subprime crisis](https://en.wikipedia.org/wiki/Regulatory_responses_to_the_subprime_crisis "Regulatory responses to the subprime crisis") [Subprime mortgage crisis solutions debate](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis_solutions_debate "Subprime mortgage crisis solutions debate") [Term Asset-Backed Securities Loan Facility](https://en.wikipedia.org/wiki/Term_Asset-Backed_Securities_Loan_Facility "Term Asset-Backed Securities Loan Facility") [Troubled Asset Relief Program](https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program "Troubled Asset Relief Program") |
| [Business failures](https://en.wikipedia.org/wiki/List_of_banks_acquired_or_bankrupted_during_the_Great_Recession "List of banks acquired or bankrupted during the Great Recession") [American International Group](https://en.wikipedia.org/wiki/American_International_Group "American International Group") [Chrysler](https://en.wikipedia.org/wiki/Chrysler "Chrysler") [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup") [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae") [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac") [General Motors](https://en.wikipedia.org/wiki/General_Motors "General Motors") [Lehman Brothers](https://en.wikipedia.org/wiki/Collapse_of_Lehman_Brothers "Collapse of Lehman Brothers") [Royal Bank of Scotland Group](https://en.wikipedia.org/wiki/NatWest_Group "NatWest Group") [UBS](https://en.wikipedia.org/wiki/UBS "UBS") |
| Regions [Africa](https://en.wikipedia.org/wiki/Great_Recession_in_Africa "Great Recession in Africa") [Americas](https://en.wikipedia.org/wiki/Great_Recession_in_the_Americas "Great Recession in the Americas") [South America](https://en.wikipedia.org/wiki/Great_Recession_in_South_America "Great Recession in South America") [United States](https://en.wikipedia.org/wiki/Great_Recession_in_the_United_States "Great Recession in the United States") [Asia](https://en.wikipedia.org/wiki/Great_Recession_in_Asia "Great Recession in Asia") [Europe](https://en.wikipedia.org/wiki/Great_Recession_in_Europe "Great Recession in Europe") [Oceania](https://en.wikipedia.org/wiki/Great_Recession_in_Oceania "Great Recession in Oceania") |
| [Timeline](https://en.wikipedia.org/wiki/Timeline_of_the_Great_Recession "Timeline of the Great Recession") |
| [v](https://en.wikipedia.org/wiki/Template:Great_Recession_series "Template:Great Recession series") [t](https://en.wikipedia.org/wiki/Template_talk:Great_Recession_series "Template talk:Great Recession series") [e](https://en.wikipedia.org/wiki/Special:EditPage/Template:Great_Recession_series "Special:EditPage/Template:Great Recession series") |
A major worldwide [financial crisis](https://en.wikipedia.org/wiki/Financial_crisis "Financial crisis") centered in the United States took place in 2008. The causes included excessive [speculation](https://en.wikipedia.org/wiki/Speculation "Speculation") on property values by both homeowners and [financial institutions](https://en.wikipedia.org/wiki/Financial_institution "Financial institution"), leading to the [2000s United States housing bubble](https://en.wikipedia.org/wiki/2000s_United_States_housing_bubble "2000s United States housing bubble"). This was exacerbated by [predatory lending](https://en.wikipedia.org/wiki/Predatory_lending "Predatory lending") for [subprime mortgages](https://en.wikipedia.org/wiki/Subprime_mortgages "Subprime mortgages") and by deficiencies in [regulation](https://en.wikipedia.org/wiki/Regulation "Regulation"). [Cash out refinancings](https://en.wikipedia.org/wiki/Cash_out_refinancing "Cash out refinancing") had fueled an increase in consumption that could no longer be sustained when home prices declined. The first phase of the crisis was the [subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis"), which began in early 2007, as [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities") (MBS) tied to U.S. [real estate](https://en.wikipedia.org/wiki/Real_estate "Real estate"), and a vast web of [derivatives](https://en.wikipedia.org/wiki/Derivative_\(finance\) "Derivative (finance)") linked to those MBS, collapsed in value. A [liquidity crisis](https://en.wikipedia.org/wiki/Liquidity_crisis "Liquidity crisis") spread to global institutions by mid-2007 and climaxed with the [bankruptcy of Lehman Brothers](https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers "Bankruptcy of Lehman Brothers") in September 2008, which triggered a [stock market crash](https://en.wikipedia.org/wiki/Stock_market_crash "Stock market crash") and [bank runs](https://en.wikipedia.org/wiki/Bank_run "Bank run") in several countries.[\[1\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-1) The crisis exacerbated the [Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession"), a [global recession](https://en.wikipedia.org/wiki/Global_recession "Global recession") that began in mid-2007, as well as the [United States bear market of 2007â2009](https://en.wikipedia.org/wiki/United_States_bear_market_of_2007%E2%80%932009 "United States bear market of 2007â2009"). It was also a contributor to the [2008â2011 Icelandic financial crisis](https://en.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_financial_crisis "2008â2011 Icelandic financial crisis") and the [euro area crisis](https://en.wikipedia.org/wiki/Euro_area_crisis "Euro area crisis").
During the 1990s, the [U.S. Congress](https://en.wikipedia.org/wiki/U.S._Congress "U.S. Congress") had passed legislation that intended to expand [affordable housing](https://en.wikipedia.org/wiki/Affordable_housing_in_the_United_States "Affordable housing in the United States") through looser financing rules, and in 1999, parts of the [1933 Banking Act](https://en.wikipedia.org/wiki/1933_Banking_Act "1933 Banking Act") (GlassâSteagall Act) were [repealed](https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act "GrammâLeachâBliley Act"), enabling institutions to mix low-risk operations, such as [commercial banking](https://en.wikipedia.org/wiki/Commercial_bank "Commercial bank") and [insurance](https://en.wikipedia.org/wiki/Insurance#Insurance_companies "Insurance"), with higher-risk operations such as [investment banking](https://en.wikipedia.org/wiki/Investment_banking "Investment banking") and [proprietary trading](https://en.wikipedia.org/wiki/Proprietary_trading "Proprietary trading").[\[2\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-2) As the [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") ("Fed") lowered the [federal funds rate](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") from 2000 to 2003, institutions increasingly targeted low-income homebuyers, largely belonging to [racial minorities](https://en.wikipedia.org/wiki/Racial_minorities "Racial minorities"), with high-risk loans;[\[3\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-3) this development went unattended by regulators.[\[4\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-4) As interest rates rose from 2004 to 2006, the cost of [mortgages](https://en.wikipedia.org/wiki/Mortgage "Mortgage") rose and the demand for housing fell; in early 2007, as more U.S. subprime mortgage holders began [defaulting](https://en.wikipedia.org/wiki/Default_\(finance\) "Default (finance)") on their repayments, lenders went bankrupt, culminating in the bankruptcy of [New Century Financial](https://en.wikipedia.org/wiki/New_Century_Financial "New Century Financial") in April. As demand and prices continued to fall, the [financial contagion](https://en.wikipedia.org/wiki/Financial_contagion "Financial contagion") spread to global [credit markets](https://en.wikipedia.org/wiki/Credit_markets "Credit markets") by August 2007, and [central banks](https://en.wikipedia.org/wiki/Central_bank "Central bank") began injecting [liquidity](https://en.wikipedia.org/wiki/Liquidity "Liquidity"). In March 2008, [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns"), the fifth-largest U.S. investment bank, was sold to [JPMorgan Chase](https://en.wikipedia.org/wiki/JPMorgan_Chase "JPMorgan Chase") in a "[fire sale](https://en.wikipedia.org/wiki/Fire_sale "Fire sale")" backed by Fed financing.
In response to the growing crisis, governments around the world deployed massive [bailouts](https://en.wikipedia.org/wiki/Bailout "Bailout") of financial institutions and used [monetary policy](https://en.wikipedia.org/wiki/Monetary_policy "Monetary policy") and [fiscal policies](https://en.wikipedia.org/wiki/Fiscal_policies "Fiscal policies") to prevent an [economic collapse](https://en.wikipedia.org/wiki/Economic_collapse "Economic collapse") of the [global financial system](https://en.wikipedia.org/wiki/Global_financial_system "Global financial system").[\[5\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-5) By July 2008, [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae") and [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac"), companies which together owned or guaranteed half of the U.S. housing market, verged on collapse; the [Housing and Economic Recovery Act of 2008](https://en.wikipedia.org/wiki/Housing_and_Economic_Recovery_Act_of_2008 "Housing and Economic Recovery Act of 2008") enabled the federal government to seize them on September 7. [Lehman Brothers](https://en.wikipedia.org/wiki/Lehman_Brothers "Lehman Brothers") (the fourth-largest U.S. investment bank) filed for the largest bankruptcy in U.S. history on September 15, which was followed by a Fed bail-out of [American International Group](https://en.wikipedia.org/wiki/American_International_Group "American International Group") (the country's largest insurer) the next day, and the seizure of [Washington Mutual](https://en.wikipedia.org/wiki/Washington_Mutual "Washington Mutual") in the largest bank failure in U.S. history on September 25. On October 3, Congress passed the [Emergency Economic Stabilization Act](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act "Emergency Economic Stabilization Act"), authorizing the [Treasury Department](https://en.wikipedia.org/wiki/United_States_Department_of_the_Treasury "United States Department of the Treasury") to purchase [toxic assets](https://en.wikipedia.org/wiki/Toxic_assets "Toxic assets") and bank stocks through the \$700 billion [Troubled Asset Relief Program](https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program "Troubled Asset Relief Program") (TARP). The Fed began a program of [quantitative easing](https://en.wikipedia.org/wiki/Quantitative_easing "Quantitative easing") by buying treasury bonds and other assets, such as MBS, and the [American Recovery and Reinvestment Act](https://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act "American Recovery and Reinvestment Act"), signed in February 2009 by newly elected president [Barack Obama](https://en.wikipedia.org/wiki/Barack_Obama "Barack Obama"), included a range of measures intended to preserve existing jobs and create new ones. These initiatives combined, coupled with actions taken in other countries, ended the worst of the [Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession") by mid-2009.
Assessments of the crisis's impact in the U.S. vary, but suggest that some 8.7 million jobs were lost, causing unemployment to rise from 5% in 2007 to a high of 10% in October 2009. The percentage of citizens living in poverty rose from 12.5% in 2007 to 15.1% in 2010. The [Dow Jones Industrial Average](https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average "Dow Jones Industrial Average") fell by 53% between October 2007 and March 2009, and some estimates suggest that one in four households lost 75% or more of their [net worth](https://en.wikipedia.org/wiki/Net_worth "Net worth"). In 2010, the [DoddâFrank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act "DoddâFrank Wall Street Reform and Consumer Protection Act") was passed, overhauling financial regulations.[\[6\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-6) It was opposed by many [Republicans](https://en.wikipedia.org/wiki/Republican_Party_\(United_States\) "Republican Party (United States)"), and it was weakened by the [Economic Growth, Regulatory Relief, and Consumer Protection Act](https://en.wikipedia.org/wiki/Economic_Growth,_Regulatory_Relief,_and_Consumer_Protection_Act "Economic Growth, Regulatory Relief, and Consumer Protection Act") in 2018. The [Basel III](https://en.wikipedia.org/wiki/Basel_III "Basel III") capital and liquidity standards were also adopted by countries around the world.[\[7\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-7)[\[8\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-8)
## Background
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=1 "Edit section: Background")\]
[](https://en.wikipedia.org/wiki/File:GDP_Real_Growth_in_2009.svg)
World map showing [real GDP growth rates](https://en.wikipedia.org/wiki/List_of_countries_by_real_GDP_growth_rate "List of countries by real GDP growth rate") for 2009 (countries in brown were in recession)
[](https://en.wikipedia.org/wiki/File:NYUGDPFinancialShare.jpg)
Share in GDP of U.S. financial sector since 1860[\[9\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-9)
The crisis exacerbated the [Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession"), a [global recession](https://en.wikipedia.org/wiki/Global_recession "Global recession") that began in mid-2007.[\[10\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-10)[\[11\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-11)[\[12\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-12)[\[13\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-13)[\[14\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-14) It was also followed by the [euro area crisis](https://en.wikipedia.org/wiki/Euro_area_crisis "Euro area crisis"), which began with the start of the [Greek government-debt crisis](https://en.wikipedia.org/wiki/Greek_government-debt_crisis "Greek government-debt crisis") in late 2009, and the [2008â2011 Icelandic financial crisis](https://en.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_financial_crisis "2008â2011 Icelandic financial crisis"), which involved the [bank failure](https://en.wikipedia.org/wiki/Bank_failure "Bank failure") of all three of the major banks in Iceland and, relative to the size of its economy, was the largest economic collapse suffered by any country in history.[\[15\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-15) It was among the five worst financial crises the world had experienced and led to a loss of more than \$2 trillion from the global economy.[\[16\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-16)[\[17\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-17) U.S. home mortgage debt relative to [GDP](https://en.wikipedia.org/wiki/GDP "GDP") increased from an average of 46% during the 1990s to 73% during 2008, reaching \$10.5 (~\$15 trillion in 2024) trillion.[\[18\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-headache-18) The increase in [cash out refinancings](https://en.wikipedia.org/wiki/Cash_out_refinancing "Cash out refinancing"), as home values rose, fueled an increase in consumption that could no longer be sustained when home prices declined.[\[19\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-extracted-19)[\[20\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-freecash-20)[\[21\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-boosted-21) Many financial institutions owned investments whose value was based on home mortgages such as [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities"), or [credit derivatives](https://en.wikipedia.org/wiki/Credit_derivative "Credit derivative") used to insure them against failure, which declined in value significantly.[\[22\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-22)[\[23\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-23)[\[24\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-24) The [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund") estimated that large U.S. and European banks lost more than \$1 trillion on [toxic assets](https://en.wikipedia.org/wiki/Toxic_asset "Toxic asset") and from bad loans from January 2007 to September 2009.[\[25\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-25)
Lack of investor confidence in bank [solvency](https://en.wikipedia.org/wiki/Solvency "Solvency") and declines in credit availability led to plummeting stock and [commodity](https://en.wikipedia.org/wiki/Commodity "Commodity") prices in late 2008 and early 2009.[\[26\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-26) The crisis rapidly spread into a global economic shock, resulting in several [bank failures](https://en.wikipedia.org/wiki/Bank_failure "Bank failure").[\[27\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-27) Economies worldwide slowed during this period since credit tightened and international trade declined.[\[28\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-28) Housing markets suffered and unemployment soared, resulting in [evictions](https://en.wikipedia.org/wiki/Eviction "Eviction") and [foreclosures](https://en.wikipedia.org/wiki/Foreclosure "Foreclosure"). Several businesses failed.[\[29\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-gofromhere-29)[\[30\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-30) From its peak in the second quarter of 2007 at \$61.4 trillion, household wealth in the United States fell \$11 trillion, to \$50.4 trillion by the end of the first quarter of 2009, resulting in a decline in consumption, then a decline in business investment.[\[31\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-31)[\[32\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-greatcrash-32) In the fourth quarter of 2008, the quarter-over-quarter decline in real GDP in the U.S. was 8.4%.[\[33\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-33) The U.S. unemployment rate peaked at 11.0% in October 2009, the highest rate since 1983 and roughly twice the pre-crisis rate. The average hours per work week declined to 33, the lowest level since the government began collecting the data in 1964.[\[34\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-34)[\[35\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-35)
The economic crisis started in the U.S. but spread to the rest of the world.[\[29\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-gofromhere-29) U.S. consumption accounted for more than a third of the growth in global consumption between 2000 and 2007 and the rest of the world depended on the U.S. consumer as a source of demand.[\[36\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-36)[\[37\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-37) Toxic securities were owned by corporate and institutional investors globally. Derivatives such as [credit default swaps](https://en.wikipedia.org/wiki/Credit_default_swap "Credit default swap") also increased the linkage between large financial institutions. The [de-leveraging](https://en.wikipedia.org/wiki/De-leveraging "De-leveraging") of financial institutions, as assets were sold to pay back obligations that could not be refinanced in frozen credit markets, further accelerated the solvency crisis and caused a decrease in international trade. Reductions in the growth rates of [developing countries](https://en.wikipedia.org/wiki/Developing_countries "Developing countries") were due to falls in trade, commodity prices, investment and [remittances](https://en.wikipedia.org/wiki/Remittance "Remittance") sent from migrant workers (example: Armenia[\[38\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-38)). States with fragile political systems feared that investors from Western states would withdraw their money because of the crisis.[\[39\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-39)
As part of [national fiscal policy response to the Great Recession](https://en.wikipedia.org/wiki/National_fiscal_policy_response_to_the_Great_Recession "National fiscal policy response to the Great Recession"), governments and central banks, including the [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve"), the [European Central Bank](https://en.wikipedia.org/wiki/European_Central_Bank "European Central Bank") and the [Bank of England](https://en.wikipedia.org/wiki/Bank_of_England "Bank of England"), provided then-unprecedented trillions of dollars in [bailouts](https://en.wikipedia.org/wiki/Bailout "Bailout") and [stimulus](https://en.wikipedia.org/wiki/Stimulus_\(economics\) "Stimulus (economics)"), including expansive [fiscal policy](https://en.wikipedia.org/wiki/Fiscal_policy "Fiscal policy") and [monetary policy](https://en.wikipedia.org/wiki/Monetary_policy "Monetary policy") to offset the decline in consumption and lending capacity, avoid a further collapse, encourage lending, restore faith in the integral [commercial paper](https://en.wikipedia.org/wiki/Commercial_paper "Commercial paper") markets, avoid the risk of a [deflationary spiral](https://en.wikipedia.org/wiki/Deflationary_spiral "Deflationary spiral"), and provide banks with enough funds to allow customers to make withdrawals.[\[40\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-40) In effect, the central banks went from being the "[lender of last resort](https://en.wikipedia.org/wiki/Lender_of_last_resort "Lender of last resort")" to the "lender of only resort" for a significant portion of the economy. In some cases the Fed was considered the "buyer of last resort".[\[41\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-41)[\[42\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-42)[\[43\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-43)[\[44\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-44)[\[45\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-45) During the fourth quarter of 2008, these central banks purchased US\$2.5 trillion (~\$3.57 trillion in 2024) of government debt and troubled private assets from banks. This was the largest liquidity injection into the credit market, and the largest monetary policy action in world history. Following a model initiated by the [2008 United Kingdom bank rescue package](https://en.wikipedia.org/wiki/2008_United_Kingdom_bank_rescue_package "2008 United Kingdom bank rescue package"),[\[46\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Langley2015-46)[\[47\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-47) the governments of European nations and the United States guaranteed the debt issued by their banks and raised the capital of their national banking systems, ultimately purchasing \$1.5 trillion newly issued [preferred stock](https://en.wikipedia.org/wiki/Preferred_stock "Preferred stock") in major banks.[\[32\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-greatcrash-32) The [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") created then-significant amounts of new currency as a method to combat the [liquidity trap](https://en.wikipedia.org/wiki/Liquidity_trap "Liquidity trap").[\[48\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-48)
Bailouts came in the form of trillions of dollars of loans, asset purchases, guarantees, and direct spending.[\[49\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-49) Significant controversy accompanied the bailouts, such as in the case of the [AIG bonus payments controversy](https://en.wikipedia.org/wiki/AIG_bonus_payments_controversy "AIG bonus payments controversy"), leading to the development of a variety of "decision making frameworks", to help balance competing policy interests during times of financial crisis.[\[50\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-50) [Alistair Darling](https://en.wikipedia.org/wiki/Alistair_Darling "Alistair Darling"), the U.K.'s [Chancellor of the Exchequer](https://en.wikipedia.org/wiki/Chancellor_of_the_Exchequer "Chancellor of the Exchequer") at the time of the crisis, stated in 2018 that Britain came within hours of "a breakdown of law and order" the day that [Royal Bank of Scotland](https://en.wikipedia.org/wiki/Royal_Bank_of_Scotland "Royal Bank of Scotland") was bailed-out.[\[51\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-51) Instead of financing more domestic loans, some banks instead spent some of the stimulus money in more profitable areas such as investing in emerging markets and foreign currencies.[\[52\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-52)
In July 2010, the [DoddâFrank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act "DoddâFrank Wall Street Reform and Consumer Protection Act") was enacted in the United States to "promote the financial stability of the United States".[\[53\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-53) The [Basel III](https://en.wikipedia.org/wiki/Basel_III "Basel III") capital and liquidity standards were adopted worldwide.[\[54\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-54) Since the 2008 financial crisis, consumer regulators in America have more closely supervised sellers of credit cards and home mortgages in order to deter anticompetitive practices that led to the crisis.[\[55\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-55)
At least two major reports on the causes of the crisis were produced by the U.S. Congress: the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission") report, released January 2011, and a report by the [United States Senate Homeland Security Permanent Subcommittee on Investigations](https://en.wikipedia.org/wiki/United_States_Senate_Homeland_Security_Permanent_Subcommittee_on_Investigations "United States Senate Homeland Security Permanent Subcommittee on Investigations") entitled [Wall Street and the Financial Crisis: Anatomy of a Financial Collapse](https://en.wikipedia.org/wiki/Wall_Street_and_the_Financial_Crisis:_Anatomy_of_a_Financial_Collapse "Wall Street and the Financial Crisis: Anatomy of a Financial Collapse"), released April 2011.
In total, 47 bankers served jail time as a result of the crisis, over half of whom were from Iceland, where the crisis was the most severe and led to the collapse of all three major Icelandic banks.[\[56\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-jail-56) In April 2012, [Geir Haarde](https://en.wikipedia.org/wiki/Geir_Haarde "Geir Haarde") of Iceland became the only politician to be convicted as a result of the crisis.[\[57\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-57)[\[58\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-58) Only one banker in the United States served jail time as a result of the crisis, [Kareem Serageldin](https://en.wikipedia.org/wiki/Kareem_Serageldin "Kareem Serageldin"), a banker at [Credit Suisse](https://en.wikipedia.org/wiki/Credit_Suisse "Credit Suisse") who was sentenced to 30 months in jail and returned \$24.6 million in compensation for manipulating bond prices to hide \$1 billion of losses.[\[59\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-59)[\[56\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-jail-56) No individuals in the United Kingdom were convicted as a result of the crisis.[\[60\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-60)[\[61\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-61) In [*SEC v. Goldman Sachs*](https://en.wikipedia.org/wiki/SEC_v._Goldman_Sachs_ABACUS "SEC v. Goldman Sachs ABACUS"), [Goldman Sachs](https://en.wikipedia.org/wiki/Goldman_Sachs "Goldman Sachs") paid a \$550 million civil penalty and acknowledged that its marketing materials for CDO contained incomplete information, settling [securities fraud](https://en.wikipedia.org/wiki/Securities_fraud "Securities fraud") charges after allegedly anticipating the financial crisis and selling toxic investments to its clients.[\[62\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-62)[\[63\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:12-63)[\[64\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-64)
With fewer resources to risk in [creative destruction](https://en.wikipedia.org/wiki/Creative_destruction "Creative destruction"), the number of patent applications was flat, compared to exponential increases in patent application in prior years.[\[65\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-65)
[](https://en.wikipedia.org/wiki/File:2008_Top1percentUSA.svg)
Share of income going to the top 1% of earners, one measure of economic inequality in the US from 1913 to 2008.
Typical American families did not fare well, nor did the "wealthy-but-not-wealthiest" families just beneath the pyramid's top.[\[66\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-66)[\[67\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-67)[\[68\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-68) However, half of the poorest families in the United States did not have wealth declines at all during the crisis because they generally did not own financial investments whose value could fluctuate. The Federal Reserve surveyed 4,000 households from 2007 to 2009, and found that the total wealth of 63% of all Americans declined in that period and 77% of the richest families had a decrease in total wealth, while only 50% of those on the bottom of the pyramid suffered a decrease.[\[69\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-69)[\[70\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-70)[\[71\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-71)
## Timeline
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=2 "Edit section: Timeline")\]
See also: [Global financial crisis in September 2008](https://en.wikipedia.org/wiki/Global_financial_crisis_in_September_2008 "Global financial crisis in September 2008"), [Global financial crisis in October 2008](https://en.wikipedia.org/wiki/Global_financial_crisis_in_October_2008 "Global financial crisis in October 2008"), [Global financial crisis in November 2008](https://en.wikipedia.org/wiki/Global_financial_crisis_in_November_2008 "Global financial crisis in November 2008"), [Global financial crisis in December 2008](https://en.wikipedia.org/wiki/Global_financial_crisis_in_December_2008 "Global financial crisis in December 2008"), [Global financial crisis in 2009](https://en.wikipedia.org/wiki/Global_financial_crisis_in_2009 "Global financial crisis in 2009"), [United States bear market of 2007â2009](https://en.wikipedia.org/wiki/United_States_bear_market_of_2007%E2%80%932009 "United States bear market of 2007â2009"), [DoddâFrank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act "DoddâFrank Wall Street Reform and Consumer Protection Act"), [Regulatory responses to the subprime crisis](https://en.wikipedia.org/wiki/Regulatory_responses_to_the_subprime_crisis "Regulatory responses to the subprime crisis"), and [Subprime mortgage crisis solutions debate](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis_solutions_debate "Subprime mortgage crisis solutions debate")
The following is a timeline of the major events of the financial crisis, including government responses, and the subsequent economic recovery.[\[72\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-72)[\[73\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-73)[\[74\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-74)[\[75\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-75)
### Pre-2007
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=3 "Edit section: Pre-2007")\]
[](https://en.wikipedia.org/wiki/File:Cost_of_housing_by_State.webp)
Cost of housing by state from the year 2000 to 2022
- April 28, 2004: Meeting is held in the basement of the Federal Reserve with the Gang of Five (Goldman Sachs, Lehman Brothers, Merrill Lynch, Bear Stearns and Morgan Stanley) and the five members of the Securities and Exchange Commission to create an exemption for the five largest investment banks in the U.S. from having to adhere to the [Net Capital Rule](https://en.wikipedia.org/wiki/Net_capital_rule "Net capital rule").[\[76\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-76)
- May 19, 2005: Fund manager [Michael Burry](https://en.wikipedia.org/wiki/Michael_Burry "Michael Burry") closed a [credit default swap](https://en.wikipedia.org/wiki/Credit_default_swap "Credit default swap") against subprime mortgage bonds with [Deutsche Bank](https://en.wikipedia.org/wiki/Deutsche_Bank "Deutsche Bank") valued at \$60 million â the first such CDS. He projected they would become volatile within two years of the low "teaser rate" of the mortgages expiring.[\[77\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-77)[\[78\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-78)
- 2006: After years of above-average price increases, housing prices peaked and [mortgage loan](https://en.wikipedia.org/wiki/Mortgage_loan "Mortgage loan") delinquency roseâthe first sign of the bursting of the [United States housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble").[\[79\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-aspnewhome-79)[\[80\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Homeownership-80) Due to increasingly lax underwriting standards, one-third of all mortgages in 2006 were subprime or no-documentation loans,[\[81\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-81) which comprised 17% of home purchases that year.[\[82\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-newcentury-82)
- May 2006: [JPMorgan](https://en.wikipedia.org/wiki/JPMorgan "JPMorgan") warned clients of a housing downturn, especially in sub-prime housing.[\[83\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-ii2007-83)
- August 2006: The [yield curve](https://en.wikipedia.org/wiki/Yield_curve "Yield curve") inverted, signaling a recession was likely within a year or two.[\[84\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-84)
- November 2006: [UBS](https://en.wikipedia.org/wiki/UBS "UBS") warned of "an impending crisis in the U.S. housing market".[\[83\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-ii2007-83)
### 2007 (JanuaryâAugust)
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=4 "Edit section: 2007 (JanuaryâAugust)")\]
- February 27, 2007: Stock prices in China and the U.S. fell by the most since 2003 as reports of a decline in home prices and [durable goods](https://en.wikipedia.org/wiki/Durable_good "Durable good") orders stoked growth fears, with [Alan Greenspan](https://en.wikipedia.org/wiki/Alan_Greenspan "Alan Greenspan") predicting a recession.[\[85\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-85) Due to increased delinquency rates in [subprime lending](https://en.wikipedia.org/wiki/Subprime_lending "Subprime lending"), [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac") said that it would stop investing in certain subprime loans.[\[86\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-86)
- April 2, 2007: [New Century](https://en.wikipedia.org/wiki/New_Century "New Century"), an American [real estate investment trust](https://en.wikipedia.org/wiki/Real_estate_investment_trust "Real estate investment trust") specializing in [subprime lending](https://en.wikipedia.org/wiki/Subprime_lending "Subprime lending") and [securitization](https://en.wikipedia.org/wiki/Securitization "Securitization"), filed for [Chapter 11 bankruptcy protection](https://en.wikipedia.org/wiki/Chapter_11_bankruptcy_protection "Chapter 11 bankruptcy protection"). This propagated the [subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis").[\[87\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-87)[\[88\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-88)[\[82\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-newcentury-82)[\[89\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-usatodaytimeline-89)[\[90\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-BBC_Timeline-90)
- June 20, 2007: After receiving [margin calls](https://en.wikipedia.org/wiki/Margin_call "Margin call"), [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns") bailed out two of its hedge funds with \$20 billion of exposure to [collateralized debt obligations](https://en.wikipedia.org/wiki/Collateralized_debt_obligation "Collateralized debt obligation") including subprime mortgages.[\[91\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-91)
- July 19, 2007: [The Dow Jones Industrial Average (DJIA)](https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average "Dow Jones Industrial Average") closed above 14,000 for the first time, at 14,000.41.[\[92\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:5-92)
- July 30, 2007: [IKB Deutsche Industriebank](https://en.wikipedia.org/wiki/IKB_Deutsche_Industriebank "IKB Deutsche Industriebank"), the first banking casualty of the crisis, announces its bailout by German public financial institution [KfW](https://en.wikipedia.org/wiki/KfW "KfW").[\[93\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-93)
- July 31, 2007: [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns") liquidated the two hedge funds.[\[89\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-usatodaytimeline-89)
- August 6, 2007: [American Home Mortgage](https://en.wikipedia.org/wiki/American_Home_Mortgage "American Home Mortgage") filed for bankruptcy.[\[89\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-usatodaytimeline-89)
- August 9, 2007: [BNP Paribas](https://en.wikipedia.org/wiki/BNP_Paribas "BNP Paribas") blocked withdrawals from three of its [hedge funds](https://en.wikipedia.org/wiki/Hedge_fund "Hedge fund") with a total of \$2.2 billion in [assets under management](https://en.wikipedia.org/wiki/Assets_under_management "Assets under management"), due to "a complete evaporation of liquidity", making valuation of the funds impossible â a clear sign that banks were refusing to do business with each other.[\[90\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-BBC_Timeline-90)[\[94\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-94)[\[95\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-95)
- August 16, 2007: The DJIA closes at 12,945.78 after falling on 12 out of the previous 20 trading days following its peak. It had fallen 1,164.63 or 8.3%.[\[92\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:5-92)
### 2007 (SeptemberâDecember)
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=5 "Edit section: 2007 (SeptemberâDecember)")\]
[](https://en.wikipedia.org/wiki/File:Northern_Rock_Queue.jpg)
People queueing outside a [Northern Rock](https://en.wikipedia.org/wiki/Northern_Rock "Northern Rock") branch in the United Kingdom to withdraw their savings during the financial crisis
- September 14, 2007: [Northern Rock](https://en.wikipedia.org/wiki/Northern_Rock "Northern Rock"), a medium-sized and highly [leveraged](https://en.wikipedia.org/wiki/Leveraged "Leveraged") British bank, received support from the [Bank of England](https://en.wikipedia.org/wiki/Bank_of_England "Bank of England").[\[96\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-96) This led to investor panic and a [bank run](https://en.wikipedia.org/wiki/Bank_run "Bank run").[\[97\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-northernrock-97)
- September 18, 2007: The [Federal Open Market Committee](https://en.wikipedia.org/wiki/Federal_Open_Market_Committee "Federal Open Market Committee") began reducing the [federal funds rate](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") from its peak of 5.25% in response to worries about liquidity and confidence.[\[98\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-98)[\[99\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-99)
- September 28, 2007: [NetBank](https://en.wikipedia.org/wiki/NetBank "NetBank") suffered from [bank failure](https://en.wikipedia.org/wiki/Bank_failure "Bank failure") and filed bankruptcy due to exposure to home loans.[\[100\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-100)
- October 9, 2007: The DJIA hit its peak closing price of 14,164.53.[\[101\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-101)
- October 15, 2007: [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup"), [Bank of America](https://en.wikipedia.org/wiki/Bank_of_America "Bank of America"), and [JPMorgan Chase](https://en.wikipedia.org/wiki/JPMorgan_Chase "JPMorgan Chase") announced plans for the \$80 billion [Master Liquidity Enhancement Conduit](https://en.wikipedia.org/wiki/Master_Liquidity_Enhancement_Conduit "Master Liquidity Enhancement Conduit") to provide liquidity to [structured investment vehicles](https://en.wikipedia.org/wiki/Structured_investment_vehicle "Structured investment vehicle"). The plan was abandoned in December.[\[102\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-102)
- November 26, 2007: US markets enter a correction as worries about the financial sector continued to mount.[\[103\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-103)
- December 2007: Unemployment in the US hit 5%.[\[104\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:6-104)
- December 12, 2007: The [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") instituted the [Term auction facility](https://en.wikipedia.org/wiki/Term_auction_facility "Term auction facility") to supply short-term credit to banks with sub-prime mortgages.[\[105\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-105)
- December 17, 2007: [Delta Financial Corporation](https://en.wikipedia.org/wiki/Delta_Financial_Corporation "Delta Financial Corporation") filed bankruptcy after failing to [securitize](https://en.wikipedia.org/wiki/Securitize "Securitize") subprime loans.[\[106\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-106)
- December 19, 2007: the [Standard and Poor's](https://en.wikipedia.org/wiki/Standard_and_Poor%27s "Standard and Poor's") rating agency downgrades the ratings of many monoline insurers which pay out bonds that fail.[\[107\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-107)
- December 31, 2007: Despite volatility through the last part of the year, markets close above where they started the year, with the DJIA closing at 13,264.82, up 6.4% for the year.[\[108\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-108)
### 2008 (JanuaryâAugust)
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=6 "Edit section: 2008 (JanuaryâAugust)")\]
- January 11, 2008: [Bank of America](https://en.wikipedia.org/wiki/Bank_of_America "Bank of America") agreed to buy [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial") for \$4 billion in stock.[\[109\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-109)
- January 18, 2008: Stock markets fell to a yearly low as the credit rating of [Ambac](https://en.wikipedia.org/wiki/Ambac "Ambac"), a [bond insurance](https://en.wikipedia.org/wiki/Bond_insurance "Bond insurance") company, was downgraded. Meanwhile, an increase in the amount of withdrawals caused Scottish Equitable to implement delays of up to 12 months on people wishing to withdraw money.[\[110\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-110)
- January 21, 2008: As US markets were closed for [Martin Luther King Jr. Day](https://en.wikipedia.org/wiki/Martin_Luther_King_Jr._Day "Martin Luther King Jr. Day"), the [FTSE 100 Index](https://en.wikipedia.org/wiki/FTSE_100_Index "FTSE 100 Index") in the United Kingdom tumbled 323.5 points or 5.5% in its largest crash since the [September 11 attacks](https://en.wikipedia.org/wiki/September_11_attacks "September 11 attacks").[\[111\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:7-111)
- January 22, 2008: The US Federal Reserve cut interest rates by 0.75% to stimulate the economy, the largest drop in 25 years and the first emergency cut since 2001.[\[111\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:7-111)
- January 2008: U.S. stocks had the worst January since 2000 over concerns about the exposure of companies that issue [bond insurance](https://en.wikipedia.org/wiki/Bond_insurance "Bond insurance").[\[112\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-112)
- February 13, 2008: The [Economic Stimulus Act of 2008](https://en.wikipedia.org/wiki/Economic_Stimulus_Act_of_2008 "Economic Stimulus Act of 2008") was enacted, which included a tax rebate.[\[113\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-113)[\[114\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-114)
- February 22, 2008: The [nationalisation of Northern Rock](https://en.wikipedia.org/wiki/Nationalisation_of_Northern_Rock "Nationalisation of Northern Rock") was completed.[\[97\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-northernrock-97)
- March 5, 2008: [The Carlyle Group](https://en.wikipedia.org/wiki/The_Carlyle_Group "The Carlyle Group") received [margin calls](https://en.wikipedia.org/wiki/Margin_calls "Margin calls") on its mortgage bond fund.[\[115\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-115)
- March 17, 2008: [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns"), with \$46 billion of [mortgage](https://en.wikipedia.org/wiki/Mortgage "Mortgage") assets that had not been written down and \$10 trillion in total assets, faced bankruptcy; instead, in its first emergency meeting in 30 years, the Federal Reserve agreed to guarantee its bad loans to facilitate its acquisition by [JPMorgan Chase](https://en.wikipedia.org/wiki/JPMorgan_Chase "JPMorgan Chase") for \$2/share. A week earlier, the stock was trading at \$60/share and a year earlier it traded for \$178/share. The buyout price was increased to \$10/share the following week.[\[116\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-116)[\[117\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-117)[\[118\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-118)
- March 18, 2008: In a contentious meeting, the Federal Reserve cut the [federal funds rate](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") by 75 basis points, its 6th cut in 6 months.[\[119\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-119) It also allowed [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae") & [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac") to buy \$200 billion in subprime mortgages from banks. Officials thought this would contain the possible crisis. The [U.S. dollar](https://en.wikipedia.org/wiki/U.S._dollar "U.S. dollar") weakened and commodity prices soared.\[*[data missing](https://en.wikipedia.org/wiki/Wikipedia:Cleanup "Wikipedia:Cleanup")*\][\[120\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-120)[\[121\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-121)[\[122\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-122)
- Late June 2008: Despite the U.S. stock market falling to 20% below its highs, commodity-related stocks soared as oil traded above \$140/barrel for the first time and steel prices rose above \$1,000 per ton. Worries about [inflation](https://en.wikipedia.org/wiki/Inflation "Inflation") combined with strong demand from China encouraged people to invest in [commodities](https://en.wikipedia.org/wiki/Commodities "Commodities") during the [2000s commodities boom](https://en.wikipedia.org/wiki/2000s_commodities_boom "2000s commodities boom").[\[123\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-123)[\[124\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-124)
- July 11, 2008: [IndyMac](https://en.wikipedia.org/wiki/IndyMac "IndyMac") failed. Oil prices peaked at \$147.50[\[125\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-indymactaken-125)[\[111\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:7-111)
- July 30, 2008: The [Housing and Economic Recovery Act of 2008](https://en.wikipedia.org/wiki/Housing_and_Economic_Recovery_Act_of_2008 "Housing and Economic Recovery Act of 2008") was enacted.[\[126\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-126)
- August 2008: Unemployment hit 6% in the US.[\[104\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:6-104)
### 2008 (September)
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=7 "Edit section: 2008 (September)")\]
- September 7, 2008: The [Federal takeover of Fannie Mae and Freddie Mac](https://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac "Federal takeover of Fannie Mae and Freddie Mac") was implemented.[\[127\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-127)
- September 15, 2008: After the Federal Reserve declined to guarantee its loans as it did for Bear Stearns, the [bankruptcy of Lehman Brothers](https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers "Bankruptcy of Lehman Brothers") led to a 504.48-point (4.42%) drop in the DJIA, its worst decline in seven years. To avoid bankruptcy, [Merrill Lynch](https://en.wikipedia.org/wiki/Merrill_Lynch "Merrill Lynch") was acquired by [Bank of America](https://en.wikipedia.org/wiki/Bank_of_America "Bank of America") for \$50 billion in a transaction facilitated by the government.[\[128\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-128) Lehman had been in talks to be sold to either Bank of America or [Barclays](https://en.wikipedia.org/wiki/Barclays "Barclays") but neither bank wanted to acquire the entire company.[\[129\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-129)
- September 16, 2008: The [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") took over [American International Group](https://en.wikipedia.org/wiki/American_International_Group "American International Group") with \$85 billion in debt and equity funding. The [Reserve Primary Fund](https://en.wikipedia.org/wiki/Reserve_Primary_Fund "Reserve Primary Fund") "[broke the buck](https://en.wikipedia.org/wiki/Break_the_buck "Break the buck")" as a result of its exposure to [Lehman Brothers](https://en.wikipedia.org/wiki/Lehman_Brothers "Lehman Brothers") securities.[\[130\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-130)
- September 17, 2008: Investors withdrew \$144 billion from U.S. [money market funds](https://en.wikipedia.org/wiki/Money_market_fund "Money market fund"), the equivalent of a [bank run](https://en.wikipedia.org/wiki/Bank_run "Bank run") on [money market funds](https://en.wikipedia.org/wiki/Money_market_fund "Money market fund"), which frequently invest in [commercial paper](https://en.wikipedia.org/wiki/Commercial_paper "Commercial paper") issued by corporations to fund their operations and payrolls, causing the short-term lending market to freeze. The withdrawal compared to \$7.1 billion in withdrawals the week prior. This interrupted the ability of corporations to rollover their [short-term debt](https://en.wikipedia.org/wiki/Short-term_debt "Short-term debt"). The U.S. government extended insurance for money market accounts analogous to bank [deposit insurance](https://en.wikipedia.org/wiki/Deposit_insurance "Deposit insurance") via a temporary guarantee[\[131\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-131) and with Federal Reserve programs to purchase commercial paper.
- September 18, 2008: In a dramatic meeting, [United States Secretary of the Treasury](https://en.wikipedia.org/wiki/United_States_Secretary_of_the_Treasury "United States Secretary of the Treasury") [Henry Paulson](https://en.wikipedia.org/wiki/Henry_Paulson "Henry Paulson") and [Chair of the Federal Reserve](https://en.wikipedia.org/wiki/Chair_of_the_Federal_Reserve "Chair of the Federal Reserve") [Ben Bernanke](https://en.wikipedia.org/wiki/Ben_Bernanke "Ben Bernanke") met with [Speaker of the United States House of Representatives](https://en.wikipedia.org/wiki/Speaker_of_the_United_States_House_of_Representatives "Speaker of the United States House of Representatives") [Nancy Pelosi](https://en.wikipedia.org/wiki/Nancy_Pelosi "Nancy Pelosi") and warned that the credit markets were close to a complete meltdown. Bernanke requested a \$700 billion fund to acquire toxic mortgages and reportedly told them: "If we don't do this, we may not have an economy on Monday".[\[132\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-132)
- September 19, 2008: The Federal Reserve created the [Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility](https://en.wikipedia.org/wiki/Asset_Backed_Commercial_Paper_Money_Market_Mutual_Fund_Liquidity_Facility "Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility") to temporarily insure money market funds and allow the credit markets to continue operating.[\[133\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-133)
- September 20, 2008: Paulson requested the U.S. Congress authorize a \$700 billion fund to acquire toxic mortgages, telling Congress "If it doesn't pass, then heaven help us all".[\[134\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-134)
- September 21, 2008: [Goldman Sachs](https://en.wikipedia.org/wiki/Goldman_Sachs "Goldman Sachs") and [Morgan Stanley](https://en.wikipedia.org/wiki/Morgan_Stanley "Morgan Stanley") converted from [investment banks](https://en.wikipedia.org/wiki/Investment_banks "Investment banks") to [bank holding companies](https://en.wikipedia.org/wiki/Bank_holding_companies "Bank holding companies") to increase their protection by the Federal Reserve.[\[135\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-135)[\[136\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-136)[\[137\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-137)[\[138\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-138)
- September 22, 2008: [MUFG Bank](https://en.wikipedia.org/wiki/MUFG_Bank "MUFG Bank") acquired 20% of [Morgan Stanley](https://en.wikipedia.org/wiki/Morgan_Stanley "Morgan Stanley").[\[139\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-139)
- September 23, 2008: [Berkshire Hathaway](https://en.wikipedia.org/wiki/Berkshire_Hathaway "Berkshire Hathaway") made a \$5 billion investment in [Goldman Sachs](https://en.wikipedia.org/wiki/Goldman_Sachs "Goldman Sachs").[\[140\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-140)
- September 26, 2008: [Washington Mutual](https://en.wikipedia.org/wiki/Washington_Mutual "Washington Mutual") went bankrupt and was seized by the [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation") after a [bank run](https://en.wikipedia.org/wiki/Bank_run "Bank run") in which panicked depositors withdrew \$16.7 billion in 10 days.[\[141\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-141)
- September 29, 2008: By a vote of 225â208, with most Democrats in support and Republicans against, the House of Representatives rejected the [Emergency Economic Stabilization Act of 2008](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 "Emergency Economic Stabilization Act of 2008"), which included the \$700 billion [Troubled Asset Relief Program](https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program "Troubled Asset Relief Program"). In response, the DJIA dropped 777.68 points, or 6.98%, then the largest point drop in history. The S\&P 500 Index fell 8.8% and the Nasdaq Composite fell 9.1%.[\[142\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-142) Several stock market indices worldwide fell 10%. Gold prices soared to \$900/ounce. The Federal Reserve doubled its credit swaps with foreign central banks as they all needed to provide liquidity. [Wachovia](https://en.wikipedia.org/wiki/Wachovia "Wachovia") reached a deal to sell itself to Citigroup; however, the deal would have made shares worthless and required government funding.[\[143\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-143)
- September 30, 2008: President [George W. Bush](https://en.wikipedia.org/wiki/George_W._Bush "George W. Bush") addressed the country, saying "Congress must act. ... Our economy is depending on decisive action from the government. The sooner we address the problem, the sooner we can get back on the path of growth and job creation". The DJIA rebounded 4.7%.[\[144\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-144)
### 2008 (October)
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=8 "Edit section: 2008 (October)")\]
- October 1, 2008: The U.S. Senate passed the [Emergency Economic Stabilization Act of 2008](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 "Emergency Economic Stabilization Act of 2008").[\[145\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-145)
- October 2, 2008: Stock market indices fell 4% as investors were nervous ahead of a vote in the U.S. House of Representatives on the [Emergency Economic Stabilization Act of 2008](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 "Emergency Economic Stabilization Act of 2008").[\[146\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-146)
- October 3, 2008: The House of Representatives passed the [Emergency Economic Stabilization Act of 2008](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 "Emergency Economic Stabilization Act of 2008") and the \$700 billion Troubled Asset Relief Program.[\[147\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-147) Bush signed the legislation that same day.[\[148\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-148) Wachovia reached a deal to be acquired by [Wells Fargo](https://en.wikipedia.org/wiki/Wells_Fargo "Wells Fargo") in a deal that did not require government funding.[\[149\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-149)
- October 6â10, 2008: From October 6â10, 2008, the Dow Jones Industrial Average (DJIA) closed lower in all five sessions. Volume levels were record-breaking. The DJIA fell 1,874.19 points, or 18.2%, in its worst weekly decline ever on both a points and percentage basis. The S\&P 500 fell more than 20%.[\[150\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-150)
- October 7, 2008: In the U.S., per the Emergency Economic Stabilization Act of 2008, the [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation") increased deposit insurance coverage to \$250,000 per depositor.[\[151\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-151)
[](https://en.wikipedia.org/wiki/File:S%26P_BSE_SENSEX_chart.svg)
During the 2008 global financial crisis, the [BSE SENSEX](https://en.wikipedia.org/wiki/BSE_SENSEX "BSE SENSEX") experienced a sharp decline. It dropped from over 21,000 points in January 2008 to below 8,000 points in October 2008.[\[152\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-152)
- October 8, 2008: The [Indonesian stock market](https://en.wikipedia.org/wiki/Indonesia_Stock_Exchange "Indonesia Stock Exchange") halted trading after a 10% drop in one day.[\[153\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-153) Global central banks held emergency meetings and coordinated interest rate cuts before the US stock markets opened.[\[154\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-154)
- October 11, 2008: The head of the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund") (IMF) warned that the world financial system was teetering on the "brink of systemic meltdown".[\[155\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-155)
- October 14, 2008: Having been suspended for three successive trading days (October 9, 10 and 13), the Icelandic stock market reopened on October 14, with the main index, the [OMX Iceland 15](https://en.wikipedia.org/wiki/OMX_Iceland_15 "OMX Iceland 15"), closing at 678.4, which was about 77% lower than the 3,004.6 at the close on October 8, after the value of the three big banks, which had formed 73.2% of the value of the OMX Iceland 15, had been set to zero, leading to the [2008â2011 Icelandic financial crisis](https://en.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_financial_crisis "2008â2011 Icelandic financial crisis").[\[156\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-156) The [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation") created the [Temporary Liquidity Guarantee Program](https://en.wikipedia.org/wiki/Temporary_Liquidity_Guarantee_Program "Temporary Liquidity Guarantee Program") to guarantee the senior debt of all FDIC-insured institutions through June 30, 2009.[\[157\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-157)
- October 16, 2008: A rescue plan was unveiled for Swiss banks [UBS AG](https://en.wikipedia.org/wiki/UBS_AG "UBS AG") and [Credit Suisse](https://en.wikipedia.org/wiki/Credit_Suisse "Credit Suisse").[\[158\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-158)
- October 24, 2008: Many of the world's stock exchanges experienced the worst declines in their history, with drops of around 10% in most indices.[\[159\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-159) In the U.S., the DJIA fell 3.6%, although not as much as other markets.[\[160\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-160) The [United States dollar](https://en.wikipedia.org/wiki/United_States_dollar "United States dollar"), the [Japanese yen](https://en.wikipedia.org/wiki/Japanese_yen "Japanese yen") and the [Swiss franc](https://en.wikipedia.org/wiki/Swiss_franc "Swiss franc") soared against other major currencies, particularly the [British pound](https://en.wikipedia.org/wiki/British_pound "British pound") and [Canadian dollar](https://en.wikipedia.org/wiki/Canadian_dollar "Canadian dollar"), as world investors sought safe havens. A [currency crisis](https://en.wikipedia.org/wiki/Currency_crisis "Currency crisis") developed, with investors transferring vast capital resources into stronger currencies, leading many governments of emerging economies to seek aid from the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund").[\[161\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-161)[\[162\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-162) Later that day, the deputy governor of the [Bank of England](https://en.wikipedia.org/wiki/Bank_of_England "Bank of England"), [Charlie Bean](https://en.wikipedia.org/wiki/Charlie_Bean_\(economist\) "Charlie Bean (economist)"), suggested that "This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history".[\[163\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-163) In a transaction pushed by regulators, [PNC Financial Services](https://en.wikipedia.org/wiki/PNC_Financial_Services "PNC Financial Services") agreed to acquire [National City Corp.](https://en.wikipedia.org/wiki/National_City_Corp. "National City Corp.")[\[164\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-164)
### 2008 (NovemberâDecember)
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=9 "Edit section: 2008 (NovemberâDecember)")\]
[](https://en.wikipedia.org/wiki/File:22_2007-2008_global_financial_crisis_effect_in_Bristol_UK_-_credit_crunch_lunch.jpg)
Restaurant in [Bristol](https://en.wikipedia.org/wiki/Bristol "Bristol"), United Kingdom, advertising cheap "Credit Crunch Lunch"
- November 6, 2008: The IMF predicted a worldwide recession of â0.3% for 2009. On the same day, the [Bank of England](https://en.wikipedia.org/wiki/Bank_of_England "Bank of England") and the [European Central Bank](https://en.wikipedia.org/wiki/European_Central_Bank "European Central Bank"), respectively, reduced their interest rates from 4.5% to 3%, and from 3.75% to 3.25%.[\[165\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-165)
- November 10, 2008: [American Express](https://en.wikipedia.org/wiki/American_Express "American Express") converted to a [bank holding company](https://en.wikipedia.org/wiki/Bank_holding_company "Bank holding company").[\[166\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-166)
- November 20, 2008: Iceland obtained an emergency loan from the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund") after the failure of banks in Iceland resulted in a devaluation of the [Icelandic krĂłna](https://en.wikipedia.org/wiki/Icelandic_kr%C3%B3na "Icelandic krĂłna") and threatened the government with bankruptcy.[\[167\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-167)
- November 25, 2008: The [Term Asset-Backed Securities Loan Facility](https://en.wikipedia.org/wiki/Term_Asset-Backed_Securities_Loan_Facility "Term Asset-Backed Securities Loan Facility") was announced.[\[168\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-168)
- November 29, 2008: Economist [Dean Baker](https://en.wikipedia.org/wiki/Dean_Baker "Dean Baker") observed:
> There is a really good reason for tighter credit. Tens of millions of homeowners who had substantial equity in their homes two years ago have little or nothing today. Businesses are facing the worst downturn since the [Great Depression](https://en.wikipedia.org/wiki/Great_Depression "Great Depression"). This matters for credit decisions. A homeowner with equity in her home is very unlikely to default on a car loan or credit card debt. They will draw on this equity rather than lose their car and/or have a default placed on their credit record. On the other hand, a homeowner who has no equity is a serious default risk. In the case of businesses, their creditworthiness depends on their future profits. Profit prospects look much worse in November 2008 than they did in November 2007 ... While many banks are obviously at the brink, consumers and businesses would be facing a much harder time getting credit right now even if the financial system were rock solid. The problem with the economy is the loss of close to \$6 trillion in housing wealth and an even larger amount of stock wealth.[\[169\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-169)
- December 1, 2008: The NBER announced the US was in a recession and had been since December 2007. The Dow tumbled 679.95 points or 7.8% on the news.[\[170\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-170)[\[92\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:5-92)
- December 6, 2008: The [2008 Greek riots](https://en.wikipedia.org/wiki/2008_Greek_riots "2008 Greek riots") began, sparked in part by economic conditions in the country.\[*[citation needed](https://en.wikipedia.org/wiki/Wikipedia:Citation_needed "Wikipedia:Citation needed")*\]
- December 16, 2008: The federal funds rate was lowered to 0%.[\[171\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-171)
- December 20, 2008: Financing under the [Troubled Asset Relief Program](https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program "Troubled Asset Relief Program") was made available to [General Motors](https://en.wikipedia.org/wiki/General_Motors "General Motors") and [Chrysler](https://en.wikipedia.org/wiki/Chrysler "Chrysler").[\[172\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-172)
### 2009
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=10 "Edit section: 2009")\]
[](https://en.wikipedia.org/wiki/File:Payroll_tax_history.jpg)
The [American Recovery and Reinvestment Act of 2009](https://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009 "American Recovery and Reinvestment Act of 2009") provided a [payroll tax](https://en.wikipedia.org/wiki/Payroll_tax "Payroll tax") credit repealed in late 2010.
- January 6, 2009: Citi claimed that Singapore would experience "the most severe recession in \[its\] history" in 2009. In the end, the economy grew in 2009 by 0.1% and in 2010 by 14.5%.[\[173\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:62-173)[\[174\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-174)[\[175\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-175)
- January 20â26, 2009: The [2009 Icelandic financial crisis protests](https://en.wikipedia.org/wiki/2009_Icelandic_financial_crisis_protests "2009 Icelandic financial crisis protests") intensified and the Icelandic government collapsed.[\[176\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-176)
- February 13, 2009: Congress approved the [American Recovery and Reinvestment Act of 2009](https://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009 "American Recovery and Reinvestment Act of 2009"), a \$787 billion economic stimulus package. President Barack Obama signed it February 17.[\[177\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-177)[\[178\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-arraecon-178)[\[179\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-179)[\[180\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-180)
- February 20, 2009: The DJIA closed at a six-year low, amidst worries that the largest banks in the United States would have to be [nationalized](https://en.wikipedia.org/wiki/Nationalized "Nationalized").[\[181\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-181)
- February 27, 2009: The [DJIA](https://en.wikipedia.org/wiki/DJIA "DJIA") closed at its lowest value since 1997 as the U.S. government increased its stake in [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup") to 36%, raising further fears of nationalization and a report showed that GDP shrank at the sharpest pace in 26 years.[\[182\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-182)
- Early March 2009: The drop in stock prices was compared to that of the [Great Depression](https://en.wikipedia.org/wiki/Great_Depression "Great Depression").[\[183\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-183)[\[184\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-184)
- March 3, 2009: President Obama stated that "Buying stocks is a potentially good deal if you've got a long-term perspective on it".[\[185\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-185)
- March 6, 2009: The Dow Jones hit its lowest level of 6,469.95, a drop of 54% from its peak of 14,164 on October 9, 2007, over a span of 17 months, before beginning to recover.[\[186\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-186)
- March 10, 2009: Shares of [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup") rose 38% after the CEO said that the company was profitable in the first two months of the year and expressed optimism about its capital position going forward. Major stock market indices rose 5â7%, marking the bottom of the stock market decline.[\[187\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-187)
- March 12, 2009: Stock market indices in the U.S. rose another 4% after [Bank of America](https://en.wikipedia.org/wiki/Bank_of_America "Bank of America") said it was profitable in January and February and would likely not need more government funding. [Bernie Madoff](https://en.wikipedia.org/wiki/Bernie_Madoff "Bernie Madoff") was convicted.[\[188\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-188)
- First quarter of 2009: For the first quarter of 2009, the annualized rate of decline in GDP was 14.4% in Germany, 15.2% in Japan, 7.4% in the UK, 18% in Latvia,[\[189\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-189) 9.8% in the Euro area and 21.5% for Mexico.[\[29\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-gofromhere-29)
- April 2, 2009: Unrest over [economic policy](https://en.wikipedia.org/wiki/Economic_policy "Economic policy") and bonuses paid to bankers resulted in the [2009 G20 London summit protests](https://en.wikipedia.org/wiki/2009_G20_London_summit_protests "2009 G20 London summit protests").
- April 10, 2009: *[Time](https://en.wikipedia.org/wiki/Time_\(magazine\) "Time (magazine)")* magazine declared "More Quickly Than It Began, The Banking Crisis Is Over".[\[190\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-190)
- April 29, 2009: The Federal Reserve projected GDP growth of 2.5â3% in 2010; an unemployment plateau in 2009 and 2010 around 10% with moderation in 2011; and inflation rates around 1â2%.[\[191\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-191)
- May 1, 2009: People protested economic conditions globally during the [2009 May Day protests](https://en.wikipedia.org/wiki/2009_May_Day_protests "2009 May Day protests").
- May 20, 2009: President Obama signed the [Fraud Enforcement and Recovery Act of 2009](https://en.wikipedia.org/wiki/Fraud_Enforcement_and_Recovery_Act_of_2009 "Fraud Enforcement and Recovery Act of 2009").
- June 2009: The [National Bureau of Economic Research](https://en.wikipedia.org/wiki/National_Bureau_of_Economic_Research "National Bureau of Economic Research") (NBER) declared June 2009 as the end date of the U.S. recession.[\[192\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-192) The [Federal Open Market Committee](https://en.wikipedia.org/wiki/Federal_Open_Market_Committee "Federal Open Market Committee") release in June 2009 stated:
> ... the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable [economic growth](https://en.wikipedia.org/wiki/Economic_growth "Economic growth") in a context of price stability.[\[193\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-193)
- June 17, 2009: [Barack Obama](https://en.wikipedia.org/wiki/Barack_Obama "Barack Obama") and key advisers introduced a series of regulatory proposals that addressed [consumer protection](https://en.wikipedia.org/wiki/Consumer_protection "Consumer protection"), [executive pay](https://en.wikipedia.org/wiki/Executive_pay "Executive pay"), bank capital requirements, expanded regulation of the [shadow banking system](https://en.wikipedia.org/wiki/Shadow_banking_system "Shadow banking system") and [derivatives](https://en.wikipedia.org/wiki/Derivative_\(finance\) "Derivative (finance)"), and enhanced authority for the Federal Reserve to safely wind down systemically important institutions.[\[194\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-194)[\[195\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-195)[\[196\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-196)
- December 11, 2009: [United States House of Representatives](https://en.wikipedia.org/wiki/United_States_House_of_Representatives "United States House of Representatives") passed bill H.R. 4173, a precursor to what became the [DoddâFrank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act "DoddâFrank Wall Street Reform and Consumer Protection Act").[\[197\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-197)
### 2010
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=11 "Edit section: 2010")\]
- January 22, 2010: President Obama introduced "The [Volcker Rule](https://en.wikipedia.org/wiki/Volcker_Rule "Volcker Rule")" limiting the ability of banks to engage in [proprietary trading](https://en.wikipedia.org/wiki/Proprietary_trading "Proprietary trading"), named after [Paul Volcker](https://en.wikipedia.org/wiki/Paul_Volcker "Paul Volcker"), who publicly argued for the proposed changes.[\[198\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-198)[\[199\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-199) Obama also proposed a [Financial Crisis Responsibility Fee](https://en.wikipedia.org/wiki/Financial_Crisis_Responsibility_Fee "Financial Crisis Responsibility Fee") on large banks.
- January 27, 2010: President Obama declared on "the markets are now stabilized, and we've recovered most of the money we spent on the banks".[\[200\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-200)
- First quarter 2010: Delinquency rates in the United States peaked at 11.54%.[\[201\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-201)
- April 15, 2010: U.S. Senate introduced bill S.3217, [Restoring American Financial Stability Act of 2010](https://en.wikipedia.org/wiki/Restoring_American_Financial_Stability_Act_of_2010 "Restoring American Financial Stability Act of 2010").[\[202\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-202)
- May 2010: The U.S. Senate passed the [Dodd-Frank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd-Frank_Wall_Street_Reform_and_Consumer_Protection_Act "Dodd-Frank Wall Street Reform and Consumer Protection Act"). The Volcker Rule against proprietary trading was not part of the legislation.[\[203\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-203)
- July 21, 2010: [DoddâFrank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act "DoddâFrank Wall Street Reform and Consumer Protection Act") enacted.[\[204\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-204)[\[205\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-205)
- September 12, 2010: European regulators introduced [Basel III](https://en.wikipedia.org/wiki/Basel_III "Basel III") regulations for banks, which increased capital ratios, limits on leverage, narrowed the definition of capital to exclude subordinated debt, limited counter-party risk, and added liquidity requirements.[\[206\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-206)[\[207\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-207) Critics argued that Basel III didn't address the problem of faulty risk-weightings. Major banks suffered losses from AAA-rated created by [financial engineering](https://en.wikipedia.org/wiki/Financial_engineering "Financial engineering") (which creates apparently risk-free assets out of high risk collateral) that required less capital according to Basel II. Lending to AA-rated sovereigns has a risk-weight of zero, thus increasing lending to governments and leading to the next crisis.[\[208\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-208) [Johan Norberg](https://en.wikipedia.org/wiki/Johan_Norberg "Johan Norberg") argued that regulations (Basel III among others) have indeed led to excessive lending to risky governments (see [Euro area crisis](https://en.wikipedia.org/wiki/Euro_area_crisis "Euro area crisis")) and the [European Central Bank](https://en.wikipedia.org/wiki/European_Central_Bank "European Central Bank") pursues even more lending as the solution.[\[209\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-209)
- November 3, 2010: To improve economic growth, the Federal Reserve announced another round of [quantitative easing](https://en.wikipedia.org/wiki/Quantitative_easing "Quantitative easing"), dubbed QE2, which included the purchase of \$600 billion in long-term [Treasuries](https://en.wikipedia.org/wiki/United_States_Treasury_security "United States Treasury security") over the following eight months.[\[210\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-210)
### Post-2010
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=12 "Edit section: Post-2010")\]
- March 2011: Two years after the [nadir](https://en.wikipedia.org/wiki/Nadir "Nadir") of the crisis, many stock market indices were 75% above their lows set in March 2009. Nevertheless, the lack of fundamental changes in banking and financial markets worried many market participants, including the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund").[\[211\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Over-211)
- 2011: Median household wealth fell 35% in the U.S., from \$106,591 to \$68,839 between 2005 and 2011.[\[212\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Kurtzleben-212)
- May 2012: The [Manhattan District Attorney](https://en.wikipedia.org/wiki/Manhattan_District_Attorney "Manhattan District Attorney") indicted [Abacus Federal Savings Bank](https://en.wikipedia.org/wiki/Abacus_Federal_Savings_Bank "Abacus Federal Savings Bank") and 19 employees for selling fraudulent mortgages to [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae"). The bank was acquitted in 2015. Abacus was the only bank prosecuted for misbehavior that precipitated the crisis.
- July 26, 2012: During the [European debt crisis](https://en.wikipedia.org/wiki/European_debt_crisis "European debt crisis"), [President of the European Central Bank](https://en.wikipedia.org/wiki/President_of_the_European_Central_Bank "President of the European Central Bank") [Mario Draghi](https://en.wikipedia.org/wiki/Mario_Draghi "Mario Draghi") announced that "The ECB is ready to do whatever it takes to preserve the euro".[\[213\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-213)
- August 2012: In the United States, many homeowners still faced foreclosure and could not refinance or modify their mortgages. Foreclosure rates remained high.[\[214\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-214)
- September 13, 2012: To improve lower interest rates, support mortgage markets, and make financial conditions more accommodative, the Federal Reserve announced another round of [quantitative easing](https://en.wikipedia.org/wiki/Quantitative_easing "Quantitative easing"), dubbed QE3, which included the purchase of \$40 billion in long-term [Treasuries](https://en.wikipedia.org/wiki/United_States_Treasury_security "United States Treasury security") each month.[\[215\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-215)
- 2014: A report showed that the distribution of household incomes in the United States became more unequal during the post-2008 [economic recovery](https://en.wikipedia.org/wiki/Economic_recovery "Economic recovery"), a first for the United States but in line with the trend over the last ten economic recoveries since 1949.[\[216\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-216)[\[217\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-217) [Income inequality in the United States](https://en.wikipedia.org/wiki/Income_inequality_in_the_United_States "Income inequality in the United States") grew from 2005 to 2012 in more than 2 out of 3 metropolitan areas.[\[218\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-218)
- June 2015: A study commissioned by the [ACLU](https://en.wikipedia.org/wiki/ACLU "ACLU") found that white home-owning households recovered from the financial crisis faster than black home-owning households, widening the [racial wealth gap](https://en.wikipedia.org/wiki/Racial_wealth_gap "Racial wealth gap") in the U.S.[\[219\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-219)
- 2017: Per the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund"), from 2007 to 2017, "advanced" economies accounted for only 26.5% of global [GDP](https://en.wikipedia.org/wiki/GDP "GDP") ([PPP](https://en.wikipedia.org/wiki/Purchasing_power_parity "Purchasing power parity")) growth while emerging and developing economies accounted for 73.5% of global GDP (PPP) growth.[\[220\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-220)
- August 2023: [UBS](https://en.wikipedia.org/wiki/UBS "UBS") reaches an agreement with the [United States Department of Justice](https://en.wikipedia.org/wiki/United_States_Department_of_Justice "United States Department of Justice") to pay a combined \$1.435 billion in civil penalties to settle a legacy matter from 2006â2007 related to the issuance, underwriting and sale of residential mortgage-backed securities.[\[221\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-221)
- In 2023, the failure of [Silicon Valley Bank](https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Bank "Collapse of Silicon Valley Bank") kicked off a banking crisis in the United States, triggering a sharp decline in global bank stock prices and swift response by regulators to prevent potential global contagion. Many investors feared it would evolve into a global financial crisis. Fears of âtoo big to failâ US banks were reminiscent of the 2008 crisis.
In the table, the names of emerging and developing economies are shown in boldface type, while the names of developed economies are in Roman (regular) type.
| Economy | Incremental GDP (billions in USD) |
|---|---|
| (01) ** China** | 14,147 |
| (02) ** India** | 5,348 |
| (03)  United States | 4,913 |
| (â)  European Union | 4,457 |
| (04) ** Indonesia** | 1,632 |
| (05) ** Turkey** | 1,024 |
| (06)  Japan | 1,003 |
| (07)  Germany | 984 |
| (08) ** Russia** | 934 |
| (09) ** Brazil** | 919 |
| (10)  South Korea | 744 |
| (11) ** Mexico** | 733 |
| (12) ** Saudi Arabia** | 700 |
| (13)  United Kingdom | 671 |
| (14)  France | 566 |
| (15) ** Nigeria** | 523 |
| (16) ** Egypt** | 505 |
| (17)  Canada | 482 |
| (18) ** Iran** | 462 |
| (19) ** Thailand** | 447 |
| (20) ** Philippines** | 440 |
| The twenty largest economies contributing to global GDP (PPP) growth (2007â2017)[\[222\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-222) | |
## Federal actions towards the crisis
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=13 "Edit section: Federal actions towards the crisis")\]
[](https://en.wikipedia.org/wiki/File:HOUSING_FINANCE_REFORM-_ESSENTIAL_ELEMENTS_OF_A_GOVERNMENT_GUARANTEE_FOR_MORTGAGE-BACKED_SECURITIES_\(IA_gov.gpo.fdsys.CHRG-113shrg86598\).pdf)
Housing Finance Reform Bill
The expansion of central bank lending in response to the crisis was not confined to the [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve")'s provision of aid to individual financial institutions. The Federal Reserve has also conducted several innovative lending programs to improve liquidity and strengthen different financial institutions and markets, such as [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac") and [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae"). In this case, the major problem in the market is the lack of free cash reserves and flows to secure the loans. The Federal Reserve took many steps to deal with financial market liquidity worries. One of these steps was a credit line for major traders, who act as the Fed's partners in open market activities.[\[223\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-223) Also, loan programs were set up to make the money market mutual funds and commercial paper market more flexible. Also, the [Term Asset-Backed Securities Loan Facility](https://en.wikipedia.org/wiki/Term_Asset-Backed_Securities_Loan_Facility "Term Asset-Backed Securities Loan Facility") (TALF) was put in place thanks to a joint effort with the US Department of the Treasury. This plan made it easier for consumers and businesses to get credit by giving Americans who owned high-quality asset-backed securities more credit.
Before the crisis, the Federal Reserve's stocks of Treasury securities were sold to pay for the increase in credit. This method was meant to keep banks from trying to give out their extra savings, which could cause the federal funds rate to drop below where it was supposed to be.[\[224\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-224) However, in October 2008, the Federal Reserve was granted the power to provide banks with interest payments on their surplus reserves. This created a motivation for banks to retain their reserves instead of disbursing them, thus reducing the need for the Federal Reserve to hedge its increased lending by decreases in alternative assets.[\[225\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-225)
Money market funds also went through runs when people lost faith in the market. To keep it from getting worse, the Fed said it would give money to mutual fund companies. Also, the [Department of Treasury](https://en.wikipedia.org/wiki/United_States_Department_of_the_Treasury "United States Department of the Treasury") said that it would briefly cover the assets of the fund. Both of these things helped get the fund market back to normal, which helped the commercial paper market, which most businesses use to run. The [FDIC](https://en.wikipedia.org/wiki/FDIC "FDIC") also did several things, such as raising the insurance cap from \$100,000 to \$250,000, to boost customer trust.
[](https://en.wikipedia.org/wiki/File:Marriner_S._Eccles_Federal_Reserve_Board_Building.jpg)
Headquarters of the United States Federal Reserve System
They engaged in [quantitative easing](https://en.wikipedia.org/wiki/Quantitative_easing "Quantitative easing"), which added more than \$4 trillion to the financial system and got banks to start lending again, both to each other and to people. Many homeowners who were trying to keep their homes from going into default got housing credits. A package of policies was passed that let borrowers refinance their loans even though the value of their homes was less than what they still owed on their [mortgages](https://en.wikipedia.org/wiki/Mortgage "Mortgage").[\[226\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:03-226)
## Causes
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=14 "Edit section: Causes")\]
| | |
|---|---|
|  | This section **may be [too long](https://en.wikipedia.org/wiki/Wikipedia:Article_size "Wikipedia:Article size") to read and navigate comfortably**. Consider [splitting](https://en.wikipedia.org/wiki/Wikipedia:Splitting "Wikipedia:Splitting") content into sub-articles, [condensing](https://en.wikipedia.org/wiki/Wikipedia:Summary_style "Wikipedia:Summary style") it, or adding [subheadings](https://en.wikipedia.org/wiki/Help:Section#Subsections "Help:Section"). Please discuss this issue on the article's [talk page](https://en.wikipedia.org/wiki/Talk:2008_financial_crisis "Talk:2008 financial crisis"). *(March 2026)* |
See also: [Subprime crisis background information](https://en.wikipedia.org/wiki/Subprime_crisis_background_information "Subprime crisis background information"), [Subprime crisis impact timeline](https://en.wikipedia.org/wiki/Subprime_crisis_impact_timeline "Subprime crisis impact timeline"), [Subprime mortgage crisis solutions debate](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis_solutions_debate "Subprime mortgage crisis solutions debate"), [Indirect economic effects of the subprime mortgage crisis](https://en.wikipedia.org/wiki/Indirect_economic_effects_of_the_subprime_mortgage_crisis "Indirect economic effects of the subprime mortgage crisis"), [Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession"), and [Inverted yield curve](https://en.wikipedia.org/wiki/Inverted_yield_curve "Inverted yield curve")
[](https://en.wikipedia.org/wiki/File:FFR_treasuries.webp)
The [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") raised the [Federal funds rate](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") causing an [Inverted yield curve](https://en.wikipedia.org/wiki/Inverted_yield_curve "Inverted yield curve") to slow inflation and get prices and [commodity](https://en.wikipedia.org/wiki/Commodity "Commodity") prices down, that usually puts the economy into a [recession](https://en.wikipedia.org/wiki/Recession "Recession").
[30 year mortgage average](https://en.wikipedia.org/wiki/Mortgage_loan "Mortgage loan")
[30 Year Treasury Bond](https://en.wikipedia.org/wiki/Treasury_bond "Treasury bond")
10 Year Treasury Bond
2 Year Treasury Bond
3 month Treasury Bond
Effective Federal Funds Rate
[CPI inflation](https://en.wikipedia.org/wiki/United_States_Consumer_Price_Index "United States Consumer Price Index") year/year
[Recessions](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States "List of recessions in the United States")
While the causes of the bubble and subsequent crash are disputed, the precipitating factor for the Financial Crisis of 2007â2008 was the bursting of the [United States housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble") and the subsequent [subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis"), which occurred due to a high default rate and resulting foreclosures of [mortgage loans](https://en.wikipedia.org/wiki/Mortgage_loan "Mortgage loan"), particularly [adjustable-rate mortgages](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage"). Some or all of the following factors contributed to the crisis:[\[227\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-4questions-227)[\[79\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-aspnewhome-79)[\[80\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Homeownership-80)
- In its January 2011 report, the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission") (FCIC, a committee of U.S. congressmen) concluded that the financial crisis was avoidable and was caused by:[\[228\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-228)[\[229\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-229)[\[230\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-230)[\[231\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-231)[\[232\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-232)
- "widespread failures in [financial regulation](https://en.wikipedia.org/wiki/Financial_regulation "Financial regulation") and supervision", including the Federal Reserve's failure to stem the tide of [toxic assets](https://en.wikipedia.org/wiki/Toxic_asset "Toxic asset").
- "dramatic failures of [corporate governance](https://en.wikipedia.org/wiki/Corporate_governance "Corporate governance") and [risk management](https://en.wikipedia.org/wiki/Risk_management "Risk management") at many systemically important [financial institutions](https://en.wikipedia.org/wiki/Financial_institutions "Financial institutions")" including too many financial firms acting recklessly and taking on too much risk.
- "a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions and by households that put the financial system on a collision course with crisis.
- ill preparation and inconsistent action by government and key policy makers lacking a full understanding of the financial system they oversaw that "added to the uncertainty and panic".
- a "systemic breakdown in accountability and ethics" at all levels.
- "collapsing mortgage-lending standards and the mortgage securitization pipeline".
- deregulation of '[over-the-counter](https://en.wikipedia.org/wiki/Over-the-counter_\(finance\) "Over-the-counter (finance)")' [derivatives](https://en.wikipedia.org/wiki/Derivative_\(finance\) "Derivative (finance)"), especially [credit default swaps](https://en.wikipedia.org/wiki/Credit_default_swap "Credit default swap").
- "the failures of credit rating agencies" to correctly price risk.
- "[Wall Street and the Financial Crisis: Anatomy of a Financial Collapse](https://en.wikipedia.org/wiki/Wall_Street_and_the_Financial_Crisis:_Anatomy_of_a_Financial_Collapse "Wall Street and the Financial Crisis: Anatomy of a Financial Collapse")" (known as the LevinâCoburn Report) by the [United States Senate](https://en.wikipedia.org/wiki/United_States_Senate "United States Senate") concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street".[\[233\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-233)
- The high delinquency and default rates by homeowners, particularly those with subprime credit, led to a rapid devaluation of mortgage-backed securities including bundled loan portfolios, derivatives and credit default swaps. As the value of these assets plummeted, buyers for these securities evaporated and banks who were heavily invested in these assets began to experience a liquidity crisis.
- [Securitization](https://en.wikipedia.org/wiki/Securitization "Securitization"), a process in which many mortgages were bundled together and formed into new financial instruments called [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities"), allowed for shifting of risk and lax underwriting standards. These bundles could be sold as (ostensibly) low-risk securities partly because they were often backed by [credit default swap](https://en.wikipedia.org/wiki/Credit_default_swap "Credit default swap") insurance.[\[234\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-234) Because mortgage lenders could pass these mortgages (and the associated risks) on in this way, they could and did adopt loose underwriting criteria.
- Lax regulation allowed [predatory lending](https://en.wikipedia.org/wiki/Predatory_lending "Predatory lending") in the private sector,[\[235\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-235)[\[236\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-236) especially after the federal government overrode anti-predatory state laws in 2004.[\[237\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-237)
- The [Community Reinvestment Act](https://en.wikipedia.org/wiki/Community_Reinvestment_Act "Community Reinvestment Act") (CRA),[\[238\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-238) a 1977 U.S. federal law designed to help low- and moderate-income Americans get mortgage loans required banks to grant mortgages to higher risk families.[\[239\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-239)[\[240\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-240)[\[241\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-241)[\[242\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-242) Granted, in 2009, Federal Reserve economists found that "only a small portion of subprime mortgage originations \[related\] to the CRA", and that "CRA-related loans appear\[ed\] to perform comparably to other types of subprime loans". These findings "run counter to the contention that the CRA contributed in any substantive way to the \[mortgage crisis\]."[\[243\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-243)
- Reckless lending by lenders such as Bank of America's [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial") unit was increasingly incentivized and even mandated by government regulation.[\[244\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:1-244)[\[245\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:3-245)[\[246\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-246) This may have caused [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae") and [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac") to lose market share and to respond by lowering their own standards.[\[247\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-247)
- Mortgage guarantees by Fannie Mae and Freddie Mac, quasi-government agencies, which purchased many subprime loan securitizations.[\[248\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-248) The implicit guarantee by the U.S. federal government created a [moral hazard](https://en.wikipedia.org/wiki/Moral_hazard "Moral hazard") and contributed to a glut of risky lending.
- Government policies that encouraged home ownership, providing easier access to loans for subprime borrowers; overvaluation of bundled subprime mortgages based on the theory that housing prices would continue to escalate; questionable trading practices on behalf of both buyers and sellers; compensation structures by banks and mortgage originators that prioritize short-term deal flow over long-term value creation; and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making.[\[249\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-249)[\[250\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-250)
- The 1999 [Gramm-Leach-Bliley Act](https://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act "Gramm-Leach-Bliley Act"), which partially repealed the [Glass-Steagall Act](https://en.wikipedia.org/wiki/Glass-Steagall_Act "Glass-Steagall Act"), effectively removed the separation between [investment banks](https://en.wikipedia.org/wiki/Investment_bank "Investment bank") and depository banks in the United States and increased speculation on the part of depository banks.[\[251\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-251)
- [Credit rating agencies](https://en.wikipedia.org/wiki/Credit_rating_agencies "Credit rating agencies") and investors failed to accurately price the [financial risk](https://en.wikipedia.org/wiki/Financial_risk "Financial risk") involved with [mortgage loan](https://en.wikipedia.org/wiki/Mortgage_loan "Mortgage loan")\-related financial products, and governments did not adjust their regulatory practices to address changes in financial markets.[\[252\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-252)[\[253\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-253)[\[254\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-declaration-254)
- Variations in the cost of borrowing.[\[255\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-255)
- [Fair value accounting](https://en.wikipedia.org/wiki/Fair_value_accounting_and_the_subprime_mortgage_crisis "Fair value accounting and the subprime mortgage crisis") was issued as U.S. accounting standard [SFAS 157](https://en.wikipedia.org/wiki/SFAS_157 "SFAS 157") in 2006 by the privately run [Financial Accounting Standards Board](https://en.wikipedia.org/wiki/Financial_Accounting_Standards_Board "Financial Accounting Standards Board") (FASB)âto which the SEC had delegated the task of establishing financial reporting standards.[\[256\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-256) This required that tradable assets such as [mortgage securities](https://en.wikipedia.org/wiki/Mortgage_securities "Mortgage securities") be valued according to their current market value rather than their historic cost or some future expected value. When the market for such securities became volatile and collapsed, the resulting loss of value had a major financial effect upon the institutions holding them even if they had no immediate plans to sell them.[\[257\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-257)
- Easy availability of credit in the US, fueled by large inflows of foreign funds after the [1998 Russian financial crisis](https://en.wikipedia.org/wiki/1998_Russian_financial_crisis "1998 Russian financial crisis") and [1997 Asian financial crisis](https://en.wikipedia.org/wiki/1997_Asian_financial_crisis "1997 Asian financial crisis") of the 1997â1998 period, led to a housing construction boom and facilitated debt-financed consumer spending. As banks began to give out more loans to potential home owners, housing prices began to rise. Lax lending standards and rising real estate prices also contributed to the real estate bubble. Loans of various types (e.g., mortgage, credit card, and auto) were easy to obtain and consumers assumed an unprecedented debt load.[\[258\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-258)[\[227\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-4questions-227)[\[259\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-259)
- As part of the housing and credit booms, the number of [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities") (MBS) and [collateralized debt obligations](https://en.wikipedia.org/wiki/Collateralized_debt_obligation "Collateralized debt obligation") (CDO), which derived their value from mortgage payments and housing prices, greatly increased. Such [financial innovation](https://en.wikipedia.org/wiki/Financial_innovation "Financial innovation") enabled institutions and investors to invest in the U.S. housing market. As housing prices declined, these investors reported significant losses.[\[260\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-imfloss-260)
- Falling prices also resulted in homes worth less than the mortgage loans, providing borrowers with a financial incentive to enter foreclosure. Foreclosure levels were elevated until early 2014.[\[261\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-261) drained significant wealth from consumers, losing up to \$4.2 [trillion](https://en.wikipedia.org/wiki/Trillion_\(short_scale\) "Trillion (short scale)")[\[262\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-262) Defaults and losses on other loan types also increased significantly as the crisis expanded from the housing market to other parts of the economy. Total losses were estimated in the trillions of U.S. dollars globally.[\[260\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-imfloss-260)
- [Financialization](https://en.wikipedia.org/wiki/Financialization "Financialization") â the increased use of leverage in the financial system.
- Financial institutions such as investment banks and hedge funds, as well as certain, differently regulated banks, assumed significant debt burdens while providing the loans described above and did not have a financial cushion sufficient to absorb large loan defaults or losses.[\[263\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-263) These losses affected the ability of financial institutions to lend, slowing economic activity.
- Some critics contend that government mandates forced banks to extend loans to borrowers previously considered uncreditworthy, leading to increasingly lax underwriting standards and high mortgage approval rates.[\[264\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:0-264)[\[244\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:1-244)[\[265\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:2-265)[\[245\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:3-245) These, in turn, led to an increase in the number of homebuyers, which drove up housing prices. This appreciation in value led many homeowners to borrow against the equity in their homes as an apparent windfall, leading to over-leveraging.
### Subprime lending
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=15 "Edit section: Subprime lending")\]
Main article: [Subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis")
[](https://en.wikipedia.org/wiki/File:U.S._Home_Ownership_and_Subprime_Origination_Share.png)
US subprime lending expanded dramatically 2004â2006
The relaxing of credit lending standards by investment banks and commercial banks allowed for a significant increase in [subprime lending](https://en.wikipedia.org/wiki/Subprime_lending "Subprime lending"). Subprime had not become less risky; Wall Street just accepted this higher risk.[\[266\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-266)
Due to competition between mortgage lenders for revenue and market share, and when the supply of creditworthy borrowers was limited, mortgage lenders relaxed underwriting standards and originated riskier mortgages to less creditworthy borrowers. In the view of some analysts, the relatively conservative [government-sponsored enterprises](https://en.wikipedia.org/wiki/Government-sponsored_enterprise "Government-sponsored enterprise") (GSEs) policed mortgage originators and maintained relatively high underwriting standards prior to 2003. However, as market power shifted from securitizers to originators, and as intense competition from private securitizers undermined GSE power, mortgage standards declined and risky loans proliferated. The riskiest loans were originated in 2004â2007, the years of the most intense competition between securitizers and the lowest market share for the GSEs. The GSEs eventually relaxed their standards to try to catch up with the private banks.[\[267\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-267)[\[268\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-268)
A contrarian view is that [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae") and [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac") led the way to relaxed underwriting standards, starting in 1995, by advocating the use of easy-to-qualify automated underwriting and appraisal systems, by designing no-down-payment products issued by lenders, by the promotion of thousands of small mortgage brokers, and by their close relationship to subprime loan aggregators such as [Countrywide](https://en.wikipedia.org/wiki/Bank_of_America_Home_Loans "Bank of America Home Loans").[\[269\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-269)[\[270\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-270)
Depending on how "subprime" mortgages are defined, they remained below 10% of all mortgage originations until 2004, when they rose to nearly 20% and remained there through the 2005â2006 peak of the [United States housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble").[\[271\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-271)
#### Role of affordable housing programs
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=16 "Edit section: Role of affordable housing programs")\]
The majority report of the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission"), written by the six Democratic appointees, the minority report, written by three of the four Republican appointees, studies by [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") economists, and the work of several independent scholars generally contend that government [affordable housing](https://en.wikipedia.org/wiki/Affordable_housing "Affordable housing") policy was not the primary cause of the financial crisis. Although they concede that governmental policies had some role in causing the crisis, they contend that GSE loans performed better than loans securitized by private investment banks, and performed better than some loans originated by institutions that held loans in their own portfolios.
In his dissent to the majority report of the Financial Crisis Inquiry Commission, conservative [American Enterprise Institute](https://en.wikipedia.org/wiki/American_Enterprise_Institute "American Enterprise Institute") [fellow](https://en.wikipedia.org/wiki/Fellow "Fellow") [Peter J. Wallison](https://en.wikipedia.org/wiki/Peter_J._Wallison "Peter J. Wallison")[\[272\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-272) stated his belief that the roots of the financial crisis can be traced directly and primarily to affordable housing policies initiated by the [United States Department of Housing and Urban Development](https://en.wikipedia.org/wiki/United_States_Department_of_Housing_and_Urban_Development "United States Department of Housing and Urban Development") (HUD) in the 1990s and to massive risky loan purchases by government-sponsored entities Fannie Mae and Freddie Mac. Based upon information in the SEC's December 2011 securities fraud case against six former executives of Fannie and Freddie, Peter Wallison and Edward Pinto estimated that, in 2008, Fannie and Freddie held 13 million substandard loans totaling over \$2 trillion.[\[273\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-273)
In the early and mid-2000s, the [Bush administration](https://en.wikipedia.org/wiki/Presidency_of_George_W._Bush "Presidency of George W. Bush") called numerous times for investigations into the safety and soundness of the GSEs and their swelling portfolio of subprime mortgages\[*[citation needed](https://en.wikipedia.org/wiki/Wikipedia:Citation_needed "Wikipedia:Citation needed")*\]. On September 10, 2003, the [United States House Committee on Financial Services](https://en.wikipedia.org/wiki/United_States_House_Committee_on_Financial_Services "United States House Committee on Financial Services") held a hearing, at the urging of the administration, to assess safety and soundness issues and to review a recent report by the [Office of Federal Housing Enterprise Oversight](https://en.wikipedia.org/wiki/Office_of_Federal_Housing_Enterprise_Oversight "Office of Federal Housing Enterprise Oversight") (OFHEO) that had uncovered accounting discrepancies within the two entities.[\[274\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-274)[\[275\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-275) The hearings never resulted in new legislation or formal investigation of Fannie Mae and Freddie Mac, as many of the committee members refused to accept the report and instead rebuked OFHEO for their attempt at regulation.[\[276\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-276) Some, such as Wallison, believe this was an early warning to the systemic risk that the growing market in subprime mortgages posed to the U.S. financial system that went unheeded.[\[277\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-277)
A 2000 [United States Department of the Treasury](https://en.wikipedia.org/wiki/United_States_Department_of_the_Treasury "United States Department of the Treasury") study of lending trends for 305 cities from 1993 to 1998 showed that \$467 billion of mortgage lending was made by [Community Reinvestment Act](https://en.wikipedia.org/wiki/Community_Reinvestment_Act "Community Reinvestment Act") (CRA)-covered lenders into low and mid-level income (LMI) borrowers and neighborhoods, representing 10% of all U.S. mortgage lending during the period. The majority of these were prime loans. Sub-prime loans made by CRA-covered institutions constituted a 3% market share of LMI loans in 1998,[\[278\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-278) but in the run-up to the crisis, fully 25% of all subprime lending occurred at CRA-covered institutions and another 25% of subprime loans had some connection with CRA.[\[279\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-279) However, most sub-prime loans were not made to the LMI borrowers targeted by the CRA,[\[280\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-280)[\[281\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:4-281) especially in the years 2005â2006 leading up to the crisis,[\[282\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-282)[\[281\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:4-281)[\[283\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-283) nor did it find any evidence that lending under the CRA rules increased delinquency rates or that the CRA indirectly influenced independent mortgage lenders to ramp up sub-prime lending.[\[284\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-284)\[*[verification needed](https://en.wikipedia.org/wiki/Wikipedia:Verifiability "Wikipedia:Verifiability")*\]
To other analysts the delay between CRA rule changes in 1995 and the explosion of subprime lending is not surprising, and does not exonerate the CRA. They contend that there were two, connected causes to the crisis: the relaxation of underwriting standards in 1995 and the ultra-low interest rates initiated by the Federal Reserve after the terrorist attack on September 11, 2001. Both causes had to be in place before the crisis could take place.[\[285\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-285) Critics also point out that publicly announced CRA loan commitments were massive, totaling \$4.5 trillion in the years between 1994 and 2007.[\[286\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-286) They also argue that the Federal Reserve's classification of CRA loans as "prime" is based on the faulty and self-serving assumption that high-interest-rate loans (3 percentage points over average) equal "subprime" loans.[\[287\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-287)
Others have pointed out that there were not enough of these loans made to cause a crisis of this magnitude. In an article in *Portfolio* magazine, [Michael Lewis](https://en.wikipedia.org/wiki/Michael_Lewis "Michael Lewis") spoke with one trader who noted that "There weren't enough Americans with \[bad\] credit taking out \[bad loans\] to satisfy investors' appetite for the end product." Essentially, investment banks and hedge funds used financial innovation to enable large wagers to be made, far beyond the actual value of the underlying mortgage loans, using [derivatives](https://en.wikipedia.org/wiki/Derivative_\(finance\) "Derivative (finance)") called credit default swaps, collateralized debt obligations and [synthetic CDOs](https://en.wikipedia.org/wiki/Synthetic_CDO "Synthetic CDO").
By March 2011, the FDIC had paid out \$9 billion (c. \$12.3 billion in 2024[\[288\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-inflation-USGDP-288)) to cover losses on bad loans at 165 failed financial institutions.[\[289\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-post-289)[\[290\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-290) The Congressional Budget Office estimated, in June 2011, that the bailout to Fannie Mae and Freddie Mac exceeds \$300 billion (c. \$411 billion in 2024[\[288\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-inflation-USGDP-288)) (calculated by adding the fair value deficits of the entities to the direct bailout funds at the time).[\[291\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-291)
Economist [Paul Krugman](https://en.wikipedia.org/wiki/Paul_Krugman "Paul Krugman") argued in January 2010 that the simultaneous growth of the residential and commercial real estate pricing bubbles and the global nature of the crisis undermines the case made by those who argue that Fannie Mae, Freddie Mac, CRA, or predatory lending were primary causes of the crisis. In other words, bubbles in both markets developed even though only the residential market was affected by these potential causes.[\[292\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-292)
Countering Krugman, Wallison wrote: "It is not true that every bubbleâeven a large bubbleâhas the potential to cause a financial crisis when it deflates." Wallison notes that other developed countries had "large bubbles during the 1997â2007 period" but "the losses associated with mortgage delinquencies and defaults when these bubbles deflated were far lower than the losses suffered in the United States when the 1997â2007 \[bubble\] deflated." According to Wallison, the reason the U.S. *residential housing* bubble (as opposed to other types of bubbles) led to financial crisis was that it was supported by a huge number of substandard loansâgenerally with low or no downpayments.[\[293\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-293)
Krugman's contention (that the growth of a commercial real estate bubble indicates that U.S. housing policy was not the cause of the crisis) is challenged by additional analysis. After researching the default of commercial loans during the financial crisis, Xudong An and Anthony B. Sanders reported (in December 2010): "We find limited evidence that substantial deterioration in [CMBS](https://en.wikipedia.org/wiki/CMBS "CMBS") \[commercial mortgage-backed securities\] loan underwriting occurred prior to the crisis."[\[294\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-294) Other analysts support the contention that the crisis in commercial real estate and related lending took place *after* the crisis in residential real estate. Business journalist Kimberly Amadeo reported: "The first signs of decline in residential real estate occurred in 2006. Three years later, commercial real estate started feeling the effects."\[*[verification needed](https://en.wikipedia.org/wiki/Wikipedia:Verifiability "Wikipedia:Verifiability")*\][\[295\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-295) Denice A. Gierach, a real estate attorney and CPA, wrote:
> ... most of the commercial real estate loans were good loans destroyed by a really bad economy. In other words, the borrowers did not cause the loans to go bad-it was the economy.[\[296\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-296)
### Growth of the housing bubble
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=17 "Edit section: Growth of the housing bubble")\]
Main article: [2000s United States housing bubble](https://en.wikipedia.org/wiki/2000s_United_States_housing_bubble "2000s United States housing bubble")
[](https://en.wikipedia.org/wiki/File:Median_and_Average_Sales_Prices_of_New_Homes_Sold_in_United_States_1963-2016_annual.svg)
A graph showing the median and average sales prices of new homes sold in the United States between 1963 and 2016 (not adjusted for inflation)[\[79\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-aspnewhome-79)
Between 1998 and 2006, the price of the typical American house increased by 124%.[\[297\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-297) During the 1980s and 1990s, the national median home price ranged from 2.9 to 3.1 times median household income. By contrast, this ratio increased to 4.0 in 2004, and 4.6 in 2006.[\[298\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-298) This [housing bubble](https://en.wikipedia.org/wiki/Housing_bubble "Housing bubble") resulted in many homeowners refinancing their homes at lower interest rates, or financing consumer spending by taking out [second mortgages](https://en.wikipedia.org/wiki/Second_mortgage "Second mortgage") secured by the price appreciation.
In a [Peabody Award](https://en.wikipedia.org/wiki/Peabody_Award "Peabody Award")\-winning program, [NPR](https://en.wikipedia.org/wiki/NPR "NPR") correspondents argued that a "Giant Pool of Money" (represented by \$70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. This pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with products such as the [mortgage-backed security](https://en.wikipedia.org/wiki/Mortgage-backed_security "Mortgage-backed security") and the [collateralized debt obligation](https://en.wikipedia.org/wiki/Collateralized_debt_obligation "Collateralized debt obligation") that were assigned safe [ratings](https://en.wikipedia.org/wiki/Credit_rating "Credit rating") by the [credit rating agencies](https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis "Credit rating agencies and the subprime crisis").[\[299\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-giantpool-299)
In effect, Wall Street connected this pool of money to the mortgage market in the US, with enormous fees accruing to those throughout the mortgage [supply chain](https://en.wikipedia.org/wiki/Supply_chain "Supply chain"), from the mortgage broker selling the loans to small banks that funded the brokers and the large investment banks behind them. By approximately 2003, the supply of mortgages originated at traditional lending standards had been exhausted, and continued strong demand began to drive down lending standards.[\[299\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-giantpool-299)
The collateralized debt obligation in particular enabled financial institutions to obtain investor funds to finance subprime and other lending, extending or increasing the housing bubble and generating large fees. This essentially places cash payments from multiple mortgages or other debt obligations into a single pool from which specific securities draw in a specific sequence of priority. Those securities first in line received investment-grade ratings from rating agencies. Securities with lower priority had lower credit ratings but theoretically a higher rate of return on the amount invested.[\[300\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-300)
By September 2008, average U.S. housing prices had declined by over 20% from their mid-2006 peak.[\[301\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-301)[\[302\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-302) As prices declined, borrowers with [adjustable-rate mortgages](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage") could not refinance to avoid the higher payments associated with rising interest rates and began to default. During 2007, lenders began foreclosure proceedings on nearly 1.3 million properties, a 79% increase over 2006.[\[303\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-303) This increased to 2.3 million in 2008, an 81% increase vs. 2007.[\[304\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-304) By August 2008, approximately 9% of all U.S. mortgages outstanding were either delinquent or in foreclosure.[\[305\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-305) By September 2009, this had risen to 14.4%.[\[306\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-306)[\[307\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-307)
After the bubble burst, Australian economist [John Quiggin](https://en.wikipedia.org/wiki/John_Quiggin "John Quiggin") wrote: "And, unlike the Great Depression, this crisis was entirely the product of financial markets. There was nothing like the postwar turmoil of the 1920s, the struggles over gold convertibility and reparations, or the [Smoot-Hawley tariff](https://en.wikipedia.org/wiki/Smoot-Hawley_tariff "Smoot-Hawley tariff"), all of which have shared the blame for the Great Depression." Instead, Quiggin lays the blame for the 2008 near-meltdown on financial markets, on political decisions to lightly regulate them, and on rating agencies which had self-interested incentives to give good ratings.[\[308\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-308)
### Easy credit conditions
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=18 "Edit section: Easy credit conditions")\]
Lower interest rates encouraged borrowing. From 2000 to 2003, the [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") lowered the [federal funds rate](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") target from 6.5% to 1.0%.[\[309\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-309)[\[310\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-310) This was done to soften the effects of the collapse of the [dot-com bubble](https://en.wikipedia.org/wiki/Dot-com_bubble "Dot-com bubble") and the [September 11 attacks](https://en.wikipedia.org/wiki/September_11_attacks "September 11 attacks"), as well as to combat a perceived risk of [deflation](https://en.wikipedia.org/wiki/Deflation "Deflation").[\[311\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-311) As early as 2002, it was apparent that credit was fueling housing instead of business investment as some economists went so far as to advocate that the Fed "needs to create a housing bubble to replace the Nasdaq bubble".[\[312\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-312) Moreover, empirical studies using data from advanced countries show that excessive credit growth contributed greatly to the severity of the crisis.[\[313\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-313)
[](https://en.wikipedia.org/wiki/File:U.S._Trade_Deficit_Dollars_and_percentage_GDP.png)
US current account deficit
Additional downward pressure on interest rates was created by a growing U.S. [current account](https://en.wikipedia.org/wiki/Current_account_\(balance_of_payments\) "Current account (balance of payments)") deficit, which peaked along with the housing bubble in 2006. Federal Reserve chairman [Ben Bernanke](https://en.wikipedia.org/wiki/Ben_Bernanke "Ben Bernanke") explained how trade deficits required the U.S. to borrow money from abroad, in the process bidding up bond prices and lowering interest rates.[\[314\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-314)
Bernanke explained that between 1996 and 2004, the U.S. current account deficit increased by \$650 billion, from 1.5% to 5.8% of GDP. Financing these deficits required the country to borrow large sums from abroad, much of it from countries running trade surpluses. These were mainly the emerging economies in Asia and oil-exporting nations. The [balance of payments](https://en.wikipedia.org/wiki/Balance_of_payments "Balance of payments") [identity](https://en.wikipedia.org/wiki/Accounting_identity "Accounting identity") requires that a country (such as the US) running a [current account](https://en.wikipedia.org/wiki/Current_account_\(balance_of_payments\) "Current account (balance of payments)") deficit also have a [capital account](https://en.wikipedia.org/wiki/Capital_account "Capital account") (investment) surplus of the same amount. Hence large and growing amounts of foreign funds (capital) flowed into the U.S. to finance its imports.
All of this created demand for various types of financial assets, raising the prices of those assets while lowering interest rates. Foreign investors had these funds to lend either because they had very high personal savings rates (as high as 40% in China) or because of high oil prices. [Ben Bernanke](https://en.wikipedia.org/wiki/Ben_Bernanke "Ben Bernanke") referred to this as a "[saving glut](https://en.wikipedia.org/wiki/Saving_glut "Saving glut")".[\[315\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Bernanke-315)
A flood of funds ([capital](https://en.wikipedia.org/wiki/Financial_capital "Financial capital") or [liquidity](https://en.wikipedia.org/wiki/Liquidity "Liquidity")) reached the U.S. financial markets. Foreign governments supplied funds by purchasing [Treasury bonds](https://en.wikipedia.org/wiki/Treasury_bond "Treasury bond") and thus avoided much of the direct effect of the crisis. U.S. households used funds borrowed from foreigners to finance consumption or to bid up the prices of housing and financial assets. Financial institutions invested foreign funds in [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities").\[*[citation needed](https://en.wikipedia.org/wiki/Wikipedia:Citation_needed "Wikipedia:Citation needed")*\]
The Fed then raised the Fed funds rate significantly between July 2004 and July 2006.[\[316\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-316) This contributed to an increase in one-year and five-year [adjustable-rate mortgage](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage") (ARM) rates, making ARM interest rate resets more expensive for homeowners.[\[317\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-317) This may have also contributed to the deflation of the housing bubble, as asset prices generally move inversely to interest rates. It became riskier to speculate in housing.[\[318\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-318)[\[319\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-319) U.S. housing and financial assets dramatically declined in value after the housing bubble burst.[\[320\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-320)[\[32\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-greatcrash-32)
### Weak and fraudulent underwriting practices
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=19 "Edit section: Weak and fraudulent underwriting practices")\]
Subprime lending standards declined in the U.S.: in early 2000, a subprime borrower had a FICO score of 660 or less. By 2005, many lenders dropped the required FICO score to 620, making it much easier to qualify for prime loans and making subprime lending a riskier business. Proof of income and assets were de-emphasized. Loans at first required full documentation, then low documentation, then no documentation. One subprime mortgage product that gained wide acceptance was the no income, no job, no asset verification required (NINJA) mortgage. Informally, these loans were aptly referred to as "[liar loans](https://en.wikipedia.org/wiki/Liar_loans "Liar loans")" because they encouraged borrowers to be less than honest in the loan application process.[\[321\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-321) Testimony given to the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission") by [whistleblower](https://en.wikipedia.org/wiki/Whistleblower "Whistleblower") [Richard M. Bowen III](https://en.wikipedia.org/wiki/Richard_M._Bowen_III "Richard M. Bowen III") on events during his tenure as the Business Chief Underwriter for Correspondent Lending in the Consumer Lending Group for [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup"), where he was responsible for over 220 professional underwriters, suggests that by 2006 and 2007, the collapse of [mortgage underwriting](https://en.wikipedia.org/wiki/Mortgage_underwriting "Mortgage underwriting") standards was endemic. His testimony stated that by 2006, 60% of mortgages purchased by [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup") from some 1,600 mortgage companies were "defective" (were not underwritten to policy, or did not contain all policy-required documents). This, despite the fact that each of these 1,600 originators was contractually responsible (certified via representations and warrantees) that its mortgage originations met [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup") standards. Moreover, during 2007, "defective mortgages (from mortgage originators contractually bound to perform underwriting to [Citi's](https://en.wikipedia.org/wiki/Citigroup "Citigroup") standards) increased to over 80% of production".[\[322\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-322)
In separate testimony to the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission"), officers of Clayton Holdings, the largest residential loan due diligence and securitization surveillance company in the United States and Europe, testified that Clayton's review of over 900,000 mortgages issued from January 2006 to June 2007 revealed that scarcely 54% of the loans met their originators' underwriting standards. The analysis, conducted on behalf of 23 investment and commercial banks, including 7 "[too big to fail](https://en.wikipedia.org/wiki/Too_big_to_fail "Too big to fail")" banks, additionally showed that 28% of the sampled loans did not meet the minimal standards of any issuer. Clayton's analysis further showed that 39% of these loans (i.e. those not meeting *any* issuer's minimal underwriting standards) were subsequently securitized and sold to investors.[\[323\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-323)[\[324\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-324)
### Predatory lending
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=20 "Edit section: Predatory lending")\]
[Predatory lending](https://en.wikipedia.org/wiki/Predatory_lending "Predatory lending") refers to the practice of unscrupulous lenders enticing borrowers to enter into unfair or abusive secured loans for inappropriate purposes.[\[325\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-325)[\[326\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-326)[\[327\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-327)
In June 2008, [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial") was sued by then [California Attorney General](https://en.wikipedia.org/wiki/California_Attorney_General "California Attorney General") [Jerry Brown](https://en.wikipedia.org/wiki/Jerry_Brown "Jerry Brown") for unfair business practices and false advertising, alleging that Countrywide used "deceptive tactics to push homeowners into complicated, risky, and expensive loans so that the company could sell as many loans as possible to third-party investors".[\[328\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-328) In May 2009, Bank of America modified 64,000 Countrywide loans as a result.[\[329\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-329) When housing prices decreased, homeowners in ARMs then had little incentive to pay their monthly payments, since their home equity had disappeared. This caused Countrywide's financial condition to deteriorate, ultimately resulting in a decision by the [Office of Thrift Supervision](https://en.wikipedia.org/wiki/Office_of_Thrift_Supervision "Office of Thrift Supervision") to seize the lender. One Countrywide employee, who would later plead guilty to two counts of [wire fraud](https://en.wikipedia.org/wiki/Wire_fraud "Wire fraud") and spent 18 months in prison, stated that, "If you had a pulse, we gave you a loan."[\[330\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-330)
Former employees from [Ameriquest](https://en.wikipedia.org/wiki/Ameriquest "Ameriquest"), which was the United States' leading wholesale lender, described a system in which they were pushed to falsify mortgage documents and then sell the mortgages to Wall Street banks eager to make fast profits. There is growing evidence that such [mortgage frauds](https://en.wikipedia.org/wiki/Mortgage_fraud "Mortgage fraud") may be a cause of the crisis.[\[331\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-331)
### Deregulation and lack of regulation
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=21 "Edit section: Deregulation and lack of regulation")\]
Further information: [Government policies and the subprime mortgage crisis](https://en.wikipedia.org/wiki/Government_policies_and_the_subprime_mortgage_crisis "Government policies and the subprime mortgage crisis")
According to Barry Eichengreen, the roots of the financial crisis lay in the deregulation of financial markets.[\[332\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:02-332) A 2012 OECD study[\[333\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-333) suggested that bank regulation based on the Basel accords encouraged unconventional business practices and contributed to or reinforced the financial crisis. In other cases, laws were changed or enforcement weakened in parts of the financial system. Key examples include:
- [Jimmy Carter](https://en.wikipedia.org/wiki/Jimmy_Carter "Jimmy Carter")'s [Depository Institutions Deregulation and Monetary Control Act](https://en.wikipedia.org/wiki/Depository_Institutions_Deregulation_and_Monetary_Control_Act "Depository Institutions Deregulation and Monetary Control Act") of 1980 (DIDMCA), which phased out several restrictions on banks' financial practices, broadened their lending powers, allowed [credit unions](https://en.wikipedia.org/wiki/Credit_union "Credit union") and [savings and loans](https://en.wikipedia.org/wiki/Savings_and_loan "Savings and loan") to offer [checkable deposits](https://en.wikipedia.org/wiki/Checkable_deposit "Checkable deposit"), and raised the [deposit insurance](https://en.wikipedia.org/wiki/Deposit_insurance "Deposit insurance") limit from \$40,000 to \$100,000 (thereby potentially lessening depositor scrutiny of lenders' risk management policies).[\[334\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-334)
- In October 1982, U.S. President [Ronald Reagan](https://en.wikipedia.org/wiki/Ronald_Reagan "Ronald Reagan") signed into law the [GarnâSt. Germain Depository Institutions Act](https://en.wikipedia.org/wiki/Garn%E2%80%93St._Germain_Depository_Institutions_Act "GarnâSt. Germain Depository Institutions Act"), which provided for [adjustable-rate mortgage](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage") loans, began the process of banking deregulation, and contributed to the [savings and loan crisis](https://en.wikipedia.org/wiki/Savings_and_loan_crisis "Savings and loan crisis") of the late 1980s/early 1990s.[\[335\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-335)[\[336\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-336)
- In November 1999, U.S. President Bill Clinton signed into law the Republican-sponsored [GrammâLeachâBliley Act](https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act "GrammâLeachâBliley Act"), which repealed provisions of the Glass-Steagall Act that prohibited a [bank holding company](https://en.wikipedia.org/wiki/Bank_holding_company "Bank holding company") from owning other financial companies. The repeal effectively removed the separation that previously existed between Wall Street investment banks and depository banks, providing a government stamp of approval for a universal risk-taking banking model. Investment banks such as Lehman became competitors with commercial banks.[\[337\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-337) Some analysts say that this repeal directly contributed to the severity of the crisis, while others downplay its impact since the institutions that were greatly affected did not fall under the jurisdiction of the act itself.[\[338\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-338)[\[339\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-339)
- In 2004, the [U.S. Securities and Exchange Commission](https://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission "U.S. Securities and Exchange Commission") relaxed the [net capital rule](https://en.wikipedia.org/wiki/Net_capital_rule "Net capital rule"), which enabled investment banks to substantially increase the level of debt they were taking on, fueling the growth in mortgage-backed securities supporting subprime mortgages. The SEC conceded that self-regulation of investment banks contributed to the crisis.[\[340\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-340)[\[341\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-341)
- Financial institutions in the [shadow banking system](https://en.wikipedia.org/wiki/Shadow_banking_system "Shadow banking system") are not subject to the same regulation as depository banks, allowing them to assume additional debt obligations relative to their financial cushion or capital base.[\[342\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Krugman_2009-342) This was despite the [Long-Term Capital Management](https://en.wikipedia.org/wiki/Long-Term_Capital_Management "Long-Term Capital Management") debacle in 1998, in which a highly leveraged shadow institution failed with systemic implications and was bailed out.
- Regulators and accounting standard-setters allowed depository banks like [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup") to move significant assets and liabilities off-balance sheet into complex legal entities called [structured investment vehicles](https://en.wikipedia.org/wiki/Structured_investment_vehicles "Structured investment vehicles"), masking the weakness of the capital base of the firm or degree of [leverage](https://en.wikipedia.org/wiki/Financial_leverage "Financial leverage") or risk taken. [Bloomberg News](https://en.wikipedia.org/wiki/Bloomberg_News "Bloomberg News") estimated that the top four U.S. banks will have to return between \$500 billion and \$1 trillion to their balance sheets during 2009.[\[343\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-343) This increased uncertainty during the crisis regarding the financial position of the major banks.[\[344\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-344) Off-balance sheet entities were also used in the [Enron scandal](https://en.wikipedia.org/wiki/Enron_scandal "Enron scandal"), which brought down [Enron](https://en.wikipedia.org/wiki/Enron "Enron") in 2001.[\[345\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-345)
- As early as 1997, Federal Reserve chairman [Alan Greenspan](https://en.wikipedia.org/wiki/Alan_Greenspan "Alan Greenspan") fought to keep the derivatives market unregulated.[\[346\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-346) With the advice of the [Working Group on Financial Markets](https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets "Working Group on Financial Markets"),[\[347\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-347) the U.S. Congress and President Bill Clinton and the Republican-controlled U.S. Congress allowed the self-regulation of the [over-the-counter](https://en.wikipedia.org/wiki/Over-the-counter_\(finance\) "Over-the-counter (finance)") derivatives market when they enacted the [Commodity Futures Modernization Act of 2000](https://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000 "Commodity Futures Modernization Act of 2000"). Written by Congress with lobbying from the financial industry, it banned the further regulation of the derivatives market. Derivatives such as [credit default swaps](https://en.wikipedia.org/wiki/Credit_default_swaps "Credit default swaps") (CDS) could be used to hedge or speculate against particular credit risks without necessarily owning the underlying debt instruments. The volume of CDS outstanding increased 100-fold from 1998 to 2008, with estimates of the debt covered by CDS contracts, as of November 2008, ranging from US\$33 to \$47 trillion. Total over-the-counter (OTC) derivative [notional value](https://en.wikipedia.org/wiki/Notional_value "Notional value") rose to \$683 trillion by June 2008.[\[348\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-348) [Warren Buffett](https://en.wikipedia.org/wiki/Warren_Buffett "Warren Buffett") famously referred to derivatives as "financial weapons of mass destruction" in early 2003.[\[349\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-349)[\[350\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-350)
A 2011 paper suggested that Canada's avoidance of a banking crisis in 2008 (as well as in prior eras) could be attributed to Canada possessing a single, powerful, overarching regulator, while the United States had a weak, crisis prone and fragmented banking system with multiple competing regulatory bodies.[\[351\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-351)
### Increased debt burden or overleveraging
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=22 "Edit section: Increased debt burden or overleveraging")\]
[](https://en.wikipedia.org/wiki/File:Leverage_ratios_for_major_investment_banks.svg)
Leverage ratios of investment banks increased significantly between 2003 and 2007
[](https://en.wikipedia.org/wiki/File:U.S._Household_Debt_Relative_to_Disposable_Income_and_GDP.png)
[Household debt](https://en.wikipedia.org/wiki/Household_debt "Household debt") relative to disposable income and GDP
Prior to the crisis, financial institutions became highly leveraged, increasing their appetite for risky investments and reducing their resilience in case of losses. Much of this leverage was achieved using complex financial instruments such as off-balance sheet securitization and derivatives, which made it difficult for creditors and regulators to monitor and try to reduce financial institution risk levels.[\[352\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-352)\[*[verification needed](https://en.wikipedia.org/wiki/Wikipedia:Verifiability "Wikipedia:Verifiability")*\]
U.S. households and financial institutions became increasingly indebted or [overleveraged](https://en.wikipedia.org/wiki/Financial_leverage "Financial leverage") during the years preceding the crisis.[\[353\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-endaffair-353) This increased their vulnerability to the collapse of the housing bubble and worsened the ensuing economic downturn.[\[354\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Yellen_on_Minsky-354) Key statistics include:
Free cash used by consumers from home equity extraction doubled from \$627 billion in 2001 to \$1,428 billion in 2005 as the housing bubble built, a total of nearly \$5 trillion over the period, contributing to economic growth worldwide.[\[19\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-extracted-19)[\[20\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-freecash-20)[\[21\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-boosted-21) U.S. home mortgage debt relative to GDP increased from an average of 46% during the 1990s to 73% during 2008, reaching \$10.5 trillion (c. \$15 trillion in 2024[\[288\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-inflation-USGDP-288)).[\[18\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-headache-18)
U.S. household debt as a percentage of annual [disposable personal income](https://en.wikipedia.org/wiki/Disposable_personal_income "Disposable personal income") was 127% at the end of 2007, versus 77% in 1990.[\[353\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-endaffair-353) In 1981, U.S. private debt was 123% of GDP; by the third quarter of 2008, it was 290%.[\[355\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-355)
From 2004 to 2007, the top five U.S. [investment banks](https://en.wikipedia.org/wiki/Investment_banks "Investment banks") each significantly increased their financial leverage, which increased their vulnerability to a financial shock. Changes in capital requirements, intended to keep U.S. banks competitive with their European counterparts, allowed lower *risk weightings* for AAA-rated securities. The shift from first-loss [tranches](https://en.wikipedia.org/wiki/Tranches "Tranches") to AAA-rated tranches was seen by regulators as a risk reduction that compensated the higher leverage.[\[356\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-356) These five institutions reported over \$4.1 trillion in debt for fiscal year 2007, about 30% of U.S. nominal GDP for 2007. [Lehman Brothers](https://en.wikipedia.org/wiki/Lehman_Brothers "Lehman Brothers") [went bankrupt and was liquidated](https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers "Bankruptcy of Lehman Brothers"), [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns") and [Merrill Lynch](https://en.wikipedia.org/wiki/Merrill_Lynch "Merrill Lynch") were sold at fire-sale prices, and [Goldman Sachs](https://en.wikipedia.org/wiki/Goldman_Sachs "Goldman Sachs") and [Morgan Stanley](https://en.wikipedia.org/wiki/Morgan_Stanley "Morgan Stanley") became commercial banks, subjecting themselves to more stringent regulation. With the exception of Lehman, these companies required or received government support.[\[357\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-357)
Fannie Mae and Freddie Mac, two U.S. [government-sponsored enterprises](https://en.wikipedia.org/wiki/Government-sponsored_enterprise "Government-sponsored enterprise"), owned or guaranteed nearly \$5 trillion (c. \$7.13 trillion in 2024[\[288\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-inflation-USGDP-288)) trillion in mortgage obligations at the time they were placed into [conservatorship](https://en.wikipedia.org/wiki/Conservatorship "Conservatorship") by the U.S. government in September 2008.[\[358\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-358)[\[359\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-359)
These seven entities were highly leveraged and had \$9 trillion in debt or guarantee obligations; yet they were not subject to the same regulation as depository banks.[\[342\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Krugman_2009-342)[\[360\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-360)
Behavior that may be optimal for an individual, such as saving more during adverse economic conditions, can be detrimental if too many individuals pursue the same behavior, as ultimately one person's consumption is another person's income. Too many consumers attempting to save or pay down debt simultaneously is called the [paradox of thrift](https://en.wikipedia.org/wiki/Paradox_of_thrift "Paradox of thrift") and can cause or deepen a recession. Economist [Hyman Minsky](https://en.wikipedia.org/wiki/Hyman_Minsky "Hyman Minsky") also described a "paradox of deleveraging" as financial institutions that have too much leverage (debt relative to equity) cannot all de-leverage simultaneously without significant declines in the value of their assets.[\[354\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Yellen_on_Minsky-354)
In April 2009, [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") vice-chair [Janet Yellen](https://en.wikipedia.org/wiki/Janet_Yellen "Janet Yellen") discussed these paradoxes:
> Once this massive credit crunch hit, it didn't take long before we were in a recession. The recession, in turn, deepened the credit crunch as demand and employment fell, and credit losses of financial institutions surged. Indeed, we have been in the grips of precisely this adverse feedback loop for more than a year. A process of balance sheet deleveraging has spread to nearly every corner of the economy. Consumers are pulling back on purchases, especially on durable goods, to build their savings. Businesses are cancelling planned investments and laying off workers to preserve cash. And financial institutions are shrinking assets to bolster capital and improve their chances of weathering the current storm. Once again, Minsky understood this dynamic. He spoke of the paradox of deleveraging, in which precautions that may be smart for individuals and firmsâand indeed essential to return the economy to a normal stateânevertheless magnify the distress of the economy as a whole.[\[354\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Yellen_on_Minsky-354)
### Financial innovation and complexity
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=23 "Edit section: Financial innovation and complexity")\]
[](https://en.wikipedia.org/wiki/File:CDO_-_FCIC_and_IMF_Diagram.png)
IMF Diagram of CDO and RMBS
The term [financial innovation](https://en.wikipedia.org/wiki/Financial_innovation "Financial innovation") refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the [adjustable-rate mortgage](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage"); the bundling of subprime mortgages into [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities") (MBS) or [collateralized debt obligations](https://en.wikipedia.org/wiki/Collateralized_debt_obligation "Collateralized debt obligation") (CDO) for sale to investors, a type of [securitization](https://en.wikipedia.org/wiki/Securitization "Securitization"); and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.\[*[citation needed](https://en.wikipedia.org/wiki/Wikipedia:Citation_needed "Wikipedia:Citation needed")*\]
CDO issuance grew from an estimated \$20 billion in Q1 2004 to its peak of over \$180 billion by Q1 2007, then declined back under \$20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets. As described in the section on subprime lending, the CDS and portfolio of CDS called [synthetic CDO](https://en.wikipedia.org/wiki/Synthetic_CDO "Synthetic CDO") enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.[\[361\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-361)
[](https://en.wikipedia.org/wiki/File:Complexity_and_the_mortgage_market_-_an_example.svg)
Diagram of CMLTI 2006 â NC2
This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse.[\[362\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-362) Economists have studied the crisis as an instance of [cascades in financial networks](https://en.wikipedia.org/wiki/Cascades_in_financial_networks "Cascades in financial networks"), where institutions' instability destabilized other institutions and led to knock-on effects.[\[363\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-363)[\[364\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-364)
[Martin Wolf](https://en.wikipedia.org/wiki/Martin_Wolf "Martin Wolf"), chief economics commentator at the *[Financial Times](https://en.wikipedia.org/wiki/Financial_Times "Financial Times")*, wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "an enormous part of what banks did in the early part of this decadeâthe off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itselfâwas to find a way round regulation."[\[365\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-365)
### Incorrect pricing of risk
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=24 "Edit section: Incorrect pricing of risk")\]
[](https://en.wikipedia.org/wiki/File:AIG_Protester_on_Pine_Street.jpg)
A protester on [Wall Street](https://en.wikipedia.org/wiki/Wall_Street "Wall Street") in the wake of the [AIG bonus payments controversy](https://en.wikipedia.org/wiki/AIG_bonus_payments_controversy "AIG bonus payments controversy") is interviewed by news media.
Mortgage risks were underestimated by almost all institutions in the chain from originator to investor by underweighting the possibility of falling housing prices based on historical trends of the past 50 years. Limitations of default and prepayment models, the heart of pricing models, led to overvaluation of mortgage and asset-backed products and their derivatives by originators, securitizers, broker-dealers, rating-agencies, insurance underwriters and the vast majority of investors (with the exception of certain hedge funds).[\[366\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-366)[\[367\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-kourlas-367) While financial derivatives and structured products helped partition and shift risk between financial participants, it was the underestimation of falling housing prices and the resultant losses that led to aggregate risk.[\[367\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-kourlas-367)
For a variety of reasons, market participants did not accurately measure the risk inherent with financial innovation such as MBS and CDOs or understand its effect on the overall stability of the financial system.[\[254\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-declaration-254) The pricing model for CDOs clearly did not reflect the level of risk they introduced into the system. Banks estimated that \$450 billion of CDO were sold between "late 2005 to the middle of 2007"; among the \$102 billion of those that had been liquidated, JPMorgan estimated that the average recovery rate for "high quality" CDOs was approximately 32 cents on the dollar, while the recovery rate for [mezzanine capital](https://en.wikipedia.org/wiki/Mezzanine_capital "Mezzanine capital") CDO was approximately five cents for every dollar.
[AIG](https://en.wikipedia.org/wiki/AIG "AIG") insured obligations of various financial institutions through the usage of [credit default swaps](https://en.wikipedia.org/wiki/Credit_default_swap "Credit default swap"). The basic CDS transaction involved AIG receiving a premium in exchange for a promise to pay money to party A in the event party B defaulted. However, AIG did not have the financial strength to support its many CDS commitments as the crisis progressed and was taken over by the government in September 2008. U.S. taxpayers provided over \$180 billion in government loans and investments in AIG during 2008 and early 2009, through which the money flowed to various counterparties to CDS transactions, including many large global financial institutions.[\[368\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-368)\[*[unreliable source?](https://en.wikipedia.org/wiki/Wikipedia:Reliable_sources "Wikipedia:Reliable sources")*\][\[369\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-369)
The [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission") (FCIC) made the major government study of the crisis. It concluded in January 2011:
> The Commission concludes [AIG](https://en.wikipedia.org/wiki/AIG "AIG") failed and was rescued by the government primarily because its enormous sales of credit default swaps were made without putting up the initial collateral, setting aside capital reserves, or hedging its exposureâa profound failure in corporate governance, particularly its risk management practices. AIG's failure was possible because of the sweeping deregulation of over-the-counter (OTC) derivatives, including credit default swaps, which effectively eliminated federal and state regulation of these products, including capital and margin requirements that would have lessened the likelihood of AIG's failure.[\[370\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-370)[\[371\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-371)[\[372\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-372)
The limitations of a widely used financial model also were not properly understood.[\[373\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-373)[\[374\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Felix1-374) This formula assumed that the price of CDS was correlated with and could predict the correct price of mortgage-backed securities. Because it was highly tractable, it rapidly came to be used by a huge percentage of CDO and CDS investors, issuers, and rating agencies.[\[374\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Felix1-374) According to one *Wired* article:
> Then the model fell apart. Cracks started appearing early on, when financial markets began behaving in ways that users of [Li's](https://en.wikipedia.org/wiki/David_X._Li "David X. Li") formula hadn't expected. The cracks became full-fledged canyons in 2008âwhen ruptures in the financial system's foundation swallowed up trillions of dollars and put the survival of the global banking system in serious peril ... Li's [Gaussian copula](https://en.wikipedia.org/wiki/Gaussian_copula "Gaussian copula") formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees.[\[374\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Felix1-374)
As financial assets became more complex and harder to value, investors were reassured by the fact that the international [bond rating](https://en.wikipedia.org/wiki/Bond_rating "Bond rating") agencies and bank regulators accepted as valid some complex mathematical models that showed the risks were much smaller than they actually were.[\[375\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-RISKS1-375) [George Soros](https://en.wikipedia.org/wiki/George_Soros "George Soros") commented that "The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility."[\[376\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-376)
A [conflict of interest](https://en.wikipedia.org/wiki/Conflict_of_interest "Conflict of interest") between [investment management](https://en.wikipedia.org/wiki/Investment_management "Investment management") professional and [institutional investors](https://en.wikipedia.org/wiki/Institutional_investor "Institutional investor"), combined with a global glut in investment capital, led to bad investments by asset managers in over-priced credit assets. Professional investment managers generally are compensated based on the volume of client [assets under management](https://en.wikipedia.org/wiki/Assets_under_management "Assets under management"). There is, therefore, an incentive for asset managers to expand their assets under management in order to maximize their compensation. As the glut in global investment capital caused the yields on credit assets to decline, asset managers were faced with the choice of either investing in assets where returns did not reflect true credit risk or returning funds to clients. Many asset managers continued to invest client funds in over-priced (under-yielding) investments, to the detriment of their clients, so they could maintain their assets under management. They supported this choice with a "plausible deniability" of the risks associated with subprime-based credit assets because the loss experience with early "vintages" of subprime loans was so low.[\[377\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-377)
Despite the dominance of the above formula, there are documented attempts of the financial industry, occurring before the crisis, to address the formula limitations, specifically the lack of dependence dynamics and the poor representation of extreme events.[\[378\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-378) The volume *Credit Correlation: Life After Copulas*, published in 2007 by [World Scientific](https://en.wikipedia.org/wiki/World_Scientific "World Scientific"), summarizes a 2006 conference held by Merrill Lynch in London where several practitioners attempted to propose models rectifying some of the copula limitations. See also the article by Donnelly and Embrechts[\[379\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-379) and the book by Brigo, Pallavicini and Torresetti, that reports relevant warnings and research on CDOs appeared in 2006.[\[380\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-380)
### Boom and collapse of the shadow banking system
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=25 "Edit section: Boom and collapse of the shadow banking system")\]
[](https://en.wikipedia.org/wiki/File:Securitization_Market_Activity.png)
Securitization markets were impaired during the crisis
There is strong evidence that the riskiest, worst performing mortgages were funded through the "[shadow banking system](https://en.wikipedia.org/wiki/Shadow_banking_system "Shadow banking system")" and that competition from the [shadow banking system](https://en.wikipedia.org/wiki/Shadow_banking_system "Shadow banking system") may have pressured more traditional institutions to lower their underwriting standards and originate riskier loans.
In a June 2008 speech, President and CEO of the [Federal Reserve Bank of New York](https://en.wikipedia.org/wiki/Federal_Reserve_Bank_of_New_York "Federal Reserve Bank of New York") [Timothy Geithner](https://en.wikipedia.org/wiki/Timothy_Geithner "Timothy Geithner")âwho in 2009 became [United States Secretary of the Treasury](https://en.wikipedia.org/wiki/United_States_Secretary_of_the_Treasury "United States Secretary of the Treasury")âplaced significant blame for the freezing of credit markets on a [run](https://en.wikipedia.org/wiki/Bank_run "Bank run") on the entities in the "parallel" banking system, also called the [shadow banking system](https://en.wikipedia.org/wiki/Shadow_banking_system "Shadow banking system"). These entities became critical to the credit markets underpinning the financial system, but were not subject to the same regulatory controls. Further, these entities were vulnerable because of [assetâliability mismatch](https://en.wikipedia.org/wiki/Asset%E2%80%93liability_mismatch "Assetâliability mismatch"), meaning that they borrowed short-term in liquid markets to purchase long-term, illiquid and risky assets. This meant that disruptions in credit markets would force them to engage in rapid deleveraging, selling their long-term assets at depressed prices. He described the significance of these entities:
> In early 2007, asset-backed commercial paper conduits, in structured investment vehicles, in auction-rate preferred securities, tender option bonds and variable rate demand notes, had a combined asset size of roughly \$2.2 trillion. Assets financed overnight in tri-party repo grew to \$2.5 trillion. Assets held in hedge funds grew to roughly \$1.8 trillion. The combined balance sheets of the five largest investment banks totaled \$4 trillion. In comparison, the total assets of the top five bank holding companies in the United States at that point were just over \$6 trillion, and total assets of the entire banking system were about \$10 trillion. The combined effect of these factors was a financial system vulnerable to self-reinforcing asset price and credit cycles.[\[381\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-reducing-381)
Economist [Paul Krugman](https://en.wikipedia.org/wiki/Paul_Krugman "Paul Krugman"), laureate of the [Nobel Memorial Prize in Economic Sciences](https://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Economic_Sciences "Nobel Memorial Prize in Economic Sciences"), described the run on the shadow banking system as the "core of what happened" to cause the crisis. He referred to this lack of controls as "[malign neglect](https://en.wikipedia.org/wiki/Benign_neglect "Benign neglect")" and argued that regulation should have been imposed on all banking-like activity.[\[342\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Krugman_2009-342) Without the ability to obtain investor funds in exchange for most types of [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities") or [asset-backed commercial paper](https://en.wikipedia.org/wiki/Asset-backed_commercial_paper "Asset-backed commercial paper"), investment banks and other entities in the [shadow banking](https://en.wikipedia.org/wiki/Shadow_banking "Shadow banking") system could not provide funds to mortgage firms and other corporations.[\[381\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-reducing-381)[\[342\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Krugman_2009-342)
This meant that nearly one-third of the U.S. lending mechanism was frozen and continued to be frozen into June 2009.[\[382\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Uncrunch-382) According to the [Brookings Institution](https://en.wikipedia.org/wiki/Brookings_Institution "Brookings Institution"), at that time the traditional banking system did not have the capital to close this gap: "It would take a number of years of strong profits to generate sufficient capital to support that additional lending volume." The authors also indicate that some forms of [securitization](https://en.wikipedia.org/wiki/Securitization "Securitization") were "likely to vanish forever, having been an artifact of excessively loose credit conditions". While traditional banks raised their lending standards, it was the collapse of the shadow banking system that was the primary cause of the reduction in funds available for borrowing.[\[29\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-gofromhere-29)
### Commodity prices
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=26 "Edit section: Commodity prices")\]
Main article: [2000s commodities boom](https://en.wikipedia.org/wiki/2000s_commodities_boom "2000s commodities boom")
[](https://en.wikipedia.org/wiki/File:Copper_Price_History_USD.png)
Global copper prices
[](https://en.wikipedia.org/wiki/File:Fertilizer_prices.webp)
Fertilizer prices
[DAP](https://en.wikipedia.org/wiki/Diammonium_phosphate "Diammonium phosphate")
[Potassium chloride](https://en.wikipedia.org/wiki/Potassium_chloride "Potassium chloride")
[Phosphorite](https://en.wikipedia.org/wiki/Phosphorite "Phosphorite")
[Triple Superphosphate](https://en.wikipedia.org/wiki/Superphosphate "Superphosphate")
[Urea](https://en.wikipedia.org/wiki/Urea "Urea")
In a 2008 paper, [Ricardo J. Caballero](https://en.wikipedia.org/wiki/Ricardo_J._Caballero "Ricardo J. Caballero"), [Emmanuel Farhi](https://en.wikipedia.org/wiki/Emmanuel_Farhi "Emmanuel Farhi"), and [Pierre-Olivier Gourinchas](https://en.wikipedia.org/wiki/Pierre-Olivier_Gourinchas "Pierre-Olivier Gourinchas") argued that the financial crisis was attributable to "global asset scarcity, which led to large capital flows toward the United States and to the creation of asset bubbles that eventually burst".[\[383\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Caballero-383) Caballero, Farhi, and Gourinchas argued "that the sharp rise in oil prices following the subprime crisis â nearly 100 percent in just a matter of months and on the face of recessionary shocks â was the result of a speculative response to the financial crisis itself, in an attempt to rebuild asset supply. That is, the global economy was subject to one shock with multiple implications rather than to two separate shocks (financial and oil)."[\[383\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Caballero-383)
Long-only commodity index funds became popular â by one estimate investment increased from \$90 billion in 2006 to \$200 billion at the end of 2007, while commodity prices increased 71% â which raised concern as to whether these index funds caused the commodity bubble. The empirical research has been mixed.[\[384\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-IrwinSanders2010-384)
### The Globals Savings Glut
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=27 "Edit section: The Globals Savings Glut")\]
The cause of the global asset bubble can be partially attributable to the global savings glut. As theorized by [Andrew Metrick](https://en.wikipedia.org/wiki/Andrew_Metrick "Andrew Metrick"), the demand for safe assets following the Asian Financial Crisis coupled with the lack of circulating treasuries created an unmet demand for "risk free" assets. Thus, institutional investors like sovereign wealth funds and pension funds began purchasing synthetic safe assets like Triple-A Mortgage Backed Securities.[\[385\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-385)
As a consequence, the demand for so-called safe assets fueled the free flow of capital into housing in the United States. This greatly worsened the crisis as banks and other financial institutions were incentivized to issue more mortgages than before.
### Monetary policy
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=28 "Edit section: Monetary policy")\]
Main article: [Criticism of the Federal Reserve](https://en.wikipedia.org/wiki/Criticism_of_the_Federal_Reserve "Criticism of the Federal Reserve")
Some commentators and economists associated with the [Austrian School of economics](https://en.wikipedia.org/wiki/Austrian_school_of_economics "Austrian school of economics"), including former [U.S. Congressman Ron Paul](https://en.wikipedia.org/wiki/Ron_Paul "Ron Paul") and historian [Tom Woods](https://en.wikipedia.org/wiki/Tom_Woods "Tom Woods"), have offered a [libertarian](https://en.wikipedia.org/wiki/Libertarianism_in_the_United_States "Libertarianism in the United States") interpretation of the crisis which differs from the explanations centered on deregulation and government oversight. In Ron Paul's book, *[End the Fed](https://en.wikipedia.org/wiki/End_the_Fed "End the Fed"),* Paul argues that the [Federal Reserve's](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") prolonged policy of [artificially low interest rates](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") in the early 2000s created a [credit bubble](https://en.wikipedia.org/wiki/Credit_bubble "Credit bubble") that allowed for speculative investments and unsustainable levels of debt, particularly in housing.[\[386\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:8-386)[\[387\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-387)[\[388\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-388) In Tom Woods' book *[Meltdown](https://en.wikipedia.org/wiki/Meltdown_\(Woods_book\) "Meltdown (Woods book)")*, he also contends that Federal Reserve manipulation of the money supply and credit markets distorted normal price signals, leading to widespread malinvestment, resulting in an inevitable correction.[\[389\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:9-389)[\[390\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-390)
Paul and Woods also criticized [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae")'s and [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac")'s role in the crisis, asserting that the entities engaged in excessive risk-taking by expanding homeownership beyond sustainable levels.[\[391\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-391)[\[392\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-392)[\[386\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:8-386) In doing this, the government intervention created [moral hazard](https://en.wikipedia.org/wiki/Moral_hazard "Moral hazard") by assuring large financial institutions that they would receive government support in times of crisis, which Paul and Woods believe encouraged riskier behavior.[\[389\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:9-389)[\[393\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-393)
### Systemic crisis of capitalism
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=29 "Edit section: Systemic crisis of capitalism")\]
In a 1998 book, [John McMurtry](https://en.wikipedia.org/wiki/John_McMurtry_\(academic\) "John McMurtry (academic)") suggested that a financial crisis is a systemic crisis of [capitalism](https://en.wikipedia.org/wiki/Capitalism "Capitalism") itself.[\[394\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-394)
In his 1978 book, *[The Downfall of Capitalism and Communism](https://en.wikipedia.org/wiki/The_Downfall_of_Capitalism_and_Communism "The Downfall of Capitalism and Communism")*, [Ravi Batra](https://en.wikipedia.org/wiki/Ravi_Batra "Ravi Batra") suggests that growing inequality of [financial capitalism](https://en.wikipedia.org/wiki/Financial_capitalism "Financial capitalism") produces speculative bubbles that burst and result in depression and major political changes. He also suggested that a "demand gap" related to differing wage and productivity growth explains deficit and debt dynamics important to stock market developments.[\[395\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-395)
[John Bellamy Foster](https://en.wikipedia.org/wiki/John_Bellamy_Foster "John Bellamy Foster"), a political economy analyst and editor of the *[Monthly Review](https://en.wikipedia.org/wiki/Monthly_Review "Monthly Review")*, believed that the decrease in GDP growth rates since the early 1970s is due to increasing [market saturation](https://en.wikipedia.org/wiki/Market_saturation "Market saturation").[\[396\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-396)
[Marxian economics](https://en.wikipedia.org/wiki/Marxian_economics "Marxian economics") followers [Andrew Kliman](https://en.wikipedia.org/wiki/Andrew_Kliman "Andrew Kliman"), Michael Roberts, and Guglielmo Carchedi, in contradistinction to the *Monthly Review* school represented by Foster, pointed to capitalism's long-term tendency of the [rate of profit](https://en.wikipedia.org/wiki/Rate_of_profit "Rate of profit") to fall as the underlying cause of crises generally. From this point of view, the problem was the inability of capital to grow or accumulate at sufficient rates through productive investment alone. Low rates of profit in productive sectors led to speculative investment in riskier assets, where there was potential for greater return on investment. The speculative frenzy of the late 1990s and 2000s was, in this view, a consequence of a rising organic composition of capital, expressed through the fall in the rate of profit. According to Michael Roberts, the fall in the rate of profit "eventually triggered the credit crunch of 2007 when credit could no longer support profits".[\[397\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-397)
In 2005 book, *The Battle for the Soul of Capitalism*, [John C. Bogle](https://en.wikipedia.org/wiki/John_C._Bogle "John C. Bogle") wrote that "Corporate America went astray largely because the power of managers went virtually unchecked by our gatekeepers for far too long". Echoing the central thesis of [James Burnham](https://en.wikipedia.org/wiki/James_Burnham "James Burnham")'s 1941 seminal book, *[The Managerial Revolution](https://en.wikipedia.org/wiki/James_Burnham#The_Managerial_Revolution "James Burnham")*, Bogle cites issues, including:[\[398\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-398)
- that "manager's capitalism" replaced "owner's capitalism", meaning management runs the firm for its benefit rather than for the shareholders, a variation on the [principalâagent problem](https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem "Principalâagent problem");
- the burgeoning executive compensation;
- the management of earnings, mainly a focus on share price rather than the creation of genuine value; and
- the failure of gatekeepers, including auditors, boards of directors, Wall Street analysts, and career politicians.
In his book *[The Big Mo](https://en.wikipedia.org/wiki/The_Big_Mo_\(book\) "The Big Mo (book)")*, [Mark Roeder](https://en.wikipedia.org/wiki/Mark_Roeder "Mark Roeder"), a former executive at the Swiss-based [UBS](https://en.wikipedia.org/wiki/UBS "UBS") Bank, suggested that large-scale momentum, or [The Big Mo](https://en.wikipedia.org/wiki/The_Big_Mo "The Big Mo"), "played a pivotal role" in the financial crisis. Roeder suggested that "recent technological advances, such as computer-driven trading programs, together with the increasingly interconnected nature of markets, has magnified the momentum effect. This has made the financial sector inherently unstable."[\[399\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-399)
[Robert Reich](https://en.wikipedia.org/wiki/Robert_Reich "Robert Reich") attributed the economic downturn to the stagnation of wages in the United States, particularly those of the hourly workers who comprise 80% of the workforce. This stagnation forced the population to borrow to meet the cost of living.[\[400\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-400)
Economists [Ailsa McKay](https://en.wikipedia.org/wiki/Ailsa_McKay "Ailsa McKay") and [Margunn Bjørnholt](https://en.wikipedia.org/wiki/Margunn_Bj%C3%B8rnholt "Margunn Bjørnholt") argued that the financial crisis and the response to it revealed a crisis of ideas in mainstream economics and within the economics profession, and call for a reshaping of both the economy, economic theory and the economics profession.[\[401\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-401)
### Wrong banking model: resilience of credit unions
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=30 "Edit section: Wrong banking model: resilience of credit unions")\]
A report by the [International Labour Organization](https://en.wikipedia.org/wiki/International_Labour_Organization "International Labour Organization") concluded that [cooperative banking](https://en.wikipedia.org/wiki/Cooperative_banking "Cooperative banking") institutions were less likely to fail than their competitors during the crisis. The cooperative banking sector had 20% market share of the European banking sector, but accounted for only 7% of all the write-downs and losses between the third quarter of 2007 and first quarter of 2011.[\[402\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-402) In 2008, in the U.S., the rate of commercial bank failures was almost triple that of [credit unions](https://en.wikipedia.org/wiki/Credit_union "Credit union"), and almost five times the credit union rate in 2010.[\[403\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-403) Credit unions increased their lending to small- and medium-sized businesses while overall lending to those businesses decreased.[\[404\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-404)
## Prediction by economists
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=31 "Edit section: Prediction by economists")\]
Economists, particularly followers of [mainstream economics](https://en.wikipedia.org/wiki/Mainstream_economics "Mainstream economics"), mostly failed to predict the crisis.[\[405\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-405) The [Wharton School of the University of Pennsylvania](https://en.wikipedia.org/wiki/Wharton_School_of_the_University_of_Pennsylvania "Wharton School of the University of Pennsylvania")'s online business journal examined why economists failed to predict a major global financial crisis and concluded that economists used mathematical models that failed to account for the critical roles that banks and other financial institutions, as opposed to producers and consumers of goods and services, play in the economy.[\[406\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-406)
Several followers of [heterodox economics](https://en.wikipedia.org/wiki/Heterodox_economics "Heterodox economics") predicted the crisis, with varying arguments. [Dirk Bezemer](https://en.wikipedia.org/wiki/Dirk_Bezemer "Dirk Bezemer")[\[407\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-407) credits 12 economists with predicting the crisis: [Dean Baker](https://en.wikipedia.org/wiki/Dean_Baker "Dean Baker") (US), [Wynne Godley](https://en.wikipedia.org/wiki/Wynne_Godley "Wynne Godley") (UK), [Fred Harrison](https://en.wikipedia.org/wiki/Fred_Harrison_\(author\) "Fred Harrison (author)") (UK), [Michael Hudson](https://en.wikipedia.org/wiki/Michael_Hudson_\(economist\) "Michael Hudson (economist)") (US), [Eric Janszen](https://en.wikipedia.org/w/index.php?title=Eric_Janszen&action=edit&redlink=1 "Eric Janszen (page does not exist)") (US), [Steve Keen](https://en.wikipedia.org/wiki/Steve_Keen "Steve Keen") (Australia), [Jakob Broechner Madsen](https://en.wikipedia.org/wiki/Jakob_Broechner_Madsen "Jakob Broechner Madsen") & Jens Kjaer Sørensen (Denmark), [Med Jones](https://en.wikipedia.org/wiki/Med_Jones "Med Jones") (US)[\[408\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-408) [Kurt Richebächer](https://en.wikipedia.org/wiki/Kurt_Richeb%C3%A4cher "Kurt Richebächer") (US), [Nouriel Roubini](https://en.wikipedia.org/wiki/Nouriel_Roubini "Nouriel Roubini") (US), [Peter Schiff](https://en.wikipedia.org/wiki/Peter_Schiff "Peter Schiff") (US), and [Robert Shiller](https://en.wikipedia.org/wiki/Robert_Shiller "Robert Shiller") (US).
Shiller, a founder of the [CaseâShiller index](https://en.wikipedia.org/wiki/Case%E2%80%93Shiller_index "CaseâShiller index") that measures home prices, wrote an article a year before the collapse of Lehman Brothers in which he predicted that a slowing U.S. housing market would cause the housing bubble to burst, leading to financial collapse.[\[409\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-409) Peter Schiff regularly appeared on television in the years before the crisis and warned of the impending real estate collapse.[\[410\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-410)
The [Austrian School](https://en.wikipedia.org/wiki/Austrian_School "Austrian School") regarded the crisis as a vindication and classic example of a predictable credit-fueled bubble caused by laxity in monetary supply.[\[411\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-411)
There were other economists that did warn of a pending crisis.[\[412\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-412)
The former Governor of the [Reserve Bank of India](https://en.wikipedia.org/wiki/Reserve_Bank_of_India "Reserve Bank of India"), [Raghuram Rajan](https://en.wikipedia.org/wiki/Raghuram_Rajan "Raghuram Rajan"), had predicted the crisis in 2005 when he became chief economist at the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund"). In 2005, at a celebration honoring [Alan Greenspan](https://en.wikipedia.org/wiki/Alan_Greenspan "Alan Greenspan"), who was about to retire as chairman of the [US Federal Reserve](https://en.wikipedia.org/wiki/US_Federal_Reserve "US Federal Reserve"), Rajan delivered a controversial paper that was critical of the financial sector.[\[413\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-413) In that paper, Rajan "argued that disaster might loom".[\[414\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-414) Rajan argued that financial sector managers were encouraged to "take risks that generate severe adverse consequences with small probability but, in return, offer generous compensation the rest of the time. These risks are known as tail risks. But perhaps the most important concern is whether banks will be able to provide liquidity to financial markets so that if the tail risk does materialize, financial positions can be unwound and losses allocated so that the consequences to the real economy are minimized."
Stock trader and financial risk engineer [Nassim Nicholas Taleb](https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb "Nassim Nicholas Taleb"), author of the 2007 book *[The Black Swan](https://en.wikipedia.org/wiki/The_Black_Swan:_The_Impact_of_the_Highly_Improbable "The Black Swan: The Impact of the Highly Improbable")*, spent years warning against the breakdown of the banking system in particular and the economy in general owing to their use of and reliance on bad risk models and reliance on forecasting, and framed the problem as part of "robustness and fragility".[\[415\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-415)[\[416\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-416) He also took action against the establishment view by making a big financial bet on banking stocks and making a fortune from the crisis ("They didn't listen, so I took their money").[\[417\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-417) According to [David Brooks](https://en.wikipedia.org/wiki/David_Brooks_\(commentator\) "David Brooks (commentator)") from *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")*, "Taleb not only has an explanation for what's happening, he saw it coming."[\[418\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-418)
Popular articles published in the mass media have led the general public to believe that the majority of economists have failed in their obligation to predict the financial crisis. For example, an article in *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")* noted that economist [Nouriel Roubini](https://en.wikipedia.org/wiki/Nouriel_Roubini "Nouriel Roubini") warned of such crisis as early as September 2006, and stated that the profession of economics is bad at predicting recessions.[\[419\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-419) According to *[The Guardian](https://en.wikipedia.org/wiki/The_Guardian "The Guardian")*, Roubini was ridiculed for predicting a collapse of the housing market and worldwide recession, while *The New York Times* labelled him "Dr. Doom".[\[420\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-420)
In a 2012 article in the journal *[Japan and the World Economy](https://en.wikipedia.org/wiki/Japan_and_the_World_Economy "Japan and the World Economy")*, Andrew K. Rose and Mark M. Spiegel used a Multiple Indicator Multiple Cause (MIMIC) model on a cross-section of 107 countries to evaluate potential causes of the 2008 crisis. The authors examined various economic indicators, ignoring [contagion effects](https://en.wikipedia.org/wiki/Financial_contagion "Financial contagion") across countries. The authors concluded: "We include over sixty potential causes of the crisis, covering such categories as: financial system policies and conditions; asset price appreciation in real estate and equity markets; international imbalances and foreign reserve adequacy; macroeconomic policies; and institutional and geographic features. Despite the fact that we use a wide number of possible causes in a flexible statistical framework, we are unable to link most of the commonly cited causes of the crisis to its incidence across countries. This negative finding in the cross-section makes us skeptical of the accuracy of 'early warning' systems of potential crises, which must also predict their timing."[\[421\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-421)
## IndyMac
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=32 "Edit section: IndyMac")\]
The first visible institution to run into trouble in the United States was the Southern Californiaâbased [IndyMac](https://en.wikipedia.org/wiki/IndyMac "IndyMac"), a spin-off of [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial"). Before its failure, IndyMac Bank was the largest [savings and loan association](https://en.wikipedia.org/wiki/Savings_and_loan_association "Savings and loan association") in the Los Angeles market and the seventh-largest [mortgage loan](https://en.wikipedia.org/wiki/Mortgage_loan "Mortgage loan") originator in the United States.[\[422\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-422) The failure of IndyMac Bank on July 11, 2008, was (until the crisis precipitated even larger failures) the fourth-largest [bank failure](https://en.wikipedia.org/wiki/Bank_failure "Bank failure") in United States history,[\[423\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-423) and the second-largest failure of a regulated [thrift](https://en.wikipedia.org/wiki/Savings_and_loan_association "Savings and loan association").[\[424\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-shutsdown-424) IndyMac Bank's parent corporation was IndyMac Bancorp until the FDIC seized IndyMac Bank.[\[425\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Liquidate-425) IndyMac Bancorp filed for [Chapter 7 bankruptcy](https://en.wikipedia.org/wiki/Chapter_7_bankruptcy "Chapter 7 bankruptcy") in July 2008.[\[425\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Liquidate-425)
IndyMac Bank was founded as Countrywide Mortgage Investment in 1985 by [David S. Loeb](https://en.wikipedia.org/wiki/David_S._Loeb "David S. Loeb") and [Angelo Mozilo](https://en.wikipedia.org/wiki/Angelo_Mozilo "Angelo Mozilo")[\[426\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-426)[\[427\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-427) as a means of [collateralizing](https://en.wikipedia.org/wiki/Cross-collateralization "Cross-collateralization") [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial") loans too big to be sold to Freddie Mac and Fannie Mae. In 1997, Countrywide spun off IndyMac as an independent company run by Mike Perry, who remained its CEO until the downfall of the bank in July 2008.[\[428\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Paletta-428)
The primary causes of its failure were largely associated with its business strategy of originating and securitizing [Alt-A](https://en.wikipedia.org/wiki/Alt-A "Alt-A") loans on a large scale. This strategy resulted in rapid growth and a high concentration of risky assets. From its inception as a savings association in 2000, IndyMac grew to the seventh largest savings and loan and ninth largest originator of mortgage loans in the United States. During 2006, IndyMac originated over \$90 billion (~\$134 billion in 2024) of mortgages.
IndyMac's aggressive growth strategy, use of Alt-A and other nontraditional loan products, insufficient underwriting, credit concentrations in residential real estate in the [California](https://en.wikipedia.org/wiki/California "California") and [Florida](https://en.wikipedia.org/wiki/Florida "Florida") marketsâstates, alongside Nevada and Arizona, where the [housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble") was most pronouncedâand heavy reliance on costly funds borrowed from a [Federal Home Loan Bank](https://en.wikipedia.org/wiki/Federal_Home_Loan_Bank "Federal Home Loan Bank") (FHLB) and from brokered deposits, led to its demise when the mortgage market declined in 2007.
IndyMac often made loans without verification of the borrower's income or assets, and to borrowers with poor credit histories. Appraisals obtained by IndyMac on underlying collateral were often questionable as well. As an Alt-A lender, IndyMac's business model was to offer loan products to fit the borrower's needs, using an extensive array of risky option-[adjustable-rate mortgages](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage") (option ARMs), subprime loans, 80/20 loans, and other nontraditional products. Ultimately, loans were made to many borrowers who simply could not afford to make their payments. The thrift remained profitable only as long as it was able to sell those loans in the [secondary mortgage market](https://en.wikipedia.org/wiki/Secondary_mortgage_market "Secondary mortgage market"). IndyMac resisted efforts to regulate its involvement in those loans or tighten their issuing criteria: see the comment by Ruthann Melbourne, Chief Risk Officer, to the regulating agencies.[\[429\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-lossreview-429)[\[430\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-430)[\[431\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-431)
On May 12, 2008, in the "Capital" section of its last 10-Q, [IndyMac](https://en.wikipedia.org/wiki/IndyMac "IndyMac") revealed that it may not be well capitalized in the future.[\[432\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-indymac10Q-432)
IndyMac reported that during April 2008, [Moody's](https://en.wikipedia.org/wiki/Moody%27s "Moody's") and [Standard & Poor's](https://en.wikipedia.org/wiki/Standard_%26_Poor%27s "Standard & Poor's") downgraded the ratings on a significant number of [Mortgage-backed security](https://en.wikipedia.org/wiki/Mortgage-backed_security "Mortgage-backed security") (MBS) bondsâincluding \$160 million (~\$228 million in 2024) issued by IndyMac that the bank retained in its MBS portfolio. IndyMac concluded that these downgrades would have harmed its risk-based capital ratio as of June 30, 2008. Had these lowered ratings been in effect on March 31, 2008, IndyMac concluded that the bank's capital ratio would have been 9.27% total risk-based. IndyMac warned that if its regulators found its capital position to have fallen below "well capitalized" (minimum 10% risk-based capital ratio) to "adequately capitalized" (8â10% risk-based capital ratio) the bank might no longer be able to use brokered deposits as a source of funds.
Senator [Charles Schumer](https://en.wikipedia.org/wiki/Charles_Schumer "Charles Schumer") (D-NY) later pointed out that brokered deposits made up more than 37% of IndyMac's total deposits, and asked the [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation") (FDIC) whether it had considered ordering IndyMac to reduce its reliance on these deposits.[\[433\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-433) With \$18.9 billion in total deposits reported on March 31,[\[432\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-indymac10Q-432) Senator Schumer would have been referring to a little over \$7 billion in brokered deposits. While the breakout of maturities of these deposits is not known exactly, a simple averaging would have put the threat of brokered deposits loss to IndyMac at \$500 million a month, had the regulator disallowed IndyMac from acquiring new brokered deposits on June 30.
IndyMac was taking new measures to preserve capital, such as deferring interest payments on some preferred securities. Dividends on common shares had already been suspended for the first quarter of 2008, after being cut in half the previous quarter. The company still had not secured a significant capital infusion nor found a ready buyer.[\[434\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-434)
IndyMac reported that the bank's risk-based capital was only \$47 million above the minimum required for this 10% mark. But it did not reveal some of that \$47 million (~\$67 million in 2024) capital it claimed it had, as of March 31, 2008, was fabricated.[\[435\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-435)
[](https://en.wikipedia.org/wiki/File:Wikinews-logo.svg)
Wikinews has related news:
- [IndyMac Bank placed into conservatorship by US Government](https://en.wikinews.org/wiki/Category:July_15,_2008#IndyMac_Bank_placed_into_conservatorship_by_US_Government "wikinews:Category:July 15, 2008")
When home prices declined in the latter half of 2007 and the secondary mortgage market collapsed, IndyMac was forced to hold \$10.7 billion (~\$15.5 billion in 2024) of loans it could not sell in the secondary market. Its reduced liquidity was further exacerbated in late June 2008 when account holders withdrew \$1.55 billion (~\$2.21 billion in 2024) or about 7.5% of IndyMac's deposits.[\[432\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-indymac10Q-432) This [bank run](https://en.wikipedia.org/wiki/Bank_run "Bank run") on the thrift followed the public release of a letter from Senator Charles Schumer to the FDIC and OTS. The letter outlined the Senator's concerns with IndyMac. While the run was a contributing factor in the timing of IndyMac's demise, the underlying cause of the failure was the unsafe and unsound way it was operated.[\[429\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-lossreview-429)
On June 26, 2008, Senator [Charles Schumer](https://en.wikipedia.org/wiki/Charles_Schumer "Charles Schumer") (D-NY), a member of the [Senate Banking Committee](https://en.wikipedia.org/wiki/Senate_Banking_Committee "Senate Banking Committee"), chairman of Congress' [Joint Economic Committee](https://en.wikipedia.org/wiki/Joint_Economic_Committee "Joint Economic Committee") and the third-ranking Democrat in the Senate, released several letters he had sent to regulators, in which he was"concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers." Some worried depositors began to withdraw money.[\[436\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-436)[\[437\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-437)
On July 7, 2008, IndyMac announced on the company blog that it:
- Had failed to raise [capital](https://en.wikipedia.org/wiki/Capital_\(economics\) "Capital (economics)") since its May 12, 2008, quarterly earnings report;
- Had been notified by bank and thrift regulators that IndyMac Bank was no longer deemed "well-capitalized".
IndyMac announced the closure of both its retail lending and wholesale divisions, halted new loan submissions, and cut 3,800 jobs.[\[438\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-438)
On July 11, 2008, citing liquidity concerns, the FDIC put IndyMac Bank into [conservatorship](https://en.wikipedia.org/wiki/Conservatorship "Conservatorship"). A [bridge bank](https://en.wikipedia.org/wiki/Bridge_bank_\(United_States\) "Bridge bank (United States)"), IndyMac Federal Bank, FSB, was established to assume control of IndyMac Bank's assets, its secured liabilities, and its insured deposit accounts. The FDIC announced plans to open IndyMac Federal Bank, FSB on July 14, 2008. Until then, depositors would have access to their insured deposits through ATMs, their existing checks, and their existing debit cards. Telephone and Internet account access was restored when the bank reopened.[\[125\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-indymactaken-125)[\[439\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-439)[\[440\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-fn1-440) The FDIC guarantees the funds of all insured accounts up to US\$100,000, and declared a special advance dividend to the roughly 10,000 depositors with funds in excess of the insured amount, guaranteeing 50% of any amounts in excess of \$100,000.[\[424\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-shutsdown-424) Yet, even with the pending sale of Indymac to IMB Management Holdings, an estimated 10,000 uninsured depositors of Indymac are still at a loss of over \$270 million.[\[441\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-441)[\[442\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-442)
With \$32 billion in assets, IndyMac Bank was one of the largest bank failures in American history.[\[443\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-443)
IndyMac Bancorp filed for [Chapter 7 bankruptcy](https://en.wikipedia.org/wiki/Chapter_7_bankruptcy "Chapter 7 bankruptcy") on July 31, 2008.[\[425\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Liquidate-425)
Initially the companies affected were those directly involved in home construction and mortgage lending such as Northern Rock and [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial"), as they could no longer obtain financing through the credit markets. Over 100 mortgage lenders went bankrupt during 2007 and 2008. Concerns that investment bank [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns") would collapse in March 2008 resulted in its fire-sale to [JP Morgan Chase](https://en.wikipedia.org/wiki/JP_Morgan_Chase "JP Morgan Chase"). The financial institution crisis hit its peak in September and October 2008. Several major institutions either failed, were acquired under duress, or were subject to government takeover. These included [Lehman Brothers](https://en.wikipedia.org/wiki/Lehman_Brothers "Lehman Brothers"), [Merrill Lynch](https://en.wikipedia.org/wiki/Merrill_Lynch "Merrill Lynch"), Fannie Mae, Freddie Mac, [Washington Mutual](https://en.wikipedia.org/wiki/Washington_Mutual "Washington Mutual"), [Wachovia](https://en.wikipedia.org/wiki/Wachovia "Wachovia"), [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup"), and [AIG](https://en.wikipedia.org/wiki/AIG "AIG").[\[32\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-greatcrash-32) On October 6, 2008, three weeks after Lehman Brothers filed the largest bankruptcy in U.S. history, Lehman's former CEO [Richard S. Fuld Jr.](https://en.wikipedia.org/wiki/Richard_S._Fuld_Jr. "Richard S. Fuld Jr.") found himself before Representative [Henry A. Waxman](https://en.wikipedia.org/wiki/Henry_A._Waxman "Henry A. Waxman"), the California Democrat who chaired the [House Committee on Oversight and Government Reform](https://en.wikipedia.org/wiki/House_Committee_on_Oversight_and_Government_Reform "House Committee on Oversight and Government Reform"). Fuld said he was a victim of the collapse, blaming a "crisis of confidence" in the markets for dooming his firm.[\[444\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-444)
## Notable books and movies
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=33 "Edit section: Notable books and movies")\]
- In 2006, [Peter Schiff](https://en.wikipedia.org/wiki/Peter_Schiff "Peter Schiff") authored a book titled *[Crash Proof: How to Profit From the Coming Economic Collapse](https://en.wikipedia.org/wiki/Crash_Proof:_How_to_Profit_From_the_Coming_Economic_Collapse "Crash Proof: How to Profit From the Coming Economic Collapse")*, which was published in February 2007 by [Wiley](https://en.wikipedia.org/wiki/Wiley_\(publisher\) "Wiley (publisher)"). The book describes various features of the economy and housing market that led to the [United States housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble"), and warns of the impending decline. After many of the predictions came to pass, a second edition titled *Crash Proof 2.0* was published in 2009, which included a "2009 update" addendum at the end of each chapter. It was featured on [The New York Times Best Seller list](https://en.wikipedia.org/wiki/The_New_York_Times_Best_Seller_list "The New York Times Best Seller list").
- *[Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and the Government Bailout Will Make Things Worse](https://en.wikipedia.org/wiki/Meltdown_\(Woods_book\) "Meltdown (Woods book)")*, by [Tom Woods](https://en.wikipedia.org/wiki/Tom_Woods "Tom Woods"), was published in February 2009 by [Regnery Publishing](https://en.wikipedia.org/wiki/Regnery_Publishing "Regnery Publishing"). It was featured on [The New York Times Best Seller list](https://en.wikipedia.org/wiki/The_New_York_Times_Best_Seller_list "The New York Times Best Seller list") for 10 weeks.
- The American documentary program *[Frontline](https://en.wikipedia.org/wiki/Frontline_\(American_TV_program\) "Frontline (American TV program)")* produced several episodes investigating various aspects of the crisis:
- "[Inside the Meltdown](https://www.pbs.org/wgbh/frontline/documentary/meltdown/)" (Season 2009: Episode 8)
- "[Ten Trillion and Counting](https://www.pbs.org/wgbh/frontline/documentary/tentrillion/)" (Season 2009: Episode 9)
- "[Breaking the Bank](https://www.pbs.org/wgbh/frontline/documentary/breakingthebank/)" (Season 2009: Episode 15)
- "[The Warning](https://www.pbs.org/wgbh/frontline/documentary/warning/)" (Season 2009: Episode 2)
- A 2010 documentary film, *Overdose: A Film about the Next Financial Crisis*, describes how the financial crisis came about and how the solutions that have been applied by many governments are setting the stage for the next crisis. The film is based on the book *Financial Fiasco* by [Johan Norberg](https://en.wikipedia.org/wiki/Johan_Norberg "Johan Norberg") and features [Alan Greenspan](https://en.wikipedia.org/wiki/Alan_Greenspan "Alan Greenspan"), with funding from the [libertarian](https://en.wikipedia.org/wiki/Libertarian "Libertarian") think tank [Cato Institute](https://en.wikipedia.org/wiki/Cato_Institute "Cato Institute").[\[445\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-445)
- In October 2010, a documentary film about the crisis, *[Inside Job](https://en.wikipedia.org/wiki/Inside_Job_\(2010_film\) "Inside Job (2010 film)")* directed by [Charles Ferguson](https://en.wikipedia.org/wiki/Charles_Ferguson_\(filmmaker\) "Charles Ferguson (filmmaker)"), was released by [Sony Pictures Classics](https://en.wikipedia.org/wiki/Sony_Pictures_Classics "Sony Pictures Classics"). In 2011, it won the [Academy Award for Best Documentary Feature](https://en.wikipedia.org/wiki/Academy_Award_for_Best_Documentary_Feature "Academy Award for Best Documentary Feature") at the [83rd Academy Awards](https://en.wikipedia.org/wiki/83rd_Academy_Awards "83rd Academy Awards").[\[446\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-446)
- Set on the night before the crisis broke, the 2011 film *[Margin Call](https://en.wikipedia.org/wiki/Margin_Call "Margin Call")* is a movie that follows traders through a sleepless 24 hours as they try to contain the damage after an analyst discovers information that is likely to ruin their firm, and possibly the whole economy.[\[447\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-447)
- The 2011 film *[Too Big to Fail](https://en.wikipedia.org/wiki/Too_Big_to_Fail_\(film\) "Too Big to Fail (film)")* is based on [Andrew Ross Sorkin](https://en.wikipedia.org/wiki/Andrew_Ross_Sorkin "Andrew Ross Sorkin")'s 2009 non-fiction book *[Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System â and Themselves](https://en.wikipedia.org/wiki/Too_Big_to_Fail_\(book\) "Too Big to Fail (book)")*.
- [Michael Lewis](https://en.wikipedia.org/wiki/Michael_Lewis "Michael Lewis") authored a best-selling non-fiction book about the crisis, entitled *[The Big Short](https://en.wikipedia.org/wiki/The_Big_Short "The Big Short")*. In 2015, it was adapted into a [film of the same name](https://en.wikipedia.org/wiki/The_Big_Short_\(film\) "The Big Short (film)"), which won the [Academy Award](https://en.wikipedia.org/wiki/Academy_Award_for_Best_Adapted_Screenplay "Academy Award for Best Adapted Screenplay"), [BAFTA Award](https://en.wikipedia.org/wiki/BAFTA_Award_for_Best_Adapted_Screenplay "BAFTA Award for Best Adapted Screenplay"), [Critics' Choice Movie Award](https://en.wikipedia.org/wiki/Critics%27_Choice_Movie_Award_for_Best_Adapted_Screenplay "Critics' Choice Movie Award for Best Adapted Screenplay"), and [Writers Guild of America Award](https://en.wikipedia.org/wiki/Writers_Guild_of_America_Award_for_Best_Adapted_Screenplay "Writers Guild of America Award for Best Adapted Screenplay"), all for Best Adapted Screenplay. One point raised is to what extent those outside of the markets themselves (i.e., not working for a mainstream investment bank) could forecast the events and be generally less myopic.
- Simon Reid-Henry's 2019 book *[Empire of Democracy](https://en.wikipedia.org/wiki/Empire_of_Democracy "Empire of Democracy")* describes how liberal norms\[*[which?](https://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_words "Wikipedia:Avoid weasel words")*\] in the West were replaced by populism as a consequence of the 2007â08 financial crisis, as well as [neoliberal](https://en.wikipedia.org/wiki/Neoliberal "Neoliberal") policies\[*[which?](https://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_words "Wikipedia:Avoid weasel words")*\] that had emerged in previous decades which hollowed out government and changed voter expectations.
- [VirĂĄg Blazsek](https://en.wikipedia.org/wiki/Vir%C3%A1g_Blazsek "VirĂĄg Blazsek")'s book, *Banking Bailout Law: A Comparative Study of the United States, United Kingdom and the European Union* (Routledge, 2020) examines the 2008 Global Financial Crisis-related bank bailout and resolution techniques through case studies from the United States, the EU, the United Kingdom, Spain and Hungary. The book identifies the advantages and disadvantages of different legal and regulatory approaches and proposes a regulatory framework intended to better address future financial crises.[\[448\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-448)
## See also
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=34 "Edit section: See also")\]
- [Banking (Special Provisions) Act 2008](https://en.wikipedia.org/wiki/Banking_\(Special_Provisions\)_Act_2008 "Banking (Special Provisions) Act 2008") (United Kingdom)
- [2008â2009 Keynesian resurgence](https://en.wikipedia.org/wiki/2008%E2%80%932009_Keynesian_resurgence "2008â2009 Keynesian resurgence")
- [2010 United States foreclosure crisis](https://en.wikipedia.org/wiki/2010_United_States_foreclosure_crisis "2010 United States foreclosure crisis")
- [2012 May Day protests](https://en.wikipedia.org/wiki/2012_May_Day_protests "2012 May Day protests")
- [2000s commodities boom](https://en.wikipedia.org/wiki/2000s_commodities_boom "2000s commodities boom")
- [Crisis theory](https://en.wikipedia.org/wiki/Crisis_theory "Crisis theory")
- [Kondratiev wave](https://en.wikipedia.org/wiki/Kondratiev_wave "Kondratiev wave")
- [List of acronyms associated with the eurozone crisis](https://en.wikipedia.org/wiki/List_of_acronyms_associated_with_the_eurozone_crisis "List of acronyms associated with the eurozone crisis")
- [List of bank failures in the United States (2008âpresent)](https://en.wikipedia.org/wiki/List_of_bank_failures_in_the_United_States_\(2008%E2%80%93present\) "List of bank failures in the United States (2008âpresent)")
- [List of banks acquired or bankrupted during the Great Recession](https://en.wikipedia.org/wiki/List_of_banks_acquired_or_bankrupted_during_the_Great_Recession "List of banks acquired or bankrupted during the Great Recession")
- [List of banks acquired or bankrupted in the United States during the 2008 financial crisis](https://en.wikipedia.org/wiki/List_of_banks_acquired_or_bankrupted_in_the_United_States_during_the_2008_financial_crisis "List of banks acquired or bankrupted in the United States during the 2008 financial crisis")
- [List of economic crises](https://en.wikipedia.org/wiki/List_of_economic_crises "List of economic crises")
- [List of entities involved in 2007â2008 financial crises](https://en.wikipedia.org/wiki/List_of_entities_involved_in_2007%E2%80%932008_financial_crises "List of entities involved in 2007â2008 financial crises")
- [List of largest bank failures in the United States](https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States "List of largest bank failures in the United States")
- [Stock market crashes in India](https://en.wikipedia.org/wiki/Stock_market_crashes_in_India "Stock market crashes in India")
- [Low-Income Countries Under Stress](https://en.wikipedia.org/wiki/Low-Income_Countries_Under_Stress "Low-Income Countries Under Stress")
- [Mark-to-market accounting](https://en.wikipedia.org/wiki/Mark-to-market_accounting "Mark-to-market accounting")
- [Neoliberalism](https://en.wikipedia.org/wiki/Neoliberalism "Neoliberalism")
- [Occupy movement](https://en.wikipedia.org/wiki/Occupy_movement "Occupy movement")
- [Pessimism porn](https://en.wikipedia.org/wiki/Pessimism_porn "Pessimism porn")
- [PIGS (economics)](https://en.wikipedia.org/wiki/PIGS_\(economics\) "PIGS (economics)")
- [Private equity in the 2000s](https://en.wikipedia.org/wiki/Private_equity_in_the_2000s "Private equity in the 2000s")
- [Subprime crisis impact timeline](https://en.wikipedia.org/wiki/Subprime_crisis_impact_timeline "Subprime crisis impact timeline")
- *[Chicago plan](https://en.wikipedia.org/wiki/Chicago_plan "Chicago plan")*
## References
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=35 "Edit section: References")\]
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Maverick, J.B. (October 22, 2019). ["Consequences of The Glass-Steagall Act Repeal"](https://web.archive.org/web/20250214141042/https://www.investopedia.com/ask/answers/050515/did-repeal-glasssteagall-act-contribute-2008-financial-crisis.asp). *Investopedia*. Archived from [the original](https://www.investopedia.com/ask/answers/050515/did-repeal-glasssteagall-act-contribute-2008-financial-crisis.asp) on February 14, 2025. Retrieved August 5, 2021.
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"Predatory Lending Practices Prior to the Global Financial Crisis". *Predatory Lending and the Destruction of the African-American Dream*. 2020. pp. 23â68\. [doi](https://en.wikipedia.org/wiki/Doi_\(identifier\) "Doi (identifier)"):[10\.1017/9781108865715.004](https://doi.org/10.1017%2F9781108865715.004). [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
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Werdigier, Julia (September 17, 2008). ["Lloyds Bank Is Discussing Purchase of British Lender"](https://web.archive.org/web/20250126183726/https://www.nytimes.com/2008/09/18/business/worldbusiness/18lloyds.html). *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")*. Archived from [the original](https://www.nytimes.com/2008/09/18/business/worldbusiness/18lloyds.html) on January 26, 2025.
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["FactboxâU.S., European bank write-downs, credit losses"](https://www.reuters.com/article/banks-writedowns-losses-idCNL554155620091105?rpc=44). [Reuters](https://en.wikipedia.org/wiki/Reuters "Reuters"). November 5, 2009.
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Evans-Pritchard, Ambrose (July 25, 2007). ["Dollar tumbles as huge credit crunch looms"](https://www.telegraph.co.uk/expat/4204516/Dollar-tumbles-as-huge-credit-crunch-looms.html). *[The Daily Telegraph](https://en.wikipedia.org/wiki/The_Daily_Telegraph "The Daily Telegraph")*. [Archived](https://ghostarchive.org/archive/20220110/https://www.telegraph.co.uk/expat/4204516/Dollar-tumbles-as-huge-credit-crunch-looms.html) from the original on January 10, 2022.
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[Norris, Floyd](https://en.wikipedia.org/wiki/Floyd_Norris "Floyd Norris") (October 24, 2008). ["United Panic"](https://web.archive.org/web/20230501200556/https://archive.nytimes.com/economix.blogs.nytimes.com/2008/10/24/united-panic/). *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")*. Archived from [the original](https://archive.nytimes.com/economix.blogs.nytimes.com/2008/10/24/united-panic/) on May 1, 2023.
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29. ^ [***a***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-gofromhere_29-0) [***b***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-gofromhere_29-1) [***c***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-gofromhere_29-2) [***d***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-gofromhere_29-3)
Baily, Martin Neil; Elliott, Douglas J. (June 15, 2009). ["The U.S. Financial and Economic Crisis: Where Does It Stand and Where Do We Go From Here?"](https://web.archive.org/web/20241203023846/https://www.brookings.edu/articles/the-u-s-financial-and-economic-crisis-where-does-it-stand-and-where-do-we-go-from-here/). *[Brookings Institution](https://en.wikipedia.org/wiki/Brookings_Institution "Brookings Institution")*. Archived from [the original](https://www.brookings.edu/research/the-u-s-financial-and-economic-crisis-where-does-it-stand-and-where-do-we-go-from-here/) on December 3, 2024.
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Williams, Carol J. (May 22, 2012). ["Euro crisis imperils recovering global economy, OECD warns"](https://web.archive.org/web/20241224191234/https://www.latimes.com/archives/blogs/world-now/story/2012-05-22/euro-crisis-imperils-recovering-global-economy-oecd-warns). *[Los Angeles Times](https://en.wikipedia.org/wiki/Los_Angeles_Times "Los Angeles Times")*. Archived from [the original](https://latimesblogs.latimes.com/world_now/2012/05/eurozone-crisis-global-economy.html) on December 24, 2024.
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Luhby, Tami (June 11, 2009). ["Americans' wealth drops \$1.3 trillion: Fed report shows a decline of home values and the stock market cut the nation's wealth to \$50.4 trillion"](https://web.archive.org/web/20250207103327/https://money.cnn.com/2009/06/11/news/economy/Americans_wealth_drops/?postversion=2009061113). [CNN](https://en.wikipedia.org/wiki/CNN "CNN"). Archived from [the original](https://money.cnn.com/2009/06/11/news/economy/Americans_wealth_drops/?postversion=2009061113) on February 7, 2025.
32. ^ [***a***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-greatcrash_32-0) [***b***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-greatcrash_32-1) [***c***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-greatcrash_32-2) [***d***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-greatcrash_32-3)
[Altman, Roger C.](https://en.wikipedia.org/wiki/Roger_Altman "Roger Altman") (January 2009). ["The Great Crash of 2008"](https://web.archive.org/web/20250214112812/https://www.foreignaffairs.com/articles/united-states/2009-01-01/great-crash-2008). *[Foreign Affairs](https://en.wikipedia.org/wiki/Foreign_Affairs "Foreign Affairs")*. Archived from [the original](https://www.foreignaffairs.com/articles/united-states/2009-01-01/great-crash-2008) on February 14, 2025.
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["Real Gross Domestic Product"](https://fred.stlouisfed.org/series/A191RL1Q225SBEA). [Federal Reserve Economic Data](https://en.wikipedia.org/wiki/Federal_Reserve_Economic_Data "Federal Reserve Economic Data"). April 1947.
34. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-34)**
["Labor Force Statistics from the Current Population Survey"](https://web.archive.org/web/20250214065916/https://data.bls.gov/timeseries/LNS14000000). [Bureau of Labor Statistics](https://en.wikipedia.org/wiki/Bureau_of_Labor_Statistics "Bureau of Labor Statistics"). Archived from [the original](https://data.bls.gov/timeseries/LNS14000000) on February 14, 2025.
35. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-35)**
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36. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-36)**
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["ConsumerSignals"](https://web.archive.org/web/20241212151939/https://www2.deloitte.com/us/en/insights/industry/retail-distribution/consumer-behavior-trends-state-of-the-consumer-tracker.html). *Deloitte Insights*. Archived from [the original](https://www2.deloitte.com/us/en/insights/industry/retail-distribution/consumer-behavior-trends-state-of-the-consumer-tracker.html) on December 12, 2024. Retrieved March 11, 2024.
38. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-38)**
An example of a developing country which suffered decreases in these fields is Armenia. According to World Bank data, the [foreign direct investment](https://en.wikipedia.org/wiki/Foreign_direct_investment "Foreign direct investment") decreased from 2008 until 2021 (see
["Foreign direct investment, net inflows (% of GDP) â Armenia"](https://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS?end=2019&locations=AM&start=2000). *data.worldbank.org*. Retrieved May 12, 2021.
). Moreover, the remittances also decreased after 2007/08, then fluctuated (see
["Personal remittances, received (% of GDP) â Armenia"](https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS?end=2019&locations=AM&start=2000). *data.worldbank.org*. Retrieved May 12, 2021.
). This led to a dramatic rise in the number of households living below the poverty line (see
["The global financial crisis and developing countries: taking stock, taking action"](https://web.archive.org/web/20200712194416/https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/3705.pdf) (PDF). *Overseas Development Institute*. September 2009. Archived from [the original](https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/3705.pdf) (PDF) on July 12, 2020. Retrieved June 17, 2022.
). The poverty headcount ratio at \$1.90 (~\$3.00 in 2025) a day increased after 2007/08, from 0.9% to 1.2% (see
["Poverty headcount ratio at \$1.90 a day (2011 PPP) (% of population) â Armenia"](https://data.worldbank.org/indicator/SI.POV.DDAY?locations=AM). *data.worldbank.org*. Retrieved May 12, 2021.
).
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[111â203 (text)](https://www.govinfo.gov/link/plaw/111/public/203?link-type=html) [(PDF)](https://www.govinfo.gov/link/plaw/111/public/203?link-type=pdf&.pdf)
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62. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-62)**
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63. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-:12_63-0)**
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64. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-64)**
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65. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-65)**
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66. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-66)**
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67. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-67)**
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68. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-68)**
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288. ^ [***a***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-inflation-USGDP_288-0) [***b***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-inflation-USGDP_288-1) [***c***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-inflation-USGDP_288-2) [***d***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-inflation-USGDP_288-3)
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["FDIC Board Approves Letter of Intent to Sell IndyMac Federal"](https://www.fdic.gov/news/news/press/2009/pr09001.html) (Press release). [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation"). January 2, 2009.
431. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-431)**
["Letter from IndyMac"](https://web.archive.org/web/20120216201626/http://files.ots.treas.gov/comments/20478116-56b7-4810-938b-60b7688f9652.pdf) (PDF). Archived from [the original](http://files.ots.treas.gov/comments/20478116-56b7-4810-938b-60b7688f9652.pdf) (PDF) on February 16, 2012. Retrieved February 24, 2014.
432. ^ [***a***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-indymac10Q_432-0) [***b***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-indymac10Q_432-1) [***c***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-indymac10Q_432-2)
["Indymac Bancorp Inc â '10-Q' for 3/31/08"](http://www.secinfo.com/dVut2.t668.htm#msef). [U.S. Securities and Exchange Commission](https://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission "U.S. Securities and Exchange Commission").
433. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-433)**
[Andrews, Edmund L.](https://en.wikipedia.org/wiki/Edmund_L._Andrews "Edmund L. Andrews") (December 22, 2008). ["Irregularity Is Uncovered at IndyMac Bank"](https://www.nytimes.com/2008/12/23/business/23thrift.html). *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")*.
434. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-434)**
VAN DOORN, PHILIP (May 13, 2008). ["Indymac Seeks to Preserve Capital"](https://www.thestreet.com/markets/rates-and-bonds/indymac-seeks-to-preserve-capital-10416473). *[TheStreet.com](https://en.wikipedia.org/wiki/TheStreet.com "TheStreet.com")*.
435. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-435)**
["Robert C. Daniels, et al. v. IndyMac Bancorp, Inc., et al"](http://securities.stanford.edu/filings-documents/1040/IMB_01/201099_r01c_08CV03812.pdf) (PDF).
436. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-436)**
["Schumer: Don't blame me for IndyMac failure"](https://money.cnn.com/2008/07/13/news/companies/schumer_indymac/index.htm). CNN. July 13, 2008.
437. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-437)**
["The \$4 Billion Senator"](https://www.wsj.com/articles/SB121607771017452513). *[The Wall Street Journal](https://en.wikipedia.org/wiki/The_Wall_Street_Journal "The Wall Street Journal")*. July 15, 2008.
438. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-438)**
Veiga, Alex (July 7, 2008). ["IndyMac stops new mortgage loans, to cut workforce by half"](https://www.mercurynews.com/2008/07/07/indymac-stops-new-mortgage-loans-to-cut-workforce-by-half/). Mercury News. [Associated Press](https://en.wikipedia.org/wiki/Associated_Press "Associated Press").
439. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-439)**
Wagner, Evan (July 11, 2008). ["FDIC Notification to All Employees"](https://ml-implode.com/info/indy-fdic.pdf) (PDF). IndyMac Bank.
440. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-fn1_440-0)**
["Federal Regulators Close California Mortgage Lender"](https://www.foxnews.com/story/federal-regulators-close-california-mortgage-lender). [Fox News](https://en.wikipedia.org/wiki/Fox_News "Fox News"). [Associated Press](https://en.wikipedia.org/wiki/Associated_Press "Associated Press"). July 11, 2008.
441. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-441)**
Heisel, William (February 28, 2009). ["IndyMac's shuffle ran over depositors"](https://www.latimes.com/archives/la-xpm-2009-feb-28-fi-indymac28-story.html). *[Los Angeles Times](https://en.wikipedia.org/wiki/Los_Angeles_Times "Los Angeles Times")*.
442. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-442)**
["FDIC: Failed Bank Information â Bank Closing Information for IndyMac Bank, F.S.B., Pasadena, CA"](https://www.fdic.gov/bank/individual/failed/IndyMac.html). [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation").
443. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-443)**
Story, Louise (July 13, 2008). ["IndyMac one of the largest bank failures in U.S. history"](https://www.nytimes.com/2008/07/13/business/worldbusiness/13iht-indy.4.14456887.html). *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")*.
444. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-444)**
Sterngold, James (April 29, 2010). ["How Much Did Lehman CEO Dick Fuld Really Make?"](https://www.bloomberg.com/news/articles/2010-04-29/how-much-did-lehman-ceo-dick-fuld-really-make). *[Bloomberg Businessweek](https://en.wikipedia.org/wiki/Bloomberg_Businessweek "Bloomberg Businessweek")*.
445. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-445)**
["Overdose: A Film about the Next Financial Crisis"](https://www.cato.org/events/overdose-film-about-next-financial-crisis). [Cato Institute](https://en.wikipedia.org/wiki/Cato_Institute "Cato Institute"). May 17, 2010.
446. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-446)**
["Oscars 2011: Inside Job banks best documentary award"](https://www.theguardian.com/film/2011/feb/28/inside-job-best-documentary-oscar). *The Guardian*. February 28, 2011.
447. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-447)**
Wilkinson, Alissa (September 15, 2018). ["5 movies that explain what caused the financial crisis, and what happened after"](https://www.vox.com/culture/2018/9/14/17856048/movies-financial-crisis-streaming-lehman-brothers-versailles-big-short-inside-job). *[Vox Media](https://en.wikipedia.org/wiki/Vox_Media "Vox Media")*.
448. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-448)**
Blazsek, VirĂĄg (October 27, 2020). *Banking Bailout Law: A Comparative Study of the United States, United Kingdom and the European Union* (1st ed.). New York (US) & London (UK): Routledge. [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[9780367410339](https://en.wikipedia.org/wiki/Special:BookSources/9780367410339 "Special:BookSources/9780367410339")
.
The initial articles and some subsequent material were adapted from the [Wikinfo](https://en.wikipedia.org/wiki/Wikinfo "Wikinfo") article [Financial crisis of 2007â2008](https://web.archive.org/web/20120111145026/http://www.wikinfo.org/index.php?title=Financial_crisis_of_2007-2008) released under the [GNU Free Documentation License Version 1.2](https://en.wikipedia.org/wiki/Wikipedia:Text_of_the_GNU_Free_Documentation_License "Wikipedia:Text of the GNU Free Documentation License")
## Further reading
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=36 "Edit section: Further reading")\]
- Kotz, David M. (2015). *The Rise and Fall of Neoliberal Capitalism*. Harvard University Press. [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[978-0-674-72565-2](https://en.wikipedia.org/wiki/Special:BookSources/978-0-674-72565-2 "Special:BookSources/978-0-674-72565-2")
. [JSTOR](https://en.wikipedia.org/wiki/JSTOR_\(identifier\) "JSTOR (identifier)") [j.ctt21pxkf9](https://www.jstor.org/stable/j.ctt21pxkf9).
- [John Lanchester](https://en.wikipedia.org/wiki/John_Lanchester "John Lanchester"), *The Invention of Money: How the heresies of two bankers became the basis of our modern economy*, [The New Yorker](https://en.wikipedia.org/wiki/The_New_Yorker "The New Yorker"), August 5 & 12, 2019, pp. 28â31
- Julien Mercille & Enda Murphy, 2015, *Deepening neoliberalism, austerity, and crisis: Europe's treasure Ireland,* [Palgrave Macmillan](https://en.wikipedia.org/wiki/Palgrave_Macmillan "Palgrave Macmillan"), [Basingstoke](https://en.wikipedia.org/wiki/Basingstoke "Basingstoke").
- [Nomi Prins](https://en.wikipedia.org/wiki/Nomi_Prins "Nomi Prins"): *Collusion: How Central Bankers Rigged the World*, [Nation Books](https://en.wikipedia.org/wiki/Nation_Books "Nation Books") 2018,
[ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[978-1568585628](https://en.wikipedia.org/wiki/Special:BookSources/978-1568585628 "Special:BookSources/978-1568585628")
.
- Patterson, Laura A.; Koller, Cynthia A. (2011). "Diffusion of Fraud Through Subprime Lending: The Perfect Storm". *Economic Crisis and Crime*. Sociology of Crime, Law and Deviance. pp. 25â45\. [doi](https://en.wikipedia.org/wiki/Doi_\(identifier\) "Doi (identifier)"):[10\.1108/S1521-6136(2011)0000016005](https://doi.org/10.1108%2FS1521-6136%282011%290000016005). [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[978-0-85724-801-5](https://en.wikipedia.org/wiki/Special:BookSources/978-0-85724-801-5 "Special:BookSources/978-0-85724-801-5")
.
- [Charles Read](https://en.wikipedia.org/wiki/Charles_Read_\(historian\) "Charles Read (historian)") (2022). *Calming the storms : the carry trade, the banking school and British financial crises since 1825*. Cham, Switzerland, pp. 295â305.
- [Tooze, Adam](https://en.wikipedia.org/wiki/Adam_Tooze "Adam Tooze") (2018). [*Crashed: How a Decade of Financial Crises Changed the World*](https://books.google.com/books?id=om2mDwAAQBAJ). New York: [Viking Press](https://en.wikipedia.org/wiki/Viking_Press "Viking Press"). [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[9780670024933](https://en.wikipedia.org/wiki/Special:BookSources/9780670024933 "Special:BookSources/9780670024933")
.
- [Peter Wallison](https://en.wikipedia.org/wiki/Peter_J._Wallison "Peter J. Wallison"), *Bad History, Worse Policy* ([Washington, D.C.](https://en.wikipedia.org/wiki/Washington,_D.C. "Washington, D.C."): [American Enterprise Institute](https://en.wikipedia.org/wiki/American_Enterprise_Institute "American Enterprise Institute"), 2013)
[ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[978-0-8447-7238-7](https://en.wikipedia.org/wiki/Special:BookSources/978-0-8447-7238-7 "Special:BookSources/978-0-8447-7238-7")
.
- Palais-Royal Initiative[\[1\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-449) (8 February 2011): [*Reform of the International Monetary System: A Cooperative Approach for the 21st Century*](https://www.emergingmarketsforum.org/wp-content/uploads/2020/01/Palais-Royal-report.pdf) (pdf, 20 p)
## External links
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=37 "Edit section: External links")\]
[](https://en.wikipedia.org/wiki/File:Commons-logo.svg)
Wikimedia Commons has media related to [Economic crisis from 2007](https://commons.wikimedia.org/wiki/Category:Economic_crisis_from_2007 "commons:Category:Economic crisis from 2007").
**Reports on causes**
- [Final Report](https://www.govinfo.gov/content/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf) of the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission")
- [Archived website](http://fcic.law.stanford.edu/) of the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission") (maintained by the [Stanford University](https://en.wikipedia.org/wiki/Stanford_University "Stanford University") and the [Stanford Law School](https://en.wikipedia.org/wiki/Stanford_Law_School "Stanford Law School"))
- [Wall Street and the Financial Crisis: Anatomy of a Financial Collapse](http://hsgac.senate.gov/public/_files/Financial_Crisis/FinancialCrisisReport.pdf) [Archived](https://web.archive.org/web/20110418203336/http://hsgac.senate.gov/public/_files/Financial_Crisis/FinancialCrisisReport.pdf) April 18, 2011, at the [Wayback Machine](https://en.wikipedia.org/wiki/Wayback_Machine "Wayback Machine"), Majority and Minority Staff Report, [United States Senate Homeland Security Permanent Subcommittee on Investigations](https://en.wikipedia.org/wiki/United_States_Senate_Homeland_Security_Permanent_Subcommittee_on_Investigations "United States Senate Homeland Security Permanent Subcommittee on Investigations"), April 13, 2011
- [What Caused the Crisis](https://www.stlouisfed.org/financial-crisis/articles-and-papers/what-caused-the-crisis): A collection of papers at the [Federal Reserve Bank of St. Louis](https://en.wikipedia.org/wiki/Federal_Reserve_Bank_of_St._Louis "Federal Reserve Bank of St. Louis")
**Journalism and interviews**
- [Inside the Meltdown](https://www.pbs.org/wgbh/pages/frontline/meltdown/) â PBS *Frontline* documentation including additional background article and in-depth interviews
- ["Money, Power & Wall Street"](https://www.pbs.org/wgbh/frontline/documentary/money-power-wall-street/) â PBS *Frontline* documentation including additional background article and in-depth interviews
- [Stewart, James B.](https://en.wikipedia.org/wiki/James_B._Stewart "James B. Stewart"), [Eight Days: the battle to save the American financial system](https://www.newyorker.com/reporting/2009/09/21/090921fa_fact_stewart), *[The New Yorker](https://en.wikipedia.org/wiki/The_New_Yorker "The New Yorker")* magazine, September 21, 2009. pp. 58â81. Summarizing September 15â23, 2008, with interviews of Paulson, Bernanke, and Geithner by James Stewart
- [Panic, Fear, and Regret](https://features.marketplace.org/bernanke-paulson-geithner/) â audio interviews with Timothy Geithner, Ben Bernanke and Henry Paulson from *[Marketplace](https://en.wikipedia.org/wiki/Marketplace_\(radio_program\) "Marketplace (radio program)")*
| [v](https://en.wikipedia.org/wiki/Template:Great_Recession "Template:Great Recession") [t](https://en.wikipedia.org/wiki/Template_talk:Great_Recession "Template talk:Great Recession") [e](https://en.wikipedia.org/wiki/Special:EditPage/Template:Great_Recession "Special:EditPage/Template:Great Recession")[Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession") | |
|---|---|
| By region | [Africa](https://en.wikipedia.org/wiki/Great_Recession_in_Africa "Great Recession in Africa") [Americas](https://en.wikipedia.org/wiki/Great_Recession_in_the_Americas "Great Recession in the Americas") [United States](https://en.wikipedia.org/wiki/Great_Recession_in_the_United_States "Great Recession in the United States") [South America](https://en.wikipedia.org/wiki/Great_Recession_in_South_America "Great Recession in South America") [Asia](https://en.wikipedia.org/wiki/Great_Recession_in_Asia "Great Recession in Asia") [Europe](https://en.wikipedia.org/wiki/Great_Recession_in_Europe "Great Recession in Europe") [Iceland](https://en.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_financial_crisis "2008â2011 Icelandic financial crisis") [Oceania](https://en.wikipedia.org/wiki/Great_Recession_in_Oceania "Great Recession in Oceania") |
| United States-specific | [Automotive industry crisis](https://en.wikipedia.org/wiki/Automotive_industry_crisis_of_2008%E2%80%932010 "Automotive industry crisis of 2008â2010") [California budget crisis](https://en.wikipedia.org/wiki/2008%E2%80%932012_California_budget_crisis "2008â2012 California budget crisis") [Housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble") [Housing market correction](https://en.wikipedia.org/wiki/United_States_housing_market_correction "United States housing market correction") [Subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis") |
| Banking losses and fraud | [Libor scandal](https://en.wikipedia.org/wiki/Libor_scandal "Libor scandal") [Tom Hayes](https://en.wikipedia.org/wiki/Tom_Hayes_\(trader\) "Tom Hayes (trader)") [SociĂŠtĂŠ GĂŠnĂŠrale trading loss](https://en.wikipedia.org/wiki/2008_Soci%C3%A9t%C3%A9_G%C3%A9n%C3%A9rale_trading_loss "2008 SociĂŠtĂŠ GĂŠnĂŠrale trading loss") [Icesave dispute](https://en.wikipedia.org/wiki/Icesave_dispute "Icesave dispute") [Forex scandal](https://en.wikipedia.org/wiki/Forex_scandal "Forex scandal") [Bernie Madoff](https://en.wikipedia.org/wiki/Bernie_Madoff "Bernie Madoff") [Tom Petters](https://en.wikipedia.org/wiki/Tom_Petters "Tom Petters") [Scott W. Rothstein](https://en.wikipedia.org/wiki/Scott_W._Rothstein "Scott W. Rothstein") [Allen Stanford](https://en.wikipedia.org/wiki/Allen_Stanford "Allen Stanford") |
| Government entities | [Consumer Financial Protection Bureau](https://en.wikipedia.org/wiki/Consumer_Financial_Protection_Bureau "Consumer Financial Protection Bureau") [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation") [Federal Home Loan Banks](https://en.wikipedia.org/wiki/Federal_Home_Loan_Banks "Federal Home Loan Banks") [Federal Housing Administration](https://en.wikipedia.org/wiki/Federal_Housing_Administration "Federal Housing Administration") [Federal Housing Finance Agency](https://en.wikipedia.org/wiki/Federal_Housing_Finance_Agency "Federal Housing Finance Agency") [Federal Housing Finance Board](https://en.wikipedia.org/wiki/Federal_Housing_Finance_Board "Federal Housing Finance Board") [Federal Reserve System](https://en.wikipedia.org/wiki/Federal_Reserve_System "Federal Reserve System") [Government National Mortgage Association](https://en.wikipedia.org/wiki/Government_National_Mortgage_Association "Government National Mortgage Association") [National Asset Management Agency](https://en.wikipedia.org/wiki/National_Asset_Management_Agency "National Asset Management Agency") [Office of Federal Housing Enterprise Oversight](https://en.wikipedia.org/wiki/Office_of_Federal_Housing_Enterprise_Oversight "Office of Federal Housing Enterprise Oversight") [Office of Financial Stability](https://en.wikipedia.org/wiki/Assistant_Secretary_of_the_Treasury_for_Financial_Stability "Assistant Secretary of the Treasury for Financial Stability") [UK Financial Investments](https://en.wikipedia.org/wiki/UK_Financial_Investments "UK Financial Investments") |
| Government policy and spending responses | |
| Banking and finance stability and reform | |
| | |
| Bank stress tests | [EU](https://en.wikipedia.org/wiki/2010_European_Union_bank_stress_test "2010 European Union bank stress test") [U.S.](https://en.wikipedia.org/wiki/2009_Supervisory_Capital_Assessment_Program "2009 Supervisory Capital Assessment Program") |
| Stimulus and recovery | [2008 European Union stimulus plan](https://en.wikipedia.org/wiki/2008_European_Union_stimulus_plan "2008 European Union stimulus plan") [2008â2009 Keynesian resurgence](https://en.wikipedia.org/wiki/2008%E2%80%932009_Keynesian_resurgence "2008â2009 Keynesian resurgence") [American Recovery and Reinvestment Act of 2009](https://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009 "American Recovery and Reinvestment Act of 2009") [Chinese economic stimulus program](https://en.wikipedia.org/wiki/Chinese_economic_stimulus_program "Chinese economic stimulus program") [Economic Stimulus Act of 2008](https://en.wikipedia.org/wiki/Economic_Stimulus_Act_of_2008 "Economic Stimulus Act of 2008") [Fraud Enforcement and Recovery Act of 2009](https://en.wikipedia.org/wiki/Fraud_Enforcement_and_Recovery_Act_of_2009 "Fraud Enforcement and Recovery Act of 2009") [Green New Deal](https://en.wikipedia.org/wiki/Green_New_Deal "Green New Deal") [Housing and Economic Recovery Act of 2008](https://en.wikipedia.org/wiki/Housing_and_Economic_Recovery_Act_of_2008 "Housing and Economic Recovery Act of 2008") [National fiscal policy response to the Great Recession](https://en.wikipedia.org/wiki/National_fiscal_policy_response_to_the_Great_Recession "National fiscal policy response to the Great Recession") [Zero interest-rate policy](https://en.wikipedia.org/wiki/Zero_interest-rate_policy "Zero interest-rate policy") |
| Government interventions, rescues, and acquisitions | |
| | |
| Non-banking | [Chrysler](https://en.wikipedia.org/wiki/Chrysler "Chrysler") [General Motors](https://en.wikipedia.org/wiki/General_Motors "General Motors") |
| Securities involved and financial markets | [Auction rate securities](https://en.wikipedia.org/wiki/Auction_rate_security "Auction rate security") [Collateralized debt obligations](https://en.wikipedia.org/wiki/Collateralized_debt_obligation "Collateralized debt obligation") [Collateralized mortgage obligations](https://en.wikipedia.org/wiki/Collateralized_mortgage_obligation "Collateralized mortgage obligation") [Credit default swaps](https://en.wikipedia.org/wiki/Credit_default_swap "Credit default swap") [Mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_security "Mortgage-backed security") [Secondary mortgage market](https://en.wikipedia.org/wiki/Secondary_mortgage_market "Secondary mortgage market") |
| Social responses | [Tea Party protests](https://en.wikipedia.org/wiki/Tea_Party_protests "Tea Party protests") (United States; c. 2009) [2009 May Day protests](https://en.wikipedia.org/wiki/2009_May_Day_protests "2009 May Day protests") (Europe, Middle East and North Africa, Asia; 2009) [Arab Spring](https://en.wikipedia.org/wiki/Arab_Spring "Arab Spring") (MENA; 2010â2012) [Occupy movement](https://en.wikipedia.org/wiki/Occupy_movement "Occupy movement") (worldwide; 2011â2012) [Occupy Wall Street](https://en.wikipedia.org/wiki/Occupy_Wall_Street "Occupy Wall Street") |
| Related topics | [2000s energy crisis](https://en.wikipedia.org/wiki/2000s_energy_crisis "2000s energy crisis") [2008 Central Asia energy crisis](https://en.wikipedia.org/wiki/2008_Central_Asia_energy_crisis "2008 Central Asia energy crisis") [Effects of the Great Recession on museums](https://en.wikipedia.org/wiki/Effects_of_the_Great_Recession_on_museums "Effects of the Great Recession on museums") [Decline of newspapers](https://en.wikipedia.org/wiki/Decline_of_newspapers "Decline of newspapers") [2007â2008 world food price crisis](https://en.wikipedia.org/wiki/2007%E2%80%932008_world_food_price_crisis "2007â2008 world food price crisis") [Retail apocalypse](https://en.wikipedia.org/wiki/Retail_apocalypse "Retail apocalypse") |
| [Euro area crisis](https://en.wikipedia.org/wiki/Euro_area_crisis "Euro area crisis") [2008 financial crisis]() [List of countries by public debt](https://en.wikipedia.org/wiki/List_of_countries_by_public_debt "List of countries by public debt") | |
| [v](https://en.wikipedia.org/wiki/Template:Subprime_mortgage_crisis "Template:Subprime mortgage crisis") [t](https://en.wikipedia.org/wiki/Template_talk:Subprime_mortgage_crisis "Template talk:Subprime mortgage crisis") [e](https://en.wikipedia.org/wiki/Special:EditPage/Template:Subprime_mortgage_crisis "Special:EditPage/Template:Subprime mortgage crisis")[U.S. subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis") | |
|---|---|
| [Background / timeline](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis#Background_and_timeline_of_events "Subprime mortgage crisis") | [Background information](https://en.wikipedia.org/wiki/Subprime_crisis_background_information "Subprime crisis background information") [Impact timeline](https://en.wikipedia.org/wiki/Subprime_crisis_impact_timeline "Subprime crisis impact timeline") |
| [Causes](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis#Causes "Subprime mortgage crisis") | [United States housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble") / [housing market correction](https://en.wikipedia.org/wiki/United_States_housing_market_correction "United States housing market correction") [Role of credit rating agencies](https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis "Credit rating agencies and the subprime crisis") [Government policies](https://en.wikipedia.org/wiki/Government_policies_and_the_subprime_mortgage_crisis "Government policies and the subprime mortgage crisis") |
| [Impacts](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis#Impacts "Subprime mortgage crisis") | [2008 financial crisis]() [Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession") [Writedowns](https://en.wikipedia.org/wiki/List_of_writedowns_due_to_subprime_crisis "List of writedowns due to subprime crisis") [Indirect economic effects](https://en.wikipedia.org/wiki/Indirect_economic_effects_of_the_subprime_mortgage_crisis "Indirect economic effects of the subprime mortgage crisis") |
| [Responses](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis#Responses "Subprime mortgage crisis") | [Economic Stimulus Act of 2008](https://en.wikipedia.org/wiki/Economic_Stimulus_Act_of_2008 "Economic Stimulus Act of 2008") [Housing and Economic Recovery Act of 2008](https://en.wikipedia.org/wiki/Housing_and_Economic_Recovery_Act_of_2008 "Housing and Economic Recovery Act of 2008") [Emergency Economic Stabilization Act of 2008](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 "Emergency Economic Stabilization Act of 2008") [DoddâFrank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act "DoddâFrank Wall Street Reform and Consumer Protection Act") [Acquired or bankrupt banks in the late 2000s financial crisis](https://en.wikipedia.org/wiki/List_of_banks_acquired_or_bankrupted_during_the_Great_Recession "List of banks acquired or bankrupted during the Great Recession") [Capital Assistance Program](https://en.wikipedia.org/wiki/Capital_Assistance_Program "Capital Assistance Program") [Capital Purchase Program](https://en.wikipedia.org/wiki/Capital_Purchase_Program "Capital Purchase Program") [Federal Reserve responses](https://en.wikipedia.org/wiki/Federal_Reserve_responses_to_the_subprime_crisis "Federal Reserve responses to the subprime crisis") [Federal takeover of Fannie Mae and Freddie Mac](https://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac "Federal takeover of Fannie Mae and Freddie Mac") [Government intervention](https://en.wikipedia.org/wiki/Government_intervention_during_the_subprime_mortgage_crisis "Government intervention during the subprime mortgage crisis") [Homeowners Affordability and Stability Plan](https://en.wikipedia.org/wiki/Homeowners_Affordability_and_Stability_Plan "Homeowners Affordability and Stability Plan") [Hope Now Alliance](https://en.wikipedia.org/wiki/Hope_Now_Alliance "Hope Now Alliance") [Loan modification](https://en.wikipedia.org/wiki/Loan_modification_in_the_United_States "Loan modification in the United States") [PublicâPrivate Investment Program for Legacy Assets](https://en.wikipedia.org/wiki/Public%E2%80%93Private_Investment_Program_for_Legacy_Assets "PublicâPrivate Investment Program for Legacy Assets") [Regulatory responses](https://en.wikipedia.org/wiki/Regulatory_responses_to_the_subprime_crisis "Regulatory responses to the subprime crisis") [Primary Dealer Credit Facility](https://en.wikipedia.org/wiki/Primary_Dealer_Credit_Facility "Primary Dealer Credit Facility") [2009 Supervisory Capital Assessment Program](https://en.wikipedia.org/wiki/2009_Supervisory_Capital_Assessment_Program "2009 Supervisory Capital Assessment Program") [Tea Party protests](https://en.wikipedia.org/wiki/Tea_Party_protests "Tea Party protests") [Term Asset-Backed Securities Loan Facility](https://en.wikipedia.org/wiki/Term_Asset-Backed_Securities_Loan_Facility "Term Asset-Backed Securities Loan Facility") [Troubled Asset Relief Program](https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program "Troubled Asset Relief Program") [Wall Street reform](https://en.wikipedia.org/wiki/Wall_Street_reform "Wall Street reform") |
| Related topics | [Error accounts](https://en.wikipedia.org/wiki/Error_account "Error account") [Financial position of the United States](https://en.wikipedia.org/wiki/Financial_position_of_the_United_States "Financial position of the United States") [Foreclosure rescue scheme](https://en.wikipedia.org/wiki/Foreclosure_rescue_scheme "Foreclosure rescue scheme") [Property derivatives](https://en.wikipedia.org/wiki/Property_derivative "Property derivative") |
| [v](https://en.wikipedia.org/wiki/Template:Financial_crises "Template:Financial crises") [t](https://en.wikipedia.org/wiki/Template_talk:Financial_crises "Template talk:Financial crises") [e](https://en.wikipedia.org/wiki/Special:EditPage/Template:Financial_crises "Special:EditPage/Template:Financial crises")[Financial crises](https://en.wikipedia.org/wiki/Financial_crisis "Financial crisis") | |
|---|---|
| [Bank run](https://en.wikipedia.org/wiki/Bank_run "Bank run") [Commodity price shocks](https://en.wikipedia.org/wiki/Commodity_price_shocks "Commodity price shocks") [Credit crunch](https://en.wikipedia.org/wiki/Credit_crunch "Credit crunch") [Credit cycle](https://en.wikipedia.org/wiki/Credit_cycle "Credit cycle") [Currency crisis](https://en.wikipedia.org/wiki/Currency_crisis "Currency crisis") [Debt crisis](https://en.wikipedia.org/wiki/Debt_crisis "Debt crisis") [Energy crisis](https://en.wikipedia.org/wiki/Energy_crisis "Energy crisis") [Financial contagion](https://en.wikipedia.org/wiki/Financial_contagion "Financial contagion") [Social contagion](https://en.wikipedia.org/wiki/Social_contagion "Social contagion") [Flash crash](https://en.wikipedia.org/wiki/Flash_crash "Flash crash") [Hyperinflation](https://en.wikipedia.org/wiki/Hyperinflation "Hyperinflation") [Liquidity crisis](https://en.wikipedia.org/wiki/Liquidity_crisis "Liquidity crisis") [Accounting](https://en.wikipedia.org/wiki/Accounting_liquidity "Accounting liquidity") [Capital](https://en.wikipedia.org/wiki/Liquid_capital "Liquid capital") [Funding](https://en.wikipedia.org/wiki/Funding_liquidity "Funding liquidity") [Market](https://en.wikipedia.org/wiki/Market_liquidity "Market liquidity") [Minsky moment](https://en.wikipedia.org/wiki/Minsky_moment "Minsky moment") [Social crisis](https://en.wikipedia.org/wiki/Social_crisis "Social crisis") [Stock market crash](https://en.wikipedia.org/wiki/Stock_market_crash "Stock market crash") | |
| Pre-[1000](https://en.wikipedia.org/wiki/Commercial_revolution "Commercial revolution") | [Financial crisis of 33 CE](https://en.wikipedia.org/wiki/Financial_crisis_of_33 "Financial crisis of 33") [Crisis of the Third Century](https://en.wikipedia.org/wiki/Crisis_of_the_Third_Century "Crisis of the Third Century") (235â284 CE) |
| [Commercial revolution](https://en.wikipedia.org/wiki/Commercial_revolution "Commercial revolution") (1000â1760) | [Great Bullion Famine](https://en.wikipedia.org/wiki/Great_Bullion_Famine "Great Bullion Famine") (c. 1400âc. 1500) [The Great Debasement](https://en.wikipedia.org/wiki/The_Great_Debasement "The Great Debasement") (1544â1551) [Spanish Price Revolution](https://en.wikipedia.org/wiki/Price_revolution "Price revolution") (c. 1550âc. 1650) [Dutch Republic stock market crashes](https://en.wikipedia.org/wiki/Financial_history_of_the_Dutch_Republic "Financial history of the Dutch Republic") (c. 1600â1760) *[Kipper und Wipper](https://en.wikipedia.org/wiki/Kipper_und_Wipper "Kipper und Wipper")* (1621â1623) [Tulip mania](https://en.wikipedia.org/wiki/Tulip_mania "Tulip mania") (1637) [South Sea bubble](https://en.wikipedia.org/wiki/South_Sea_Company "South Sea Company") (1720) [Mississippi bubble](https://en.wikipedia.org/wiki/John_Law%27s_Company "John Law's Company") (1720) |
| [1st Industrial Revolution](https://en.wikipedia.org/wiki/Industrial_Revolution "Industrial Revolution") (1760â1840) | [Amsterdam banking crisis of 1763](https://en.wikipedia.org/wiki/Amsterdam_banking_crisis_of_1763 "Amsterdam banking crisis of 1763") [Bengal Bubble of 1769](https://en.wikipedia.org/wiki/Bengal_Bubble_of_1769 "Bengal Bubble of 1769") (1769â1784) [British credit crisis of 1772â1773](https://en.wikipedia.org/wiki/British_credit_crisis_of_1772%E2%80%931773 "British credit crisis of 1772â1773") [Dutch Republic financial collapse](https://en.wikipedia.org/wiki/Financial_history_of_the_Dutch_Republic "Financial history of the Dutch Republic") (c. 1780â1795) [Copper Panic of 1789](https://en.wikipedia.org/wiki/Copper_Panic_of_1789 "Copper Panic of 1789") [Panic of 1792](https://en.wikipedia.org/wiki/Panic_of_1792 "Panic of 1792") [Panic of 1796â1797](https://en.wikipedia.org/wiki/Panic_of_1796%E2%80%931797 "Panic of 1796â1797") [Danish state bankruptcy of 1813](https://en.wikipedia.org/wiki/Danish_state_bankruptcy_of_1813 "Danish state bankruptcy of 1813") [Post-Napoleonic Irish grain price and land use shocks](https://en.wikipedia.org/wiki/Commodity_price_shocks "Commodity price shocks") (1815â1816) [Panic of 1819](https://en.wikipedia.org/wiki/Panic_of_1819 "Panic of 1819") [Panic of 1825](https://en.wikipedia.org/wiki/Panic_of_1825 "Panic of 1825") [Panic of 1837](https://en.wikipedia.org/wiki/Panic_of_1837 "Panic of 1837") |
| 1840â1870 | [European potato failure](https://en.wikipedia.org/wiki/European_potato_failure "European potato failure") (1845â1856) [Great Irish Famine](https://en.wikipedia.org/wiki/Great_Famine_\(Ireland\) "Great Famine (Ireland)") [Highland Potato Famine](https://en.wikipedia.org/wiki/Highland_Potato_Famine "Highland Potato Famine") [Panic of 1847](https://en.wikipedia.org/wiki/Panic_of_1847 "Panic of 1847") [Panic of 1857](https://en.wikipedia.org/wiki/Panic_of_1857 "Panic of 1857") [Panic of 1866](https://en.wikipedia.org/wiki/Panic_of_1866 "Panic of 1866") [Black Friday](https://en.wikipedia.org/wiki/Black_Friday_\(1869\) "Black Friday (1869)") (1869) |
| [2nd Industrial Revolution](https://en.wikipedia.org/wiki/Second_Industrial_Revolution "Second Industrial Revolution") (1870â1914) | [Panic of 1873](https://en.wikipedia.org/wiki/Panic_of_1873 "Panic of 1873") [Paris Bourse crash of 1882](https://en.wikipedia.org/wiki/Paris_Bourse_crash_of_1882 "Paris Bourse crash of 1882") [Panic of 1884](https://en.wikipedia.org/wiki/Panic_of_1884 "Panic of 1884") [Arendal crash](https://en.wikipedia.org/wiki/Arendal_crash "Arendal crash") (1886) [Baring crisis](https://en.wikipedia.org/wiki/Baring_crisis "Baring crisis") (1890) [Encilhamento](https://en.wikipedia.org/wiki/Encilhamento "Encilhamento") (1890â1893) [Panic of 1893](https://en.wikipedia.org/wiki/Panic_of_1893 "Panic of 1893") [Australian banking crisis of 1893](https://en.wikipedia.org/wiki/Australian_banking_crisis_of_1893 "Australian banking crisis of 1893") [Black Monday](https://en.wikipedia.org/wiki/Black_Monday_\(1894\) "Black Monday (1894)") (1894) [Panic of 1896](https://en.wikipedia.org/wiki/Panic_of_1896 "Panic of 1896") [Panic of 1901](https://en.wikipedia.org/wiki/Panic_of_1901 "Panic of 1901") [Panic of 1907](https://en.wikipedia.org/wiki/Panic_of_1907 "Panic of 1907") [Shanghai rubber stock market crisis](https://en.wikipedia.org/wiki/Shanghai_rubber_stock_market_crisis "Shanghai rubber stock market crisis") (1910) [Panic of 1910â11](https://en.wikipedia.org/wiki/Panic_of_1910%E2%80%9311 "Panic of 1910â11") [Financial crisis of 1914](https://en.wikipedia.org/wiki/Financial_crisis_of_1914 "Financial crisis of 1914") |
| [Interwar period](https://en.wikipedia.org/wiki/Interwar_period "Interwar period") (1918â1939) | [Early Soviet hyperinflation](https://en.wikipedia.org/wiki/Hyperinflation_in_early_Soviet_Russia "Hyperinflation in early Soviet Russia") (1917â1924) [Weimar Republic hyperinflation](https://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic "Hyperinflation in the Weimar Republic") (1921â1923) [ShĹwa financial crisis](https://en.wikipedia.org/wiki/Sh%C5%8Dwa_financial_crisis "ShĹwa financial crisis") (1927) [Wall Street crash of 1929](https://en.wikipedia.org/wiki/Wall_Street_crash_of_1929 "Wall Street crash of 1929") [Panic of 1930](https://en.wikipedia.org/wiki/Panic_of_1930 "Panic of 1930") [Chinese hyperinflation](https://en.wikipedia.org/wiki/Chinese_hyperinflation "Chinese hyperinflation") (1937â1950) |
| [Wartime period](https://en.wikipedia.org/wiki/World_War_II "World War II") (1939â1945) | [Greek hyperinflation](https://en.wikipedia.org/wiki/Hyperinflation_in_Greece "Hyperinflation in Greece") (1941â1946) [Chinese hyperinflation](https://en.wikipedia.org/wiki/Chinese_hyperinflation "Chinese hyperinflation") (1937â1950) |
| [PostâWWII expansion](https://en.wikipedia.org/wiki/Post%E2%80%93World_War_II_economic_expansion "PostâWorld War II economic expansion") (1945â1973) | [Hungarian pengĹ hyperinflation](https://en.wikipedia.org/wiki/Hungarian_peng%C5%91#Hyperinflation "Hungarian pengĹ") (1945â1946) [Kennedy Slide of 1962](https://en.wikipedia.org/wiki/Kennedy_Slide_of_1962 "Kennedy Slide of 1962") [1963â1965 Indonesian hyperinflation](https://en.wikipedia.org/w/index.php?title=1963%E2%80%931965_Indonesian_hyperinflation&action=edit&redlink=1 "1963â1965 Indonesian hyperinflation (page does not exist)") [Chinese hyperinflation](https://en.wikipedia.org/wiki/Chinese_hyperinflation "Chinese hyperinflation") (1937â1950) |
| [Great Inflation](https://en.wikipedia.org/wiki/Stagflation "Stagflation") (1973â1982) | [1970s energy crisis](https://en.wikipedia.org/wiki/1970s_energy_crisis "1970s energy crisis") (1973â1980) [1973 oil crisis](https://en.wikipedia.org/wiki/1973_oil_crisis "1973 oil crisis") [1973â1974 stock market crash](https://en.wikipedia.org/wiki/1973%E2%80%931974_stock_market_crash "1973â1974 stock market crash") [Secondary banking crisis of 1973â1975](https://en.wikipedia.org/wiki/Secondary_banking_crisis_of_1973%E2%80%931975 "Secondary banking crisis of 1973â1975") [Steel crisis](https://en.wikipedia.org/wiki/Steel_crisis "Steel crisis") (1973â1982) [Latin American debt crisis](https://en.wikipedia.org/wiki/Latin_American_debt_crisis "Latin American debt crisis") (1975â1982) [1976 sterling crisis](https://en.wikipedia.org/wiki/1976_sterling_crisis "1976 sterling crisis") [1979 oil crisis](https://en.wikipedia.org/wiki/1979_oil_crisis "1979 oil crisis") [Brazilian hyperinflation](https://en.wikipedia.org/wiki/Hyperinflation_in_Brazil "Hyperinflation in Brazil") (1980â1982) |
| [Great Moderation](https://en.wikipedia.org/wiki/Great_Moderation "Great Moderation")/ Great Regression (1982â2007) | [Brazilian hyperinflation](https://en.wikipedia.org/wiki/Hyperinflation_in_Brazil "Hyperinflation in Brazil") (1982â1994) [Souk Al-Manakh stock market crash](https://en.wikipedia.org/wiki/Souk_Al-Manakh_stock_market_crash "Souk Al-Manakh stock market crash") (1982) [Chilean crisis of 1982](https://en.wikipedia.org/wiki/Crisis_of_1982 "Crisis of 1982") [1983 Israel bank stock crisis](https://en.wikipedia.org/wiki/1983_Israel_bank_stock_crisis "1983 Israel bank stock crisis") [Black Saturday (1983)](https://en.wikipedia.org/wiki/Black_Saturday_\(1983\) "Black Saturday (1983)") [Savings and loan crisis](https://en.wikipedia.org/wiki/Savings_and_loan_crisis "Savings and loan crisis") (1986â1995) [Cameroonian economic crisis](https://en.wikipedia.org/wiki/Cameroonian_economic_crisis "Cameroonian economic crisis") (1987â2000s) [Black Monday (1987)](https://en.wikipedia.org/wiki/Black_Monday_\(1987\) "Black Monday (1987)") [1988â1992 Norwegian banking crisis](https://en.wikipedia.org/wiki/1988%E2%80%931992_Norwegian_banking_crisis "1988â1992 Norwegian banking crisis") [Japanese asset price bubble crash](https://en.wikipedia.org/wiki/Japanese_asset_price_bubble "Japanese asset price bubble") (1990â1992) [Rhode Island banking crisis](https://en.wikipedia.org/wiki/Rhode_Island_banking_crisis "Rhode Island banking crisis") (1990â1992) [1991 Indian economic crisis](https://en.wikipedia.org/wiki/1991_Indian_economic_crisis "1991 Indian economic crisis") [1990â1994 Swedish financial crisis](https://en.wikipedia.org/wiki/1990%E2%80%931994_Swedish_financial_crisis "1990â1994 Swedish financial crisis") [1990s Finnish banking crisis](https://en.wikipedia.org/wiki/1990s_Finnish_banking_crisis "1990s Finnish banking crisis") [1990s Armenian energy crisis](https://en.wikipedia.org/wiki/1990s_Armenian_energy_crisis "1990s Armenian energy crisis") [Cuban Special Period](https://en.wikipedia.org/wiki/Special_Period "Special Period") (1991â2000) [Black Wednesday (1992 Sterling crisis)](https://en.wikipedia.org/wiki/Black_Wednesday "Black Wednesday") [Hyperinflation in Serbia and Montenegro](https://en.wikipedia.org/wiki/Hyperinflation_in_Serbia_and_Montenegro "Hyperinflation in Serbia and Montenegro") (1992â1994) [1994 bond market crisis](https://en.wikipedia.org/wiki/1994_bond_market_crisis "1994 bond market crisis") [Venezuelan banking crisis of 1994](https://en.wikipedia.org/wiki/Venezuelan_banking_crisis_of_1994 "Venezuelan banking crisis of 1994") [1994 Papua New Guinea financial crisis](https://en.wikipedia.org/wiki/1994_Papua_New_Guinea_financial_crisis "1994 Papua New Guinea financial crisis") [Mexican peso crisis](https://en.wikipedia.org/wiki/Mexican_peso_crisis "Mexican peso crisis") (1994â1996) [1997 Asian financial crisis](https://en.wikipedia.org/wiki/1997_Asian_financial_crisis "1997 Asian financial crisis") [October 27, 1997, mini-crash](https://en.wikipedia.org/wiki/October_27,_1997,_mini-crash "October 27, 1997, mini-crash") [1998 Russian financial crisis](https://en.wikipedia.org/wiki/1998_Russian_financial_crisis "1998 Russian financial crisis") [1998â1999 Ecuador economic crisis](https://en.wikipedia.org/wiki/1998%E2%80%931999_Ecuador_economic_crisis "1998â1999 Ecuador economic crisis") [1998â2002 Argentine great depression](https://en.wikipedia.org/wiki/1998%E2%80%932002_Argentine_great_depression "1998â2002 Argentine great depression") [Samba effect](https://en.wikipedia.org/wiki/Samba_effect "Samba effect") (1999) [Dot-com bubble](https://en.wikipedia.org/wiki/Dot-com_bubble "Dot-com bubble") (2000â2004) [9/11 stock market crash](https://en.wikipedia.org/wiki/Economic_effects_of_the_September_11_attacks "Economic effects of the September 11 attacks") (2001) [2001 Turkish economic crisis](https://en.wikipedia.org/wiki/2001_Turkish_economic_crisis "2001 Turkish economic crisis") [South American economic crisis of 2002](https://en.wikipedia.org/wiki/South_American_economic_crisis_of_2002 "South American economic crisis of 2002") [Stock market downturn of 2002](https://en.wikipedia.org/wiki/Stock_market_downturn_of_2002 "Stock market downturn of 2002") [2002 Uruguay banking crisis](https://en.wikipedia.org/wiki/2002_Uruguay_banking_crisis "2002 Uruguay banking crisis") [2003 Myanmar banking crisis](https://en.wikipedia.org/wiki/2003_Myanmar_banking_crisis "2003 Myanmar banking crisis") [2000s energy crisis](https://en.wikipedia.org/wiki/2000s_energy_crisis "2000s energy crisis") (2003â2008) [2004 Argentine energy crisis](https://en.wikipedia.org/wiki/2004_Argentine_energy_crisis "2004 Argentine energy crisis") [Chinese stock bubble of 2007](https://en.wikipedia.org/wiki/Chinese_stock_bubble_of_2007 "Chinese stock bubble of 2007") [Hyperinflation in Zimbabwe](https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe "Hyperinflation in Zimbabwe") (2007âpresent) |
| [Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession") (2007â2009) | [2008 financial crisis]() [September 2008](https://en.wikipedia.org/wiki/Global_financial_crisis_in_September_2008 "Global financial crisis in September 2008") [October 2008](https://en.wikipedia.org/wiki/Global_financial_crisis_in_October_2008 "Global financial crisis in October 2008") [November 2008](https://en.wikipedia.org/wiki/Global_financial_crisis_in_November_2008 "Global financial crisis in November 2008") [December 2008](https://en.wikipedia.org/wiki/Global_financial_crisis_in_December_2008 "Global financial crisis in December 2008") [2009](https://en.wikipedia.org/wiki/Global_financial_crisis_in_2009 "Global financial crisis in 2009") [Subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis") [2000s U.S. housing market correction](https://en.wikipedia.org/wiki/2000s_United_States_housing_market_correction "2000s United States housing market correction") [U.S. bear market of 2007â2009](https://en.wikipedia.org/wiki/United_States_bear_market_of_2007%E2%80%932009 "United States bear market of 2007â2009") [2008 Latvian financial crisis](https://en.wikipedia.org/wiki/2008_Latvian_financial_crisis "2008 Latvian financial crisis") [2008â2009 Belgian financial crisis](https://en.wikipedia.org/wiki/2008%E2%80%932009_Belgian_financial_crisis "2008â2009 Belgian financial crisis") [Great Recession in Russia](https://en.wikipedia.org/wiki/Great_Recession_in_Russia "Great Recession in Russia") [2008â2009 Ukrainian financial crisis](https://en.wikipedia.org/wiki/2008%E2%80%932009_Ukrainian_financial_crisis "2008â2009 Ukrainian financial crisis") [2008â2011 Icelandic financial crisis](https://en.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_financial_crisis "2008â2011 Icelandic financial crisis") [Post-2008 Irish banking crisis](https://en.wikipedia.org/wiki/Post-2008_Irish_banking_crisis "Post-2008 Irish banking crisis") [2008â2014 Spanish financial crisis](https://en.wikipedia.org/wiki/2008%E2%80%932014_Spanish_financial_crisis "2008â2014 Spanish financial crisis") [Blue Monday Crash 2009](https://en.wikipedia.org/wiki/Blue_Monday_Crash_2009 "Blue Monday Crash 2009") [Euro area crisis](https://en.wikipedia.org/wiki/Euro_area_crisis "Euro area crisis") [Greek government-debt crisis](https://en.wikipedia.org/wiki/Greek_government-debt_crisis "Greek government-debt crisis") |
| [Information Age](https://en.wikipedia.org/wiki/Information_Age "Information Age") (2009âpresent) | [2009 Dubai debt standstill](https://en.wikipedia.org/wiki/Dubai_World "Dubai World") [Venezuelan banking crisis of 2009â2010](https://en.wikipedia.org/wiki/Venezuelan_banking_crisis_of_2009%E2%80%932010 "Venezuelan banking crisis of 2009â2010") [2010â2014 Portuguese financial crisis](https://en.wikipedia.org/wiki/2010%E2%80%932014_Portuguese_financial_crisis "2010â2014 Portuguese financial crisis") [Energy crisis in Venezuela](https://en.wikipedia.org/wiki/Energy_crisis_in_Venezuela "Energy crisis in Venezuela") (2010âpresent) [Syrian economic crisis](https://en.wikipedia.org/wiki/Economy_of_Syria "Economy of Syria") (2011âpresent) [August 2011 stock markets fall](https://en.wikipedia.org/wiki/August_2011_stock_markets_fall "August 2011 stock markets fall") [2011 Bangladesh share market scam](https://en.wikipedia.org/wiki/2011_Bangladesh_share_market_scam "2011 Bangladesh share market scam") [2012â2013 Cypriot financial crisis](https://en.wikipedia.org/wiki/2012%E2%80%932013_Cypriot_financial_crisis "2012â2013 Cypriot financial crisis") [Chinese Banking Liquidity Crisis of 2013](https://en.wikipedia.org/wiki/Chinese_Banking_Liquidity_Crisis_of_2013 "Chinese Banking Liquidity Crisis of 2013") [Venezuela economic crisis](https://en.wikipedia.org/wiki/2013%E2%80%93present_economic_crisis_in_Venezuela "2013âpresent economic crisis in Venezuela") (2013âpresent) [2014 Brazilian economic crisis](https://en.wikipedia.org/wiki/2014_Brazilian_economic_crisis "2014 Brazilian economic crisis") [Puerto Rican government-debt crisis](https://en.wikipedia.org/wiki/Puerto_Rican_government-debt_crisis "Puerto Rican government-debt crisis") (2014â2022) [Russian financial crisis (2014â2016)](https://en.wikipedia.org/wiki/Russian_financial_crisis_\(2014%E2%80%932016\) "Russian financial crisis (2014â2016)") [2015â16 Nepal blockade](https://en.wikipedia.org/wiki/2015%E2%80%9316_Nepal_blockade "2015â16 Nepal blockade") [2015â2016 Chinese stock market turbulence](https://en.wikipedia.org/wiki/2015%E2%80%932016_Chinese_stock_market_turbulence "2015â2016 Chinese stock market turbulence") [2015â2016 stock market selloff](https://en.wikipedia.org/wiki/2015%E2%80%932016_stock_market_selloff "2015â2016 stock market selloff") [Brexit stock market crash](https://en.wikipedia.org/wiki/Economic_effects_of_Brexit "Economic effects of Brexit") (2016) [Hyperinflation in Venezuela](https://en.wikipedia.org/wiki/Hyperinflation_in_Venezuela "Hyperinflation in Venezuela") (2016â2022) [2017 Sri Lankan fuel crisis](https://en.wikipedia.org/wiki/2017_Sri_Lankan_fuel_crisis "2017 Sri Lankan fuel crisis") [Ghana banking crisis](https://en.wikipedia.org/wiki/Ghana_banking_crisis "Ghana banking crisis") (2017â2018) [Turkish economic crisis (2018âcurrent)](https://en.wikipedia.org/wiki/Turkish_economic_crisis_\(2018%E2%80%93current\) "Turkish economic crisis (2018âcurrent)") [Lebanese liquidity crisis](https://en.wikipedia.org/wiki/Lebanese_liquidity_crisis "Lebanese liquidity crisis") (2019âpresent) [Sri Lankan economic crisis (2019â2024)](https://en.wikipedia.org/wiki/Sri_Lankan_economic_crisis_\(2019%E2%80%932024\) "Sri Lankan economic crisis (2019â2024)") [COVID-19 pandemic](https://en.wikipedia.org/wiki/Economic_impact_of_the_COVID-19_pandemic "Economic impact of the COVID-19 pandemic") [Financial market impact](https://en.wikipedia.org/wiki/Financial_market_impact_of_the_COVID-19_pandemic "Financial market impact of the COVID-19 pandemic") [2020 stock market crash](https://en.wikipedia.org/wiki/2020_stock_market_crash "2020 stock market crash") [Recession](https://en.wikipedia.org/wiki/COVID-19_recession "COVID-19 recession") [Chinese property sector crisis (2020âpresent)](https://en.wikipedia.org/wiki/Chinese_property_sector_crisis_\(2020%E2%80%93present\) "Chinese property sector crisis (2020âpresent)") [2021â2023 inflation surge](https://en.wikipedia.org/wiki/2021%E2%80%932023_inflation_surge "2021â2023 inflation surge") [2022 Russian financial crisis](https://en.wikipedia.org/wiki/Economic_impact_of_the_Russo-Ukrainian_war_\(2022%E2%80%93present\) "Economic impact of the Russo-Ukrainian war (2022âpresent)") [Pakistani economic crisis (2021â2024)](https://en.wikipedia.org/wiki/Pakistani_economic_crisis_\(2021%E2%80%932024\) "Pakistani economic crisis (2021â2024)") [2022 stock market decline](https://en.wikipedia.org/wiki/2022_stock_market_decline "2022 stock market decline") [German economic crisis (2022âpresent)](https://en.wikipedia.org/wiki/German_economic_crisis_\(2022%E2%80%93present\) "German economic crisis (2022âpresent)") [2023 United States banking crisis](https://en.wikipedia.org/wiki/2023_United_States_banking_crisis "2023 United States banking crisis") [2023â2024 Egyptian financial crisis](https://en.wikipedia.org/wiki/2023%E2%80%932024_Egyptian_financial_crisis "2023â2024 Egyptian financial crisis") [2025 stock market crash](https://en.wikipedia.org/wiki/2025_stock_market_crash "2025 stock market crash") |
| [List of banking crises](https://en.wikipedia.org/wiki/List_of_banking_crises "List of banking crises") [List of economic crises](https://en.wikipedia.org/wiki/List_of_economic_crises "List of economic crises") [List of sovereign debt crises](https://en.wikipedia.org/wiki/List_of_sovereign_debt_crises "List of sovereign debt crises") [List of stock market crashes and bear markets](https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets "List of stock market crashes and bear markets") | |
| [v](https://en.wikipedia.org/wiki/Template:United_States_%E2%80%93_Commonwealth_of_Nations_recessions "Template:United States â Commonwealth of Nations recessions") [t](https://en.wikipedia.org/wiki/Template_talk:United_States_%E2%80%93_Commonwealth_of_Nations_recessions "Template talk:United States â Commonwealth of Nations recessions") [e](https://en.wikipedia.org/wiki/Special:EditPage/Template:United_States_%E2%80%93_Commonwealth_of_Nations_recessions "Special:EditPage/Template:United States â Commonwealth of Nations recessions")[Economic history of the United States](https://en.wikipedia.org/wiki/Economic_history_of_the_United_States "Economic history of the United States") and Commonwealth of Nations countries | |
|---|---|
| [Commercial revolution](https://en.wikipedia.org/wiki/Commercial_revolution "Commercial revolution") (1000â1760) | [Great Bullion Famine](https://en.wikipedia.org/wiki/Great_Bullion_Famine "Great Bullion Famine") (c. 1400âc. 1500) [Great Slump](https://en.wikipedia.org/wiki/Great_Slump_\(15th_century\) "Great Slump (15th century)") (1430â1490) [The Great Debasement](https://en.wikipedia.org/wiki/The_Great_Debasement "The Great Debasement") (1544â1551) [Financial Revolution](https://en.wikipedia.org/wiki/Financial_Revolution "Financial Revolution") (1690â1800) [Slump of 1706](https://en.wikipedia.org/wiki/War_of_the_Spanish_Succession "War of the Spanish Succession") [Great Frost of 1709](https://en.wikipedia.org/wiki/Great_Frost_of_1709 "Great Frost of 1709") [South Sea bubble](https://en.wikipedia.org/wiki/South_Sea_Company "South Sea Company") (1713â1720) [Mississippi bubble](https://en.wikipedia.org/wiki/John_Law%27s_Company "John Law's Company") (1717â1720) [Economic impact of the Seven Years' War](https://en.wikipedia.org/wiki/Financial_costs_of_the_Seven_Years%27_War "Financial costs of the Seven Years' War") (1754â1763) |
| [1st Industrial Revolution](https://en.wikipedia.org/wiki/Industrial_Revolution "Industrial Revolution")/ [Market Revolution](https://en.wikipedia.org/wiki/Market_Revolution "Market Revolution") (1760â1870) | Industrial Revolution [Scotland](https://en.wikipedia.org/wiki/Industrial_Revolution_in_Scotland "Industrial Revolution in Scotland") [United States](https://en.wikipedia.org/wiki/Industrial_Revolution_in_the_United_States "Industrial Revolution in the United States") [Wales](https://en.wikipedia.org/wiki/Industrial_Revolution_in_Wales "Industrial Revolution in Wales") [Bengal Bubble of 1769](https://en.wikipedia.org/wiki/Bengal_Bubble_of_1769 "Bengal Bubble of 1769") (1769â1784) [British credit crisis of 1772â1773](https://en.wikipedia.org/wiki/British_credit_crisis_of_1772%E2%80%931773 "British credit crisis of 1772â1773") [American Revolutionary War inflation](https://en.wikipedia.org/wiki/Financial_costs_of_the_American_Revolutionary_War "Financial costs of the American Revolutionary War") (1775â1783) [Panic of 1785](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Early_recessions_and_crises_\(1785%E2%80%931836\) "List of recessions in the United States") (1785â1788) [Copper Panic of 1789](https://en.wikipedia.org/wiki/Copper_Panic_of_1789 "Copper Panic of 1789")/[Panic of 1792](https://en.wikipedia.org/wiki/Panic_of_1792 "Panic of 1792") (1789â1793) [Canal Mania](https://en.wikipedia.org/wiki/Canal_Mania "Canal Mania") (c. 1790âc. 1810) [Panic of 1796â1797](https://en.wikipedia.org/wiki/Panic_of_1796%E2%80%931797 "Panic of 1796â1797") (1796â1799) [1802â1804 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Early_recessions_and_crises_\(1785%E2%80%931836\) "List of recessions in the United States") [Carolina gold rush](https://en.wikipedia.org/wiki/Carolina_gold_rush "Carolina gold rush") (1802â1825) [Depression of 1807](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Early_recessions_and_crises_\(1785%E2%80%931836\) "List of recessions in the United States") (1807â1810) [1810s Alabama real estate bubble](https://en.wikipedia.org/wiki/Alabama_real_estate_bubble_of_the_1810s "Alabama real estate bubble of the 1810s") [Alabama Fever](https://en.wikipedia.org/wiki/Alabama_Fever "Alabama Fever") [1812 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Early_recessions_and_crises_\(1785%E2%80%931836\) "List of recessions in the United States") [Post-Napoleonic Depression](https://en.wikipedia.org/wiki/Post-Napoleonic_Depression "Post-Napoleonic Depression") (1815â1821) [1822â23 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Early_recessions_and_crises_\(1785%E2%80%931836\) "List of recessions in the United States") [Panic of 1825](https://en.wikipedia.org/wiki/Panic_of_1825 "Panic of 1825") [Panic of 1826](https://en.wikipedia.org/wiki/Panic_of_1826 "Panic of 1826") [1828â29 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Early_recessions_and_crises_\(1785%E2%80%931836\) "List of recessions in the United States") [Georgia Gold Rush](https://en.wikipedia.org/wiki/Georgia_Gold_Rush "Georgia Gold Rush") (1828âc. 1840) [1830s Chicago real estate bubble](https://en.wikipedia.org/wiki/Chicago_real_estate_bubble_of_the_1830s "Chicago real estate bubble of the 1830s") [1833â34 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Early_recessions_and_crises_\(1785%E2%80%931836\) "List of recessions in the United States") [Panic of 1837](https://en.wikipedia.org/wiki/Panic_of_1837 "Panic of 1837") (1836â1838 and 1839â1843) [U.S. state defaults in the 1840s](https://en.wikipedia.org/wiki/U.S._state_defaults_in_the_1840s "U.S. state defaults in the 1840s") [Railway Mania](https://en.wikipedia.org/wiki/Railway_Mania "Railway Mania") (c. 1840âc. 1850) [Plank Road Boom](https://en.wikipedia.org/wiki/Plank_Road_Boom "Plank Road Boom") (1844âc. 1855) [1845â46 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Free_Banking_Era_to_the_Great_Depression_\(1836%E2%80%931929\) "List of recessions in the United States") [Panic of 1847](https://en.wikipedia.org/wiki/Panic_of_1847 "Panic of 1847") (1847â1848) [California gold rush](https://en.wikipedia.org/wiki/California_gold_rush "California gold rush") (1848â1855) [British Columbia gold rushes](https://en.wikipedia.org/wiki/British_Columbia_gold_rushes "British Columbia gold rushes") [Queen Charlottes Gold Rush](https://en.wikipedia.org/wiki/Queen_Charlottes_Gold_Rush "Queen Charlottes Gold Rush"), 1851 [Fraser Canyon Gold Rush](https://en.wikipedia.org/wiki/Fraser_Canyon_Gold_Rush "Fraser Canyon Gold Rush"), 1858 [Rock Creek Gold Rush](https://en.wikipedia.org/wiki/Rock_Creek_Gold_Rush "Rock Creek Gold Rush"), 1859 [Similkameen Gold Rush](https://en.wikipedia.org/wiki/Similkameen_Gold_Rush "Similkameen Gold Rush"), 1860 [Stikine Gold Rush](https://en.wikipedia.org/wiki/Stikine_Gold_Rush "Stikine Gold Rush"), 1861 [Cariboo Gold Rush](https://en.wikipedia.org/wiki/Cariboo_Gold_Rush "Cariboo Gold Rush"), 1861â1867 [Wild Horse Creek Gold Rush](https://en.wikipedia.org/wiki/Fisherville,_British_Columbia "Fisherville, British Columbia"), 1863â1870 [Leechtown Gold Rush](https://en.wikipedia.org/wiki/Leechtown,_British_Columbia "Leechtown, British Columbia"), 1864â1865 [Big Bend Gold Rush](https://en.wikipedia.org/wiki/Big_Bend_Gold_Rush "Big Bend Gold Rush"), c. 1865 [Omineca Gold Rush](https://en.wikipedia.org/wiki/Omineca_Gold_Rush "Omineca Gold Rush"), 1869 [Victorian gold rush](https://en.wikipedia.org/wiki/Victorian_gold_rush "Victorian gold rush") (1851âc. 1870) [New South Wales gold rush](https://en.wikipedia.org/wiki/New_South_Wales_gold_rush "New South Wales gold rush") (1851â1880) [Australian gold rushes](https://en.wikipedia.org/wiki/Australian_gold_rushes "Australian gold rushes") (1851â1914) [1853â54 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Free_Banking_Era_to_the_Great_Depression_\(1836%E2%80%931929\) "List of recessions in the United States") [Panic of 1857](https://en.wikipedia.org/wiki/Panic_of_1857 "Panic of 1857") (1857â1858) [Pike's Peak gold rush](https://en.wikipedia.org/wiki/Pike%27s_Peak_gold_rush "Pike's Peak gold rush") (1858â1861) [Pennsylvania oil rush](https://en.wikipedia.org/wiki/Pennsylvania_oil_rush "Pennsylvania oil rush") (1859â1891) [1860â61 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Free_Banking_Era_to_the_Great_Depression_\(1836%E2%80%931929\) "List of recessions in the United States") [Colorado River mining boom](https://en.wikipedia.org/wiki/Steamboats_of_the_Colorado_River "Steamboats of the Colorado River") (1861â1864) [Otago gold rush](https://en.wikipedia.org/wiki/Otago_gold_rush "Otago gold rush") (1861â1864) [U.S. Civil War economy](https://en.wikipedia.org/wiki/Economic_history_of_the_American_Civil_War "Economic history of the American Civil War") (1861â1865) [First Nova Scotia Gold Rush](https://en.wikipedia.org/wiki/Gold_mining_in_Nova_Scotia "Gold mining in Nova Scotia") (1861â1874) [West Coast gold rush](https://en.wikipedia.org/wiki/West_Coast_gold_rush "West Coast gold rush") (1864â1867) [Panic of 1866](https://en.wikipedia.org/wiki/Panic_of_1866 "Panic of 1866") (1865â1867) [Vermilion Lake gold rush](https://en.wikipedia.org/wiki/Vermilion_Lake_gold_rush "Vermilion Lake gold rush") (1865â1867) [Kildonan Gold Rush](https://en.wikipedia.org/wiki/Kildonan_Gold_Rush "Kildonan Gold Rush") (1869) [Black Friday](https://en.wikipedia.org/wiki/Black_Friday_\(1869\) "Black Friday (1869)") (1869â1870) |
| [Gilded Age](https://en.wikipedia.org/wiki/Gilded_Age "Gilded Age")/ [2nd Industrial Revolution](https://en.wikipedia.org/wiki/Second_Industrial_Revolution "Second Industrial Revolution") (1870â1914) | [Coromandel Gold Rushes](https://en.wikipedia.org/wiki/Coromandel_Gold_Rushes "Coromandel Gold Rushes") (c. 1870âc. 1890) [Cassiar Gold Rush](https://en.wikipedia.org/wiki/Cassiar_Country "Cassiar Country") (c. 1870âc. 1890) [Long Depression](https://en.wikipedia.org/wiki/Long_Depression "Long Depression") 1873â1879; [Panic of 1873](https://en.wikipedia.org/wiki/Panic_of_1873 "Panic of 1873") [Black Hills gold rush](https://en.wikipedia.org/wiki/Black_Hills_gold_rush "Black Hills gold rush") (1874â1880) [Colorado Silver Boom](https://en.wikipedia.org/wiki/Colorado_Silver_Boom "Colorado Silver Boom") (1879â1893) [Western Australian gold rushes](https://en.wikipedia.org/wiki/Western_Australian_gold_rushes "Western Australian gold rushes") (c. 1880âc. 1900) [Indiana gas boom](https://en.wikipedia.org/wiki/Indiana_gas_boom "Indiana gas boom") (c. 1880â1903) [Ohio oil rush](https://en.wikipedia.org/wiki/Petroleum_industry_in_Ohio "Petroleum industry in Ohio") (c. 1880âc. 1930) [Depression of 1882â1885](https://en.wikipedia.org/wiki/Depression_of_1882%E2%80%931885 "Depression of 1882â1885") [Panic of 1884](https://en.wikipedia.org/wiki/Panic_of_1884 "Panic of 1884") [Cayoosh Gold Rush](https://en.wikipedia.org/wiki/Cayoosh_Gold_Rush "Cayoosh Gold Rush") (1884) [Witwatersrand Gold Rush](https://en.wikipedia.org/wiki/Witwatersrand_Gold_Rush "Witwatersrand Gold Rush") (1886) [1887â88 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Free_Banking_Era_to_the_Great_Depression_\(1836%E2%80%931929\) "List of recessions in the United States") [Baring crisis](https://en.wikipedia.org/wiki/Baring_crisis "Baring crisis") (1890â1891) [Cripple Creek Gold Rush](https://en.wikipedia.org/wiki/Cripple_Creek_Gold_Rush "Cripple Creek Gold Rush") (c. 1890âc. 1910) [Panic of 1893](https://en.wikipedia.org/wiki/Panic_of_1893 "Panic of 1893") (1893â1897) [Australian banking crisis of 1893](https://en.wikipedia.org/wiki/Australian_banking_crisis_of_1893 "Australian banking crisis of 1893") [Black Monday](https://en.wikipedia.org/wiki/Black_Monday_\(1894\) "Black Monday (1894)") (1894) [Panic of 1896](https://en.wikipedia.org/wiki/Panic_of_1896 "Panic of 1896") [Klondike Gold Rush](https://en.wikipedia.org/wiki/Klondike_Gold_Rush "Klondike Gold Rush") (1896â1899) [Second Nova Scotia Gold Rush](https://en.wikipedia.org/wiki/Gold_mining_in_Nova_Scotia "Gold mining in Nova Scotia") (1896â1903) [Kobuk River Stampede](https://en.wikipedia.org/wiki/Kobuk_River_Stampede "Kobuk River Stampede") (1897â1899) [Mount Baker gold rush](https://en.wikipedia.org/wiki/Mount_Baker_gold_rush "Mount Baker gold rush") (1897âc. 1925) [1899â1900 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Free_Banking_Era_to_the_Great_Depression_\(1836%E2%80%931929\) "List of recessions in the United States") [Nome Gold Rush](https://en.wikipedia.org/wiki/Nome_Gold_Rush "Nome Gold Rush") (1899â1909) [Fairbanks Gold Rush](https://en.wikipedia.org/wiki/Fairbanks_Gold_Rush "Fairbanks Gold Rush") (c. 1900âc. 1930) [Texas oil boom](https://en.wikipedia.org/wiki/Texas_oil_boom "Texas oil boom") (1901âc. 1950) [Panic of 1901](https://en.wikipedia.org/wiki/Panic_of_1901 "Panic of 1901") (1902â1904) [Cobalt silver rush](https://en.wikipedia.org/wiki/Cobalt_silver_rush "Cobalt silver rush") (1903âc. 1930) [Panic of 1907](https://en.wikipedia.org/wiki/Panic_of_1907 "Panic of 1907") (1907â1908) [Porcupine Gold Rush](https://en.wikipedia.org/wiki/Porcupine_Gold_Rush "Porcupine Gold Rush") (1909âc. 1960) [Panic of 1910â11](https://en.wikipedia.org/wiki/Panic_of_1910%E2%80%9311 "Panic of 1910â11") (1910â1912) [Financial crisis of 1914](https://en.wikipedia.org/wiki/Financial_crisis_of_1914 "Financial crisis of 1914") (1913â14) |
| World War home fronts/ [Interwar period](https://en.wikipedia.org/wiki/Interwar_period "Interwar period") (1914â1945) | [World War I economy](https://en.wikipedia.org/wiki/Economic_history_of_World_War_I "Economic history of World War I") and [home fronts](https://en.wikipedia.org/wiki/Home_front_during_World_War_I "Home front during World War I") [Australia](https://en.wikipedia.org/wiki/Australia_in_World_War_I#Home_front "Australia in World War I") [Canada](https://en.wikipedia.org/wiki/Canada_in_World_War_I#Home_Front "Canada in World War I") [United Kingdom](https://en.wikipedia.org/wiki/History_of_the_United_Kingdom_during_the_First_World_War "History of the United Kingdom during the First World War") [United States](https://en.wikipedia.org/wiki/United_States_home_front_during_World_War_I "United States home front during World War I") [PostâWorld War I recession](https://en.wikipedia.org/wiki/Post%E2%80%93World_War_I_recession "PostâWorld War I recession") (1918â1919) [Recession of 1920â1921](https://en.wikipedia.org/wiki/Recession_of_1920%E2%80%931921 "Recession of 1920â1921") [1920s Florida land boom](https://en.wikipedia.org/wiki/Florida_land_boom_of_the_1920s "Florida land boom of the 1920s") (c. 1920â1925) [Roaring Twenties](https://en.wikipedia.org/wiki/Roaring_Twenties "Roaring Twenties") [1923â1924 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Free_Banking_Era_to_the_Great_Depression_\(1836%E2%80%931929\) "List of recessions in the United States") [1926â1927 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Free_Banking_Era_to_the_Great_Depression_\(1836%E2%80%931929\) "List of recessions in the United States") [Great Depression](https://en.wikipedia.org/wiki/Great_Depression "Great Depression") 1929â1939; [Wall Street crash of 1929](https://en.wikipedia.org/wiki/Wall_Street_crash_of_1929 "Wall Street crash of 1929") [Panic of 1930](https://en.wikipedia.org/wiki/Panic_of_1930 "Panic of 1930") [Great Contraction](https://en.wikipedia.org/wiki/Great_Contraction "Great Contraction"), 1929â1933 [Recession of 1937â1938](https://en.wikipedia.org/wiki/Recession_of_1937%E2%80%931938 "Recession of 1937â1938") [Australia](https://en.wikipedia.org/wiki/Great_Depression_in_Australia "Great Depression in Australia") [Canada](https://en.wikipedia.org/wiki/Great_Depression_in_Canada "Great Depression in Canada") [India](https://en.wikipedia.org/wiki/Great_Depression_in_India "Great Depression in India") [South Africa](https://en.wikipedia.org/wiki/Great_Depression_in_South_Africa "Great Depression in South Africa") [United Kingdom](https://en.wikipedia.org/wiki/Great_Depression_in_the_United_Kingdom "Great Depression in the United Kingdom") [United States](https://en.wikipedia.org/wiki/Great_Depression_in_the_United_States "Great Depression in the United States") [1930s Kakamega gold rush](https://en.wikipedia.org/wiki/Kakamega_gold_rush "Kakamega gold rush") [Third Nova Scotia Gold Rush](https://en.wikipedia.org/wiki/Gold_mining_in_Nova_Scotia "Gold mining in Nova Scotia") (1932â1942) [World War II home front](https://en.wikipedia.org/wiki/Home_front_during_World_War_II "Home front during World War II") [Australia](https://en.wikipedia.org/wiki/Australian_home_front_during_World_War_II "Australian home front during World War II") [Canada](https://en.wikipedia.org/wiki/Canada_in_World_War_II#Home_front "Canada in World War II") [United Kingdom](https://en.wikipedia.org/wiki/British_home_front_during_World_War_II "British home front during World War II") [United States](https://en.wikipedia.org/wiki/United_States_home_front_during_World_War_II "United States home front during World War II") |
| [PostâWWII expansion](https://en.wikipedia.org/wiki/Post%E2%80%93World_War_II_economic_expansion "PostâWorld War II economic expansion")/ [1970s stagflation](https://en.wikipedia.org/wiki/Stagflation "Stagflation") (1945â1982) | [Great Compression](https://en.wikipedia.org/wiki/Great_Compression "Great Compression") [1945 recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States#Great_Depression_onward_\(1929%E2%80%93present\) "List of recessions in the United States") [Recession of 1949](https://en.wikipedia.org/wiki/Recession_of_1949 "Recession of 1949") (1948â1949) [Hong Kong and Singapore Asian Tiger expansions](https://en.wikipedia.org/wiki/Four_Asian_Tigers "Four Asian Tigers") (1950â1990) [1951 Canada recession](https://en.wikipedia.org/wiki/List_of_recessions_in_Canada "List of recessions in Canada") [Recession of 1953](https://en.wikipedia.org/wiki/Recession_of_1953 "Recession of 1953") (1953â1954) [Recession of 1958](https://en.wikipedia.org/wiki/Recession_of_1958 "Recession of 1958") (1957â1958) [Recession of 1960â1961](https://en.wikipedia.org/wiki/Recession_of_1960%E2%80%931961 "Recession of 1960â1961") [Kennedy Slide of 1962](https://en.wikipedia.org/wiki/Kennedy_Slide_of_1962 "Kennedy Slide of 1962") [Poseidon bubble](https://en.wikipedia.org/wiki/Poseidon_bubble "Poseidon bubble") (1969â1970) [Recession of 1969â1970](https://en.wikipedia.org/wiki/Recession_of_1969%E2%80%931970 "Recession of 1969â1970") [1970s commodities boom](https://en.wikipedia.org/wiki/1970s_commodities_boom "1970s commodities boom") [1973â1975 recession](https://en.wikipedia.org/wiki/1973%E2%80%931975_recession "1973â1975 recession") [1973â1974 stock market crash](https://en.wikipedia.org/wiki/1973%E2%80%931974_stock_market_crash "1973â1974 stock market crash") [Secondary banking crisis of 1973â1975](https://en.wikipedia.org/wiki/Secondary_banking_crisis_of_1973%E2%80%931975 "Secondary banking crisis of 1973â1975") [1970s energy crisis](https://en.wikipedia.org/wiki/1970s_energy_crisis "1970s energy crisis") 1973â1980; [1973 oil crisis](https://en.wikipedia.org/wiki/1973_oil_crisis "1973 oil crisis") [1979 oil crisis](https://en.wikipedia.org/wiki/1979_oil_crisis "1979 oil crisis") [Steel crisis](https://en.wikipedia.org/wiki/Steel_crisis "Steel crisis") (1973â1982) [1976 sterling crisis](https://en.wikipedia.org/wiki/1976_sterling_crisis "1976 sterling crisis") [Silver Thursday](https://en.wikipedia.org/wiki/Silver_Thursday "Silver Thursday") (1980) [Early 1980s recession](https://en.wikipedia.org/wiki/Early_1980s_recession "Early 1980s recession") 1980â1982; [United States](https://en.wikipedia.org/wiki/Early_1980s_recession_in_the_United_States "Early 1980s recession in the United States") |
| [Computer Age](https://en.wikipedia.org/wiki/Information_Age "Information Age")/ [Second Gilded Age](https://en.wikipedia.org/wiki/Second_Gilded_Age "Second Gilded Age") (1982âpresent) | [Great Moderation](https://en.wikipedia.org/wiki/Great_Moderation "Great Moderation") (1982â2007) [1980s oil glut](https://en.wikipedia.org/wiki/1980s_oil_glut "1980s oil glut") [Black Saturday](https://en.wikipedia.org/wiki/Black_Saturday_\(1983\) "Black Saturday (1983)") (1983) [New Zealand property bubble](https://en.wikipedia.org/wiki/New_Zealand_property_bubble "New Zealand property bubble") (c. 1985â) [Savings and loan crisis](https://en.wikipedia.org/wiki/Savings_and_loan_crisis "Savings and loan crisis") (1986â1995) [Black Monday](https://en.wikipedia.org/wiki/Black_Monday_\(1987\) "Black Monday (1987)") (1987) [Friday the 13th mini-crash](https://en.wikipedia.org/wiki/Friday_the_13th_mini-crash "Friday the 13th mini-crash") (1989) [Early 1990s recession](https://en.wikipedia.org/wiki/Early_1990s_recession "Early 1990s recession") 1990â1991; [Australia](https://en.wikipedia.org/wiki/Early_1990s_recession_in_Australia "Early 1990s recession in Australia") [United States](https://en.wikipedia.org/wiki/Early_1990s_recession_in_the_United_States "Early 1990s recession in the United States") [1990 oil price shock](https://en.wikipedia.org/wiki/1990_oil_price_shock "1990 oil price shock") [Rhode Island banking crisis](https://en.wikipedia.org/wiki/Rhode_Island_banking_crisis "Rhode Island banking crisis") (1990â1992) [1991 Indian economic crisis](https://en.wikipedia.org/wiki/1991_Indian_economic_crisis "1991 Indian economic crisis") [1990s United States boom](https://en.wikipedia.org/wiki/1990s_United_States_boom "1990s United States boom") (1991â2001) [1990s India economic boom](https://en.wikipedia.org/wiki/Economic_liberalisation_in_India "Economic liberalisation in India") [Hyperinflation in Zimbabwe](https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe "Hyperinflation in Zimbabwe") (1991âpresent) [Black Wednesday](https://en.wikipedia.org/wiki/Black_Wednesday "Black Wednesday") (1992) [1994 bond market crisis](https://en.wikipedia.org/wiki/1994_bond_market_crisis "1994 bond market crisis") [1994 Papua New Guinea financial crisis](https://en.wikipedia.org/wiki/1994_Papua_New_Guinea_financial_crisis "1994 Papua New Guinea financial crisis") [Dot-com bubble](https://en.wikipedia.org/wiki/Dot-com_bubble "Dot-com bubble") 1995â2004; [Stock market downturn of 2002](https://en.wikipedia.org/wiki/Stock_market_downturn_of_2002 "Stock market downturn of 2002") [1997 Asian financial crisis](https://en.wikipedia.org/wiki/1997_Asian_financial_crisis "1997 Asian financial crisis") [October 27, 1997, mini-crash](https://en.wikipedia.org/wiki/October_27,_1997,_mini-crash "October 27, 1997, mini-crash") [Early 2000s recession](https://en.wikipedia.org/wiki/Early_2000s_recession "Early 2000s recession") 2001; [9/11 stock market crash](https://en.wikipedia.org/wiki/Economic_effects_of_the_September_11_attacks "Economic effects of the September 11 attacks") [2000s commodities boom](https://en.wikipedia.org/wiki/2000s_commodities_boom "2000s commodities boom") (2000â2014) [United States housing bubble](https://en.wikipedia.org/wiki/2000s_United_States_housing_bubble "2000s United States housing bubble") (2002â2006) [Canadian property bubble](https://en.wikipedia.org/wiki/Canadian_property_bubble "Canadian property bubble") (2002â) [2003 Myanmar banking crisis](https://en.wikipedia.org/wiki/2003_Myanmar_banking_crisis "2003 Myanmar banking crisis") [2000s energy crisis](https://en.wikipedia.org/wiki/2000s_energy_crisis "2000s energy crisis") (2003â2008) [North Dakota oil boom](https://en.wikipedia.org/wiki/North_Dakota_oil_boom "North Dakota oil boom") (2006â2015) [Uranium bubble of 2007](https://en.wikipedia.org/wiki/Uranium_bubble_of_2007 "Uranium bubble of 2007") [Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession") 2007â2009; [Australia and New Zealand](https://en.wikipedia.org/wiki/Great_Recession_in_Oceania "Great Recession in Oceania") [Bangladesh, India, Malaysia, Pakistan, and Sri Lanka](https://en.wikipedia.org/wiki/Great_Recession_in_Asia "Great Recession in Asia") [British West Indies](https://en.wikipedia.org/wiki/Great_Recession_in_South_America "Great Recession in South America") [Canada](https://en.wikipedia.org/wiki/Great_Recession_in_the_Americas "Great Recession in the Americas") [South Africa](https://en.wikipedia.org/wiki/Great_Recession_in_Africa "Great Recession in Africa") [United Kingdom](https://en.wikipedia.org/wiki/Great_Recession_in_Europe#United_Kingdom "Great Recession in Europe") [United States](https://en.wikipedia.org/wiki/Great_Recession_in_the_United_States "Great Recession in the United States") [2008 financial crisis]() [September](https://en.wikipedia.org/wiki/Global_financial_crisis_in_September_2008 "Global financial crisis in September 2008") [October](https://en.wikipedia.org/wiki/Global_financial_crisis_in_October_2008 "Global financial crisis in October 2008") [November](https://en.wikipedia.org/wiki/Global_financial_crisis_in_November_2008 "Global financial crisis in November 2008") [December](https://en.wikipedia.org/wiki/Global_financial_crisis_in_December_2008 "Global financial crisis in December 2008") [2009](https://en.wikipedia.org/wiki/Global_financial_crisis_in_2009 "Global financial crisis in 2009") [Subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis") [2000s U.S. housing market correction](https://en.wikipedia.org/wiki/2000s_United_States_housing_market_correction "2000s United States housing market correction") [U.S. bear market of 2007â2009](https://en.wikipedia.org/wiki/United_States_bear_market_of_2007%E2%80%932009 "United States bear market of 2007â2009") [2007â2010 U.S. bank failures](https://en.wikipedia.org/wiki/List_of_banks_acquired_or_bankrupted_in_the_United_States_during_the_2008_financial_crisis "List of banks acquired or bankrupted in the United States during the 2008 financial crisis") [Corporate debt bubble](https://en.wikipedia.org/wiki/Corporate_debt_bubble "Corporate debt bubble") (2008â) [Blue Monday Crash 2009](https://en.wikipedia.org/wiki/Blue_Monday_Crash_2009 "Blue Monday Crash 2009") [2010 flash crash](https://en.wikipedia.org/wiki/2010_flash_crash "2010 flash crash") [Malaysia Tiger Cub expansion](https://en.wikipedia.org/wiki/Tiger_Cub_Economies "Tiger Cub Economies") (2010s) [Australian property bubble](https://en.wikipedia.org/wiki/Australian_property_bubble "Australian property bubble") (2010â) [August 2011 stock markets fall](https://en.wikipedia.org/wiki/August_2011_stock_markets_fall "August 2011 stock markets fall") [Black Monday](https://en.wikipedia.org/wiki/Black_Monday_\(2011\) "Black Monday (2011)") [2011 Bangladesh share market scam](https://en.wikipedia.org/wiki/2011_Bangladesh_share_market_scam "2011 Bangladesh share market scam") [Cryptocurrency bubble](https://en.wikipedia.org/wiki/Cryptocurrency_bubble "Cryptocurrency bubble") (2011â) [Puerto Rican government-debt crisis](https://en.wikipedia.org/wiki/Puerto_Rican_government-debt_crisis "Puerto Rican government-debt crisis") (2014â2022) [2015â2016 stock market selloff](https://en.wikipedia.org/wiki/2015%E2%80%932016_stock_market_selloff "2015â2016 stock market selloff") [Brexit stock market crash](https://en.wikipedia.org/wiki/Economic_effects_of_Brexit "Economic effects of Brexit") (2016) [2017 Sri Lankan fuel crisis](https://en.wikipedia.org/wiki/2017_Sri_Lankan_fuel_crisis "2017 Sri Lankan fuel crisis") [Ghana banking crisis](https://en.wikipedia.org/wiki/Ghana_banking_crisis "Ghana banking crisis") (2017â2018) [Sri Lankan economic crisis](https://en.wikipedia.org/wiki/Sri_Lankan_economic_crisis_\(2019%E2%80%932024\) "Sri Lankan economic crisis (2019â2024)") (2019â2024) [COVID-19 recession](https://en.wikipedia.org/wiki/COVID-19_recession "COVID-19 recession") 2020â2022; [2020 stock market crash](https://en.wikipedia.org/wiki/2020_stock_market_crash "2020 stock market crash") [financial market impact](https://en.wikipedia.org/wiki/Financial_market_impact_of_the_COVID-19_pandemic "Financial market impact of the COVID-19 pandemic") [sectoral impacts](https://en.wikipedia.org/wiki/Economic_impact_of_the_COVID-19_pandemic "Economic impact of the COVID-19 pandemic") [shortages](https://en.wikipedia.org/wiki/Shortages_related_to_the_COVID-19_pandemic "Shortages related to the COVID-19 pandemic") [Canada](https://en.wikipedia.org/wiki/Economic_impact_of_the_COVID-19_pandemic_in_Canada "Economic impact of the COVID-19 pandemic in Canada") [India](https://en.wikipedia.org/wiki/Economic_impact_of_the_COVID-19_pandemic_in_India "Economic impact of the COVID-19 pandemic in India") [Malaysia](https://en.wikipedia.org/wiki/Economic_impact_of_the_COVID-19_pandemic_in_Malaysia "Economic impact of the COVID-19 pandemic in Malaysia") [New Zealand](https://en.wikipedia.org/wiki/Economic_impact_of_the_COVID-19_pandemic_in_New_Zealand "Economic impact of the COVID-19 pandemic in New Zealand") [United Kingdom](https://en.wikipedia.org/wiki/Economic_impact_of_the_COVID-19_pandemic_in_the_United_Kingdom "Economic impact of the COVID-19 pandemic in the United Kingdom") [United States](https://en.wikipedia.org/wiki/Economic_impact_of_the_COVID-19_pandemic_in_the_United_States "Economic impact of the COVID-19 pandemic in the United States") [2020s commodities boom](https://en.wikipedia.org/wiki/2020s_commodities_boom "2020s commodities boom") [Global energy crisis](https://en.wikipedia.org/wiki/Global_energy_crisis_\(2021%E2%80%932023\) "Global energy crisis (2021â2023)") 2021â2023; [2021 United Kingdom natural gas supplier crisis](https://en.wikipedia.org/wiki/2021_United_Kingdom_natural_gas_supplier_crisis "2021 United Kingdom natural gas supplier crisis") [regional effects](https://en.wikipedia.org/wiki/Regional_effects_of_the_2021%E2%80%932023_global_energy_crisis "Regional effects of the 2021â2023 global energy crisis") [2021â2023 global supply chain crisis](https://en.wikipedia.org/wiki/2021%E2%80%932023_global_supply_chain_crisis "2021â2023 global supply chain crisis") [2021â2023 inflation surge](https://en.wikipedia.org/wiki/2021%E2%80%932023_inflation_surge "2021â2023 inflation surge") [Pakistani economic crisis](https://en.wikipedia.org/wiki/Pakistani_economic_crisis_\(2021%E2%80%932024\) "Pakistani economic crisis (2021â2024)") (2021â2024) [2022 stock market decline](https://en.wikipedia.org/wiki/2022_stock_market_decline "2022 stock market decline") [2022â2023 global food crises](https://en.wikipedia.org/wiki/2022%E2%80%932023_global_food_crises "2022â2023 global food crises") [2023 United Kingdom recession](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_Kingdom "List of recessions in the United Kingdom") [2023 United States banking crisis](https://en.wikipedia.org/wiki/2023_United_States_banking_crisis "2023 United States banking crisis") [2025 stock market crash](https://en.wikipedia.org/wiki/2025_stock_market_crash "2025 stock market crash") |
| Countries and sectors | [Australia](https://en.wikipedia.org/wiki/Economic_history_of_Australia "Economic history of Australia") [rail transport](https://en.wikipedia.org/wiki/History_of_rail_transport_in_Australia "History of rail transport in Australia") [slavery](https://en.wikipedia.org/wiki/Slavery_in_Australia "Slavery in Australia") [whaling](https://en.wikipedia.org/wiki/Whaling_in_Australia "Whaling in Australia")/[Western Australia](https://en.wikipedia.org/wiki/Whaling_in_Western_Australia "Whaling in Western Australia") [Canada](https://en.wikipedia.org/wiki/Economic_history_of_Canada "Economic history of Canada") [agriculture](https://en.wikipedia.org/wiki/History_of_agriculture_in_Canada "History of agriculture in Canada") [currencies](https://en.wikipedia.org/wiki/History_of_Canadian_currencies "History of Canadian currencies") [early banking system](https://en.wikipedia.org/wiki/Early_Canadian_banking_system "Early Canadian banking system") [list of recessions](https://en.wikipedia.org/wiki/List_of_recessions_in_Canada "List of recessions in Canada") [petroleum industry](https://en.wikipedia.org/wiki/History_of_the_petroleum_industry_in_Canada "History of the petroleum industry in Canada") [rail transport](https://en.wikipedia.org/wiki/History_of_rail_transport_in_Canada "History of rail transport in Canada") [slavery](https://en.wikipedia.org/wiki/Slavery_in_Canada "Slavery in Canada") [technological and industrial](https://en.wikipedia.org/wiki/Technological_and_industrial_history_of_Canada "Technological and industrial history of Canada") [whaling](https://en.wikipedia.org/wiki/Whaling_in_Canada "Whaling in Canada")/[Pacific Northwest](https://en.wikipedia.org/wiki/Whaling_on_the_Pacific_Northwest_Coast "Whaling on the Pacific Northwest Coast") [Ghana](https://en.wikipedia.org/wiki/Economic_history_of_Ghana "Economic history of Ghana") [India](https://en.wikipedia.org/wiki/Economic_history_of_India "Economic history of India") [agriculture](https://en.wikipedia.org/wiki/History_of_agriculture_in_the_Indian_subcontinent "History of agriculture in the Indian subcontinent") [Company rule](https://en.wikipedia.org/wiki/Economy_of_India_under_Company_rule "Economy of India under Company rule") [maritime](https://en.wikipedia.org/wiki/Indian_maritime_history "Indian maritime history") [British Raj](https://en.wikipedia.org/wiki/Economy_of_India_under_the_British_Raj "Economy of India under the British Raj") [Deindustrialisation](https://en.wikipedia.org/wiki/De-industrialisation_of_India "De-industrialisation of India") [salt tax](https://en.wikipedia.org/wiki/History_of_the_salt_tax_in_British_India "History of the salt tax in British India") [slavery](https://en.wikipedia.org/wiki/Slavery_in_India "Slavery in India") [Malaysia](https://en.wikipedia.org/wiki/Economic_history_of_Malaysia "Economic history of Malaysia") [New Zealand](https://en.wikipedia.org/wiki/Economic_history_of_New_Zealand "Economic history of New Zealand") [whaling](https://en.wikipedia.org/wiki/Whaling_in_New_Zealand "Whaling in New Zealand") [Nigeria](https://en.wikipedia.org/wiki/Economic_history_of_Nigeria "Economic history of Nigeria") [slavery](https://en.wikipedia.org/wiki/Slavery_in_Nigeria "Slavery in Nigeria") [Pakistan](https://en.wikipedia.org/wiki/Economic_history_of_Pakistan "Economic history of Pakistan") [maritime](https://en.wikipedia.org/wiki/Maritime_history_of_Pakistan "Maritime history of Pakistan") [rail transport](https://en.wikipedia.org/wiki/History_of_rail_transport_in_Pakistan "History of rail transport in Pakistan") [South Africa](https://en.wikipedia.org/wiki/Economic_history_of_South_Africa "Economic history of South Africa") [slavery](https://en.wikipedia.org/wiki/Slavery_in_South_Africa "Slavery in South Africa") [whaling](https://en.wikipedia.org/wiki/Whaling_in_South_Africa "Whaling in South Africa") [Uganda](https://en.wikipedia.org/wiki/Economic_history_of_Uganda "Economic history of Uganda") [United Kingdom](https://en.wikipedia.org/wiki/Economic_history_of_the_United_Kingdom "Economic history of the United Kingdom") [Agricultural Revolution](https://en.wikipedia.org/wiki/British_Agricultural_Revolution "British Agricultural Revolution") [Atlantic slave trade](https://en.wikipedia.org/wiki/Atlantic_slave_trade "Atlantic slave trade") [banking](https://en.wikipedia.org/wiki/History_of_banking_in_the_United_Kingdom "History of banking in the United Kingdom") [British Empire](https://en.wikipedia.org/wiki/Economy_of_the_British_Empire "Economy of the British Empire") [English fiscal system](https://en.wikipedia.org/wiki/History_of_the_English_fiscal_system "History of the English fiscal system") [Interwar unemployment and poverty](https://en.wikipedia.org/wiki/Interwar_unemployment_and_poverty_in_the_United_Kingdom "Interwar unemployment and poverty in the United Kingdom") [list of recessions](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_Kingdom "List of recessions in the United Kingdom") [maritime](https://en.wikipedia.org/wiki/Maritime_history_of_the_United_Kingdom "Maritime history of the United Kingdom")/[England](https://en.wikipedia.org/wiki/Maritime_history_of_England "Maritime history of England")/[Scotland](https://en.wikipedia.org/wiki/Maritime_history_of_Scotland "Maritime history of Scotland") [Middle Ages England](https://en.wikipedia.org/wiki/Economy_of_England_in_the_Middle_Ages "Economy of England in the Middle Ages")/[agriculture](https://en.wikipedia.org/wiki/Economics_of_English_agriculture_in_the_Middle_Ages "Economics of English agriculture in the Middle Ages") [national debt](https://en.wikipedia.org/wiki/History_of_the_British_national_debt "History of the British national debt") [Scotland](https://en.wikipedia.org/wiki/Economic_history_of_Scotland "Economic history of Scotland")/[agriculture](https://en.wikipedia.org/wiki/History_of_agriculture_in_Scotland "History of agriculture in Scotland")/[Middle Ages](https://en.wikipedia.org/wiki/Economy_of_Scotland_in_the_Middle_Ages "Economy of Scotland in the Middle Ages") [rail transport](https://en.wikipedia.org/wiki/History_of_rail_transport_in_Great_Britain "History of rail transport in Great Britain")/[preâ1830](https://en.wikipedia.org/wiki/History_of_rail_transport_in_Great_Britain_to_1830 "History of rail transport in Great Britain to 1830")/[1830â1922](https://en.wikipedia.org/wiki/History_of_rail_transport_in_Great_Britain_1830%E2%80%931922 "History of rail transport in Great Britain 1830â1922")/[1923â1947](https://en.wikipedia.org/wiki/History_of_rail_transport_in_Great_Britain_1923%E2%80%931947 "History of rail transport in Great Britain 1923â1947")/[1948â1994](https://en.wikipedia.org/wiki/History_of_rail_transport_in_Great_Britain_1948%E2%80%931994 "History of rail transport in Great Britain 1948â1994")/[1995âpresent](https://en.wikipedia.org/wiki/History_of_rail_transport_in_Great_Britain_1995_to_date "History of rail transport in Great Britain 1995 to date") [slavery](https://en.wikipedia.org/wiki/Slavery_in_Britain "Slavery in Britain") [trade unions](https://en.wikipedia.org/wiki/History_of_trade_unions_in_the_United_Kingdom "History of trade unions in the United Kingdom") [Victorian era](https://en.wikipedia.org/wiki/Economy,_industry,_and_trade_of_the_Victorian_era "Economy, industry, and trade of the Victorian era") [Wales](https://en.wikipedia.org/wiki/Economic_history_of_Wales "Economic history of Wales") [whaling](https://en.wikipedia.org/wiki/Whaling_in_the_United_Kingdom "Whaling in the United Kingdom")/[Scotland](https://en.wikipedia.org/wiki/Whaling_in_Scotland "Whaling in Scotland") [United States](https://en.wikipedia.org/wiki/Economic_history_of_the_United_States "Economic history of the United States") [agriculture](https://en.wikipedia.org/wiki/History_of_agriculture_in_the_United_States "History of agriculture in the United States") [banking](https://en.wikipedia.org/wiki/History_of_banking_in_the_United_States "History of banking in the United States")/[colonial-era credit](https://en.wikipedia.org/wiki/Credit_in_the_Thirteen_Colonies "Credit in the Thirteen Colonies")/[cooperatives](https://en.wikipedia.org/wiki/History_of_cooperatives_in_the_United_States "History of cooperatives in the United States")/[investment banking](https://en.wikipedia.org/wiki/History_of_investment_banking_in_the_United_States "History of investment banking in the United States")/[wildcat banking](https://en.wikipedia.org/wiki/Wildcat_banking "Wildcat banking") [business](https://en.wikipedia.org/wiki/American_business_history "American business history") [central banking](https://en.wikipedia.org/wiki/History_of_central_banking_in_the_United_States "History of central banking in the United States") [coal mining](https://en.wikipedia.org/wiki/History_of_coal_mining_in_the_United_States "History of coal mining in the United States") [indentured servitude](https://en.wikipedia.org/wiki/Indentured_servitude_in_British_America "Indentured servitude in British America") [iron and steel industry](https://en.wikipedia.org/wiki/History_of_the_iron_and_steel_industry_in_the_United_States "History of the iron and steel industry in the United States") [labor](https://en.wikipedia.org/wiki/Labor_history_of_the_United_States "Labor history of the United States") [list of economic expansions](https://en.wikipedia.org/wiki/List_of_economic_expansions_in_the_United_States "List of economic expansions in the United States") [list of recessions](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States "List of recessions in the United States") [lumber industry](https://en.wikipedia.org/wiki/History_of_the_lumber_industry_in_the_United_States "History of the lumber industry in the United States") [maritime](https://en.wikipedia.org/wiki/History_of_the_United_States_Merchant_Marine "History of the United States Merchant Marine")/[colonial-era](https://en.wikipedia.org/wiki/Maritime_history_of_Colonial_America "Maritime history of Colonial America")/[1776â1799](https://en.wikipedia.org/wiki/Maritime_history_of_the_United_States_\(1776%E2%80%931799\) "Maritime history of the United States (1776â1799)")/[1800â1899](https://en.wikipedia.org/wiki/Maritime_history_of_the_United_States_\(1800%E2%80%931899\) "Maritime history of the United States (1800â1899)")/[1900â1999](https://en.wikipedia.org/wiki/Maritime_history_of_the_United_States_\(1900%E2%80%931999\) "Maritime history of the United States (1900â1999)")/[2000âpresent](https://en.wikipedia.org/wiki/Maritime_history_of_the_United_States_\(2000%E2%80%93present\) "Maritime history of the United States (2000âpresent)") [monetary policy](https://en.wikipedia.org/wiki/History_of_monetary_policy_in_the_United_States "History of monetary policy in the United States") [poverty](https://en.wikipedia.org/wiki/History_of_poverty_in_the_United_States "History of poverty in the United States") [petroleum industry](https://en.wikipedia.org/wiki/History_of_the_petroleum_industry_in_the_United_States "History of the petroleum industry in the United States")/[oil shale](https://en.wikipedia.org/wiki/History_of_the_oil_shale_industry_in_the_United_States "History of the oil shale industry in the United States") [public debt](https://en.wikipedia.org/wiki/History_of_the_United_States_public_debt "History of the United States public debt") [rail transportation](https://en.wikipedia.org/wiki/History_of_rail_transportation_in_the_United_States "History of rail transportation in the United States") [slavery](https://en.wikipedia.org/wiki/Slavery_in_the_United_States "Slavery in the United States")/[colonial-era slavery](https://en.wikipedia.org/wiki/Slavery_in_the_colonial_history_of_the_United_States "Slavery in the colonial history of the United States")/[forced labor](https://en.wikipedia.org/wiki/History_of_forced_labor_in_the_United_States "History of forced labor in the United States")/[slave trade](https://en.wikipedia.org/wiki/Slave_trade_in_the_United_States "Slave trade in the United States")/[slave markets](https://en.wikipedia.org/wiki/Slave_markets_and_slave_jails_in_the_United_States "Slave markets and slave jails in the United States") [tariffs](https://en.wikipedia.org/wiki/History_of_tariffs_in_the_United_States "History of tariffs in the United States") [taxation](https://en.wikipedia.org/wiki/History_of_taxation_in_the_United_States "History of taxation in the United States") [technological and industrial](https://en.wikipedia.org/wiki/Technological_and_industrial_history_of_the_United_States "Technological and industrial history of the United States") [United States dollar](https://en.wikipedia.org/wiki/History_of_the_United_States_dollar "History of the United States dollar") [whaling](https://en.wikipedia.org/wiki/Whaling_in_the_United_States "Whaling in the United States") [Zimbabwe](https://en.wikipedia.org/wiki/Economic_history_of_Zimbabwe "Economic history of Zimbabwe") |
| [Business cycle](https://en.wikipedia.org/wiki/Business_cycle "Business cycle") topics | [Aggregate demand](https://en.wikipedia.org/wiki/Aggregate_demand "Aggregate demand")/[Supply](https://en.wikipedia.org/wiki/Aggregate_supply "Aggregate supply") [Effective demand](https://en.wikipedia.org/wiki/Effective_demand "Effective demand") [General glut](https://en.wikipedia.org/wiki/General_glut "General glut") [Model](https://en.wikipedia.org/wiki/AD%E2%80%93AS_model "ADâAS model") [Overproduction](https://en.wikipedia.org/wiki/Overproduction "Overproduction") [Paradox of thrift](https://en.wikipedia.org/wiki/Paradox_of_thrift "Paradox of thrift") [Price-and-wage stickiness](https://en.wikipedia.org/wiki/Nominal_rigidity "Nominal rigidity") [Underconsumption](https://en.wikipedia.org/wiki/Underconsumption "Underconsumption") [Inflation](https://en.wikipedia.org/wiki/Inflation "Inflation") and [unemployment](https://en.wikipedia.org/wiki/Unemployment "Unemployment") [Chronic](https://en.wikipedia.org/wiki/Chronic_inflation "Chronic inflation") [Classical dichotomy](https://en.wikipedia.org/wiki/Classical_dichotomy "Classical dichotomy") [Debasement](https://en.wikipedia.org/wiki/Debasement "Debasement") [Debt monetization](https://en.wikipedia.org/wiki/Debt_monetization "Debt monetization") [Demand-pull](https://en.wikipedia.org/wiki/Demand-pull_inflation "Demand-pull inflation")/[cost-push](https://en.wikipedia.org/wiki/Cost-push_inflation "Cost-push inflation")/[built-in inflation](https://en.wikipedia.org/wiki/Inertial_inflation "Inertial inflation") [Deflation](https://en.wikipedia.org/wiki/Deflation "Deflation") [Disinflation](https://en.wikipedia.org/wiki/Disinflation "Disinflation") [Full employment](https://en.wikipedia.org/wiki/Full_employment "Full employment") [Hyperinflation](https://en.wikipedia.org/wiki/Hyperinflation "Hyperinflation") [Money supply](https://en.wikipedia.org/wiki/Money_supply "Money supply")/[demand](https://en.wikipedia.org/wiki/Demand_for_money "Demand for money") [NAIRU](https://en.wikipedia.org/wiki/NAIRU "NAIRU") [Natural rate of unemployment](https://en.wikipedia.org/wiki/Natural_rate_of_unemployment "Natural rate of unemployment") [Neutrality of money](https://en.wikipedia.org/wiki/Neutrality_of_money "Neutrality of money") [Phillips curve](https://en.wikipedia.org/wiki/Phillips_curve "Phillips curve") [Price level](https://en.wikipedia.org/wiki/Price_level "Price level") [Real and nominal value](https://en.wikipedia.org/wiki/Real_and_nominal_value "Real and nominal value") [Sahm rule](https://en.wikipedia.org/wiki/Sahm_rule "Sahm rule") [Velocity of money](https://en.wikipedia.org/wiki/Velocity_of_money "Velocity of money") [Expansion](https://en.wikipedia.org/wiki/Economic_expansion "Economic expansion") [Miracle](https://en.wikipedia.org/wiki/Economic_miracle "Economic miracle") [Recovery](https://en.wikipedia.org/wiki/Economic_recovery "Economic recovery") [Stagnation](https://en.wikipedia.org/wiki/Economic_stagnation "Economic stagnation") [Interest rate](https://en.wikipedia.org/wiki/Interest_rate "Interest rate") [Nominal interest rate](https://en.wikipedia.org/wiki/Nominal_interest_rate "Nominal interest rate") [Real interest rate](https://en.wikipedia.org/wiki/Real_interest_rate "Real interest rate") [Yield curve](https://en.wikipedia.org/wiki/Yield_curve "Yield curve")/[Inverted](https://en.wikipedia.org/wiki/Inverted_yield_curve "Inverted yield curve") [Recession](https://en.wikipedia.org/wiki/Recession "Recession") [Balance sheet](https://en.wikipedia.org/wiki/Balance_sheet_recession "Balance sheet recession") [Depression](https://en.wikipedia.org/wiki/Economic_depression "Economic depression") [Global](https://en.wikipedia.org/wiki/Global_recession "Global recession") [Rolling](https://en.wikipedia.org/wiki/Rolling_recession "Rolling recession") [Shapes](https://en.wikipedia.org/wiki/Recession_shapes "Recession shapes") [Stagflation](https://en.wikipedia.org/wiki/Stagflation "Stagflation") [Shock](https://en.wikipedia.org/wiki/Shock_\(economics\) "Shock (economics)") [Demand](https://en.wikipedia.org/wiki/Demand_shock "Demand shock") [Supply](https://en.wikipedia.org/wiki/Supply_shock "Supply shock") |
| [Credit cycle](https://en.wikipedia.org/wiki/Credit_cycle "Credit cycle") topics | [Financial bubble](https://en.wikipedia.org/wiki/Economic_bubble "Economic bubble") [Commodity booms](https://en.wikipedia.org/wiki/List_of_commodity_booms "List of commodity booms")/[diamond rush](https://en.wikipedia.org/wiki/Diamond_rush "Diamond rush")/[gold rush](https://en.wikipedia.org/wiki/Gold_rush "Gold rush")/[oil boom](https://en.wikipedia.org/wiki/Oil_boom "Oil boom") [Real-estate bubble](https://en.wikipedia.org/wiki/Real-estate_bubble "Real-estate bubble")/[housing bubble](https://en.wikipedia.org/wiki/Housing_bubble "Housing bubble")/[boomtown](https://en.wikipedia.org/wiki/Boomtown "Boomtown")/[ghost town](https://en.wikipedia.org/wiki/Ghost_town "Ghost town") [Speculation](https://en.wikipedia.org/wiki/Speculation "Speculation") [Stock market bubble](https://en.wikipedia.org/wiki/Stock_market_bubble "Stock market bubble") [Financial crisis](https://en.wikipedia.org/wiki/Financial_crisis "Financial crisis") [Bank run](https://en.wikipedia.org/wiki/Bank_run "Bank run")/[bank failure](https://en.wikipedia.org/wiki/Bank_failure "Bank failure") [Commodity price shocks](https://en.wikipedia.org/wiki/Commodity_price_shocks "Commodity price shocks") [Credit crunch](https://en.wikipedia.org/wiki/Credit_crunch "Credit crunch") [Currency crisis](https://en.wikipedia.org/wiki/Currency_crisis "Currency crisis") [Debt crisis](https://en.wikipedia.org/wiki/Debt_crisis "Debt crisis") [Energy crisis](https://en.wikipedia.org/wiki/Energy_crisis "Energy crisis") [Liquidity crisis](https://en.wikipedia.org/wiki/Liquidity_crisis "Liquidity crisis")/[accounting](https://en.wikipedia.org/wiki/Accounting_liquidity "Accounting liquidity")/[capital](https://en.wikipedia.org/wiki/Liquid_capital "Liquid capital")/[funding](https://en.wikipedia.org/wiki/Funding_liquidity "Funding liquidity")/[market](https://en.wikipedia.org/wiki/Market_liquidity "Market liquidity") [Minsky moment](https://en.wikipedia.org/wiki/Minsky_moment "Minsky moment")/[leverage cycle](https://en.wikipedia.org/wiki/Leverage_cycle "Leverage cycle") [Stock market crash](https://en.wikipedia.org/wiki/Stock_market_crash "Stock market crash")/[Flash crash](https://en.wikipedia.org/wiki/Flash_crash "Flash crash") [Social contagion](https://en.wikipedia.org/wiki/Social_contagion "Social contagion") [Financial contagion](https://en.wikipedia.org/wiki/Financial_contagion "Financial contagion") [Irrational exuberance](https://en.wikipedia.org/wiki/Irrational_exuberance "Irrational exuberance") [Market trend](https://en.wikipedia.org/wiki/Market_trend "Market trend") Proposed bubbles [AI bubble](https://en.wikipedia.org/wiki/AI_bubble "AI bubble")/[AI boom](https://en.wikipedia.org/wiki/AI_boom "AI boom")/[Fourth Industrial Revolution](https://en.wikipedia.org/wiki/Fourth_Industrial_Revolution "Fourth Industrial Revolution")/[Imagination Age](https://en.wikipedia.org/wiki/Imagination_Age "Imagination Age") [Carbon bubble](https://en.wikipedia.org/wiki/Carbon_bubble "Carbon bubble")/[Age of Oil](https://en.wikipedia.org/wiki/Age_of_Oil "Age of Oil")/[Peak oil](https://en.wikipedia.org/wiki/Peak_oil "Peak oil") [Everything bubble](https://en.wikipedia.org/wiki/Everything_bubble "Everything bubble") [Green bubble](https://en.wikipedia.org/wiki/Green_bubble "Green bubble") [Social media stock bubble](https://en.wikipedia.org/wiki/Social_media_stock_bubble "Social media stock bubble") [Unicorn bubble](https://en.wikipedia.org/wiki/Unicorn_bubble "Unicorn bubble") [U.S. higher education bubble](https://en.wikipedia.org/wiki/Higher_education_bubble_in_the_United_States "Higher education bubble in the United States") |
| [v](https://en.wikipedia.org/wiki/Template:History_of_the_United_States_navbox "Template:History of the United States navbox") [t](https://en.wikipedia.org/wiki/Template_talk:History_of_the_United_States_navbox "Template talk:History of the United States navbox") [e](https://en.wikipedia.org/wiki/Special:EditPage/Template:History_of_the_United_States_navbox "Special:EditPage/Template:History of the United States navbox")[History of the United States](https://en.wikipedia.org/wiki/History_of_the_United_States "History of the United States") | |
|---|---|
| [Timeline](https://en.wikipedia.org/wiki/Timeline_of_United_States_history "Timeline of United States history") [Outline](https://en.wikipedia.org/wiki/Outline_of_United_States_history "Outline of United States history") | |
| Events | |
| | |
| Pre-Colonial | **[Geological](https://en.wikipedia.org/wiki/Geological_history_of_North_America "Geological history of North America")** **[Pre-Columbian era](https://en.wikipedia.org/wiki/Pre-Columbian_era "Pre-Columbian era")** |
| [Colonial](https://en.wikipedia.org/wiki/Colonial_history_of_the_United_States "Colonial history of the United States") | [Exploration of North America](https://en.wikipedia.org/wiki/Exploration_of_North_America "Exploration of North America") [European colonization](https://en.wikipedia.org/wiki/European_colonization_of_the_Americas "European colonization of the Americas") [Native American epidemics](https://en.wikipedia.org/wiki/Native_American_disease_and_epidemics "Native American disease and epidemics") [Settlement of Jamestown](https://en.wikipedia.org/wiki/History_of_Jamestown,_Virginia_\(1607%E2%80%931699\) "History of Jamestown, Virginia (1607â1699)") [Thirteen Colonies](https://en.wikipedia.org/wiki/Thirteen_Colonies "Thirteen Colonies") [Atlantic slave trade](https://en.wikipedia.org/wiki/Atlantic_slave_trade "Atlantic slave trade") [King William's War](https://en.wikipedia.org/wiki/King_William%27s_War "King William's War") [Queen Anne's War](https://en.wikipedia.org/wiki/Queen_Anne%27s_War "Queen Anne's War") [Dummer's War](https://en.wikipedia.org/wiki/Dummer%27s_War "Dummer's War") [First Great Awakening](https://en.wikipedia.org/wiki/First_Great_Awakening "First Great Awakening") [War of Jenkins' Ear](https://en.wikipedia.org/wiki/War_of_Jenkins%27_Ear "War of Jenkins' Ear") [King George's War](https://en.wikipedia.org/wiki/King_George%27s_War "King George's War") [Prelude to Revolution](https://en.wikipedia.org/wiki/American_Revolution#Origin "American Revolution") [American Enlightenment](https://en.wikipedia.org/wiki/American_Enlightenment "American Enlightenment") [French and Indian War](https://en.wikipedia.org/wiki/French_and_Indian_War "French and Indian War") [Proclamation of 1763](https://en.wikipedia.org/wiki/Royal_Proclamation_of_1763 "Royal Proclamation of 1763") [Sugar Act](https://en.wikipedia.org/wiki/Sugar_Act "Sugar Act") [Stamp Act Congress](https://en.wikipedia.org/wiki/Stamp_Act_Congress "Stamp Act Congress") [Sons of Liberty](https://en.wikipedia.org/wiki/Sons_of_Liberty "Sons of Liberty") [Virginia Association](https://en.wikipedia.org/wiki/Virginia_Association "Virginia Association") [Boston Massacre](https://en.wikipedia.org/wiki/Boston_Massacre "Boston Massacre") [Boston Tea Party](https://en.wikipedia.org/wiki/Boston_Tea_Party "Boston Tea Party") [Intolerable Acts](https://en.wikipedia.org/wiki/Intolerable_Acts "Intolerable Acts") [First Continental Congress](https://en.wikipedia.org/wiki/First_Continental_Congress "First Continental Congress") [Continental Association](https://en.wikipedia.org/wiki/Continental_Association "Continental Association") |
| [1776â1789](https://en.wikipedia.org/wiki/History_of_the_United_States_\(1776%E2%80%931789\) "History of the United States (1776â1789)") | [American Revolution](https://en.wikipedia.org/wiki/American_Revolution "American Revolution") [War](https://en.wikipedia.org/wiki/American_Revolutionary_War "American Revolutionary War") [Second Continental Congress](https://en.wikipedia.org/wiki/Second_Continental_Congress "Second Continental Congress") [Virginia Declaration of Rights](https://en.wikipedia.org/wiki/Virginia_Declaration_of_Rights "Virginia Declaration of Rights") [Lee Resolution](https://en.wikipedia.org/wiki/Lee_Resolution "Lee Resolution") [Declaration of Independence](https://en.wikipedia.org/wiki/United_States_Declaration_of_Independence "United States Declaration of Independence") [Treaty of Paris](https://en.wikipedia.org/wiki/Treaty_of_Paris_\(1783\) "Treaty of Paris (1783)") [Confederation period](https://en.wikipedia.org/wiki/Confederation_of_United_States_of_America "Confederation of United States of America") [Articles of Confederation](https://en.wikipedia.org/wiki/Articles_of_Confederation "Articles of Confederation") [and Perpetual Union](https://en.wikipedia.org/wiki/Perpetual_Union "Perpetual Union") [Pennsylvania Mutiny](https://en.wikipedia.org/wiki/Pennsylvania_Mutiny_of_1783 "Pennsylvania Mutiny of 1783") [Shays' Rebellion](https://en.wikipedia.org/wiki/Shays%27_Rebellion "Shays' Rebellion") [Northwest Ordinance](https://en.wikipedia.org/wiki/Northwest_Ordinance "Northwest Ordinance") [Constitutional Convention](https://en.wikipedia.org/wiki/Constitutional_Convention_\(United_States\) "Constitutional Convention (United States)") [Drafting and ratification of the Constitution](https://en.wikipedia.org/wiki/History_of_the_United_States_Constitution "History of the United States Constitution") |
| [1789â1815](https://en.wikipedia.org/wiki/History_of_the_United_States_\(1789%E2%80%931815\) "History of the United States (1789â1815)") | [Bill of Rights](https://en.wikipedia.org/wiki/United_States_Bill_of_Rights "United States Bill of Rights") [Federalist Era](https://en.wikipedia.org/wiki/Federalist_Era "Federalist Era") [Whiskey Rebellion](https://en.wikipedia.org/wiki/Whiskey_Rebellion "Whiskey Rebellion") [Quasi-War](https://en.wikipedia.org/wiki/Quasi-War "Quasi-War") [Jeffersonian era](https://en.wikipedia.org/wiki/Jeffersonian_democracy "Jeffersonian democracy") [Louisiana Purchase](https://en.wikipedia.org/wiki/Louisiana_Purchase "Louisiana Purchase") [War of 1812](https://en.wikipedia.org/wiki/War_of_1812 "War of 1812") |
| [1815â1849](https://en.wikipedia.org/wiki/History_of_the_United_States_\(1815%E2%80%931849\) "History of the United States (1815â1849)") | [Era of Good Feelings](https://en.wikipedia.org/wiki/Era_of_Good_Feelings "Era of Good Feelings") [Missouri Compromise](https://en.wikipedia.org/wiki/Missouri_Compromise "Missouri Compromise") [Monroe Doctrine](https://en.wikipedia.org/wiki/Monroe_Doctrine "Monroe Doctrine") [Jacksonian era](https://en.wikipedia.org/wiki/Jacksonian_democracy "Jacksonian democracy") [Trail of Tears](https://en.wikipedia.org/wiki/Trail_of_Tears "Trail of Tears") [Nat Turner's slave rebellion](https://en.wikipedia.org/wiki/Nat_Turner%27s_slave_rebellion "Nat Turner's slave rebellion") [Nullification crisis](https://en.wikipedia.org/wiki/Nullification_crisis "Nullification crisis") [Westward expansion](https://en.wikipedia.org/wiki/Manifest_destiny "Manifest destiny") [MexicanâAmerican War](https://en.wikipedia.org/wiki/Mexican%E2%80%93American_War "MexicanâAmerican War") [Seneca Falls Convention](https://en.wikipedia.org/wiki/Seneca_Falls_Convention "Seneca Falls Convention") [First Industrial Revolution](https://en.wikipedia.org/wiki/Industrial_Revolution#United_States "Industrial Revolution") [Second Great Awakening](https://en.wikipedia.org/wiki/Second_Great_Awakening "Second Great Awakening") |
| [1849â1865](https://en.wikipedia.org/wiki/History_of_the_United_States_\(1849%E2%80%931865\) "History of the United States (1849â1865)") | [Antebellum Era](https://en.wikipedia.org/wiki/Antebellum_South "Antebellum South") [California Gold Rush](https://en.wikipedia.org/wiki/California_Gold_Rush "California Gold Rush") [Greater Reconstruction](https://en.wikipedia.org/wiki/Greater_Reconstruction "Greater Reconstruction") [Prelude to War](https://en.wikipedia.org/wiki/Origins_of_the_American_Civil_War "Origins of the American Civil War") [Compromise of 1850](https://en.wikipedia.org/wiki/Compromise_of_1850 "Compromise of 1850") [Fugitive Slave Act](https://en.wikipedia.org/wiki/Fugitive_Slave_Act_of_1850 "Fugitive Slave Act of 1850") [KansasâNebraska Act](https://en.wikipedia.org/wiki/Kansas%E2%80%93Nebraska_Act "KansasâNebraska Act") [Bleeding Kansas](https://en.wikipedia.org/wiki/Bleeding_Kansas "Bleeding Kansas") [Dred Scott decision](https://en.wikipedia.org/wiki/Dred_Scott_v._Sandford "Dred Scott v. Sandford") [Election of Lincoln](https://en.wikipedia.org/wiki/1860_United_States_presidential_election "1860 United States presidential election") [Secession](https://en.wikipedia.org/wiki/Confederate_States_of_America#Secession "Confederate States of America") [Civil War](https://en.wikipedia.org/wiki/American_Civil_War "American Civil War") [Emancipation Proclamation](https://en.wikipedia.org/wiki/Emancipation_Proclamation "Emancipation Proclamation") [Assassination of Abraham Lincoln](https://en.wikipedia.org/wiki/Assassination_of_Abraham_Lincoln "Assassination of Abraham Lincoln") |
| [1865â1917](https://en.wikipedia.org/wiki/History_of_the_United_States_\(1865%E2%80%931917\) "History of the United States (1865â1917)") | [Reconstruction era](https://en.wikipedia.org/wiki/Reconstruction_era "Reconstruction era") [Amendments](https://en.wikipedia.org/wiki/Reconstruction_Amendments "Reconstruction Amendments") [First transcontinental railroad](https://en.wikipedia.org/wiki/First_transcontinental_railroad "First transcontinental railroad") [Ku Klux Klan](https://en.wikipedia.org/wiki/Ku_Klux_Klan "Ku Klux Klan") [Enforcement Acts](https://en.wikipedia.org/wiki/Enforcement_Acts "Enforcement Acts") [Compromise of 1877](https://en.wikipedia.org/wiki/Compromise_of_1877 "Compromise of 1877") [End](https://en.wikipedia.org/wiki/End_of_Reconstruction "End of Reconstruction") [Second Industrial Revolution](https://en.wikipedia.org/wiki/Second_Industrial_Revolution#United_States "Second Industrial Revolution") [Gilded Age](https://en.wikipedia.org/wiki/Gilded_Age "Gilded Age") [The Gospel of Wealth](https://en.wikipedia.org/wiki/The_Gospel_of_Wealth "The Gospel of Wealth") [Assassination of James A. Garfield](https://en.wikipedia.org/wiki/Assassination_of_James_A._Garfield "Assassination of James A. Garfield") [Chinese Exclusion Act](https://en.wikipedia.org/wiki/Chinese_Exclusion_Act "Chinese Exclusion Act") [Pendleton Civil Service Reform Act](https://en.wikipedia.org/wiki/Pendleton_Civil_Service_Reform_Act "Pendleton Civil Service Reform Act") [Haymarket affair](https://en.wikipedia.org/wiki/Haymarket_affair "Haymarket affair") [Sherman Antitrust Act](https://en.wikipedia.org/wiki/Sherman_Antitrust_Act "Sherman Antitrust Act") [Progressive Era](https://en.wikipedia.org/wiki/Progressive_Era "Progressive Era") [SpanishâAmerican War](https://en.wikipedia.org/wiki/Spanish%E2%80%93American_War "SpanishâAmerican War") [Imperialism](https://en.wikipedia.org/wiki/American_imperialism "American imperialism") [Assassination of William McKinley](https://en.wikipedia.org/wiki/Assassination_of_William_McKinley "Assassination of William McKinley") [Square Deal](https://en.wikipedia.org/wiki/Square_Deal "Square Deal") [Nadir of American race relations](https://en.wikipedia.org/wiki/Nadir_of_American_race_relations "Nadir of American race relations") |
| [1917â1945](https://en.wikipedia.org/wiki/History_of_the_United_States_\(1917%E2%80%931945\) "History of the United States (1917â1945)") | [World War I](https://en.wikipedia.org/wiki/United_States_in_World_War_I "United States in World War I") [Paris Peace Conference](https://en.wikipedia.org/wiki/Paris_Peace_Conference_\(1919%E2%80%931920\)#American_approach "Paris Peace Conference (1919â1920)") [First Red Scare](https://en.wikipedia.org/wiki/First_Red_Scare "First Red Scare") [Roaring Twenties](https://en.wikipedia.org/wiki/Roaring_Twenties "Roaring Twenties") [Prohibition](https://en.wikipedia.org/wiki/Prohibition_in_the_United_States "Prohibition in the United States") [Women's suffrage](https://en.wikipedia.org/wiki/Women%27s_suffrage_in_the_United_States "Women's suffrage in the United States") [Tulsa race massacre](https://en.wikipedia.org/wiki/Tulsa_race_massacre "Tulsa race massacre") [Second Klan](https://en.wikipedia.org/wiki/Ku_Klux_Klan#Second_Klan:_1915%E2%80%931944 "Ku Klux Klan") [Bath School disaster](https://en.wikipedia.org/wiki/Bath_School_disaster "Bath School disaster") [Harlem Renaissance](https://en.wikipedia.org/wiki/Harlem_Renaissance "Harlem Renaissance") [Great Depression](https://en.wikipedia.org/wiki/Great_Depression_in_the_United_States "Great Depression in the United States") [Wall Street crash of 1929](https://en.wikipedia.org/wiki/Wall_Street_crash_of_1929 "Wall Street crash of 1929") [Dust Bowl](https://en.wikipedia.org/wiki/Dust_Bowl "Dust Bowl") [New Deal](https://en.wikipedia.org/wiki/New_Deal "New Deal") [World War II](https://en.wikipedia.org/wiki/Military_history_of_the_United_States_during_World_War_II "Military history of the United States during World War II") [Pearl Harbor](https://en.wikipedia.org/wiki/Attack_on_Pearl_Harbor "Attack on Pearl Harbor") [home front](https://en.wikipedia.org/wiki/United_States_home_front_during_World_War_II "United States home front during World War II") [Manhattan Project](https://en.wikipedia.org/wiki/Manhattan_Project "Manhattan Project") [Atomic bombings of Hiroshima and Nagasaki](https://en.wikipedia.org/wiki/Atomic_bombings_of_Hiroshima_and_Nagasaki "Atomic bombings of Hiroshima and Nagasaki") |
| [1945â1964](https://en.wikipedia.org/wiki/History_of_the_United_States_\(1945%E2%80%931964\) "History of the United States (1945â1964)") | [Strike wave of 1945â1946](https://en.wikipedia.org/wiki/United_States_strike_wave_of_1945%E2%80%931946 "United States strike wave of 1945â1946") [Start of Cold War](https://en.wikipedia.org/wiki/Cold_War_\(1947%E2%80%931948\) "Cold War (1947â1948)") [Truman Doctrine](https://en.wikipedia.org/wiki/Truman_Doctrine "Truman Doctrine") [Early Cold War](https://en.wikipedia.org/wiki/Cold_War_\(1948%E2%80%931953\) "Cold War (1948â1953)") [North Atlantic Treaty](https://en.wikipedia.org/wiki/North_Atlantic_Treaty "North Atlantic Treaty") [Korean War](https://en.wikipedia.org/wiki/Korean_War "Korean War") [Ivy Mike](https://en.wikipedia.org/wiki/Ivy_Mike "Ivy Mike") [McCarthyism](https://en.wikipedia.org/wiki/McCarthyism "McCarthyism") [Post-war boom](https://en.wikipedia.org/wiki/Post%E2%80%93World_War_II_economic_expansion "PostâWorld War II economic expansion") [Project Mercury](https://en.wikipedia.org/wiki/Project_Mercury "Project Mercury") [Civil Rights Movement](https://en.wikipedia.org/wiki/Civil_rights_movement "Civil rights movement") [Earlyâmid Cold War](https://en.wikipedia.org/wiki/Cold_War_\(1953%E2%80%931962\) "Cold War (1953â1962)") [Cuban Missile Crisis](https://en.wikipedia.org/wiki/Cuban_Missile_Crisis "Cuban Missile Crisis") [Assassination of John F. Kennedy](https://en.wikipedia.org/wiki/Assassination_of_John_F._Kennedy "Assassination of John F. Kennedy") |
| [1964â1980](https://en.wikipedia.org/wiki/History_of_the_United_States_\(1964%E2%80%931980\) "History of the United States (1964â1980)") | [Great Society](https://en.wikipedia.org/wiki/Great_Society "Great Society") [Space Race](https://en.wikipedia.org/wiki/Space_Race "Space Race") [Project Gemini](https://en.wikipedia.org/wiki/Project_Gemini "Project Gemini") [Apollo program](https://en.wikipedia.org/wiki/Apollo_program "Apollo program") [Mid Cold War](https://en.wikipedia.org/wiki/Cold_War_\(1962%E2%80%931979\) "Cold War (1962â1979)") [DĂŠtente](https://en.wikipedia.org/wiki/D%C3%A9tente "DĂŠtente") [Vietnam War](https://en.wikipedia.org/wiki/Vietnam_War "Vietnam War") [Fall of Saigon](https://en.wikipedia.org/wiki/Fall_of_Saigon "Fall of Saigon") [Assassination of Malcolm X](https://en.wikipedia.org/wiki/Assassination_of_Malcolm_X "Assassination of Malcolm X") [Assassination of Martin Luther King Jr.](https://en.wikipedia.org/wiki/Assassination_of_Martin_Luther_King_Jr. "Assassination of Martin Luther King Jr.") [Assassination of Robert F. Kennedy](https://en.wikipedia.org/wiki/Assassination_of_Robert_F._Kennedy "Assassination of Robert F. Kennedy") [Counterculture](https://en.wikipedia.org/wiki/Counterculture_of_the_1960s "Counterculture of the 1960s") [Second-wave feminism](https://en.wikipedia.org/wiki/Second-wave_feminism "Second-wave feminism") [Gay liberation](https://en.wikipedia.org/wiki/Gay_liberation "Gay liberation") [Stonewall riots](https://en.wikipedia.org/wiki/Stonewall_riots "Stonewall riots") [Kent State massacre](https://en.wikipedia.org/wiki/Kent_State_massacre "Kent State massacre") [Roe v. Wade](https://en.wikipedia.org/wiki/Roe_v._Wade "Roe v. Wade") [Watergate scandal](https://en.wikipedia.org/wiki/Watergate_scandal "Watergate scandal") [Pardon of Richard Nixon](https://en.wikipedia.org/wiki/Pardon_of_Richard_Nixon "Pardon of Richard Nixon") [Assassinations of George Moscone and Harvey Milk](https://en.wikipedia.org/wiki/Assassinations_of_George_Moscone_and_Harvey_Milk "Assassinations of George Moscone and Harvey Milk") [Iran hostage crisis](https://en.wikipedia.org/wiki/Iran_hostage_crisis "Iran hostage crisis") [Moral Majority](https://en.wikipedia.org/wiki/Moral_Majority "Moral Majority") |
| [1980â1991](https://en.wikipedia.org/wiki/History_of_the_United_States_\(1980%E2%80%931991\) "History of the United States (1980â1991)") | [Reagan era](https://en.wikipedia.org/wiki/Reagan_era "Reagan era") Presidential elections [1980](https://en.wikipedia.org/wiki/1980_United_States_presidential_election "1980 United States presidential election") [1984](https://en.wikipedia.org/wiki/1984_United_States_presidential_election "1984 United States presidential election") [1988](https://en.wikipedia.org/wiki/1988_United_States_presidential_election "1988 United States presidential election") [Reaganomics](https://en.wikipedia.org/wiki/Reaganomics "Reaganomics") [IranâContra affair](https://en.wikipedia.org/wiki/Iran%E2%80%93Contra_affair "IranâContra affair") [Crack epidemic](https://en.wikipedia.org/wiki/Crack_epidemic_in_the_United_States "Crack epidemic in the United States") [Late Cold War](https://en.wikipedia.org/wiki/Cold_War_\(1979%E2%80%931985\) "Cold War (1979â1985)") [Invasion of Grenada](https://en.wikipedia.org/wiki/United_States_invasion_of_Grenada "United States invasion of Grenada") [Reagan Doctrine](https://en.wikipedia.org/wiki/Reagan_Doctrine "Reagan Doctrine") [End of the Cold War](https://en.wikipedia.org/wiki/Cold_War_\(1985%E2%80%931991\) "Cold War (1985â1991)") [Space Shuttle program](https://en.wikipedia.org/wiki/Space_Shuttle_program "Space Shuttle program") [War on drugs](https://en.wikipedia.org/wiki/War_on_drugs "War on drugs") [Invasion of Panama](https://en.wikipedia.org/wiki/United_States_invasion_of_Panama "United States invasion of Panama") |
| [1991â2016](https://en.wikipedia.org/wiki/History_of_the_United_States_\(1991%E2%80%932016\) "History of the United States (1991â2016)") | [Gulf War](https://en.wikipedia.org/wiki/Gulf_War "Gulf War") [NAFTA](https://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement "North American Free Trade Agreement") [Los Angeles riots](https://en.wikipedia.org/wiki/1992_Los_Angeles_riots "1992 Los Angeles riots") [WTC bombing](https://en.wikipedia.org/wiki/1993_World_Trade_Center_bombing "1993 World Trade Center bombing") [Waco siege](https://en.wikipedia.org/wiki/Waco_siege "Waco siege") [Republican Revolution](https://en.wikipedia.org/wiki/Republican_Revolution "Republican Revolution") [Oklahoma City bombing](https://en.wikipedia.org/wiki/Oklahoma_City_bombing "Oklahoma City bombing") [Columbine](https://en.wikipedia.org/wiki/Columbine_High_School_massacre "Columbine High School massacre") *[Bush v. Gore](https://en.wikipedia.org/wiki/Bush_v._Gore "Bush v. Gore")* [September 11 attacks](https://en.wikipedia.org/wiki/September_11_attacks "September 11 attacks") [War on terror](https://en.wikipedia.org/wiki/War_on_terror "War on terror") [War in Afghanistan](https://en.wikipedia.org/wiki/War_in_Afghanistan_\(2001%E2%80%932021\) "War in Afghanistan (2001â2021)") [Iraq War](https://en.wikipedia.org/wiki/Iraq_War "Iraq War") [2005 Atlantic Hurricane Season](https://en.wikipedia.org/wiki/2005_Atlantic_Hurricane_Season "2005 Atlantic Hurricane Season") [Hurricane Katrina](https://en.wikipedia.org/wiki/Hurricane_Katrina "Hurricane Katrina") [Virginia Tech shooting](https://en.wikipedia.org/wiki/Virginia_Tech_shooting "Virginia Tech shooting") [Great Recession](https://en.wikipedia.org/wiki/Great_Recession_in_the_United_States "Great Recession in the United States") [Killing of Osama bin Laden](https://en.wikipedia.org/wiki/Killing_of_Osama_bin_Laden "Killing of Osama bin Laden") [2012 Benghazi attack](https://en.wikipedia.org/wiki/2012_Benghazi_attack "2012 Benghazi attack") [Rise in mass shootings](https://en.wikipedia.org/wiki/List_of_mass_shootings_in_the_United_States "List of mass shootings in the United States") [Tucson](https://en.wikipedia.org/wiki/2011_Tucson_shooting "2011 Tucson shooting") [Aurora](https://en.wikipedia.org/wiki/2012_Aurora_theater_shooting "2012 Aurora theater shooting") [Sandy Hook](https://en.wikipedia.org/wiki/Sandy_Hook_Elementary_School_shooting "Sandy Hook Elementary School shooting") [Orlando](https://en.wikipedia.org/wiki/Pulse_nightclub_shooting "Pulse nightclub shooting") [Hurricane Sandy](https://en.wikipedia.org/wiki/Hurricane_Sandy "Hurricane Sandy") [Black Lives Matter](https://en.wikipedia.org/wiki/Black_Lives_Matter "Black Lives Matter") *[Obergefell v. Hodges](https://en.wikipedia.org/wiki/Obergefell_v._Hodges "Obergefell v. Hodges")* |
| [2016âpresent](https://en.wikipedia.org/wiki/History_of_the_United_States_\(2016%E2%80%93present\) "History of the United States (2016âpresent)") | [2016 presidential election](https://en.wikipedia.org/wiki/2016_United_States_presidential_election "2016 United States presidential election") [Trumpism](https://en.wikipedia.org/wiki/Trumpism "Trumpism") [Unite the Right rally](https://en.wikipedia.org/wiki/Unite_the_Right_rally "Unite the Right rally") [Continued rise in mass shootings](https://en.wikipedia.org/wiki/List_of_mass_shootings_in_the_United_States "List of mass shootings in the United States") [Las Vegas](https://en.wikipedia.org/wiki/2017_Las_Vegas_shooting "2017 Las Vegas shooting") [Parkland](https://en.wikipedia.org/wiki/Parkland_high_school_shooting "Parkland high school shooting") [El Paso](https://en.wikipedia.org/wiki/2019_El_Paso_Walmart_shooting "2019 El Paso Walmart shooting") [Uvalde](https://en.wikipedia.org/wiki/Uvalde_school_shooting "Uvalde school shooting") [2017 Atlantic Hurricane Season](https://en.wikipedia.org/wiki/2017_Atlantic_Hurricane_Season "2017 Atlantic Hurricane Season") [Harvey](https://en.wikipedia.org/wiki/Hurricane_Harvey "Hurricane Harvey") [Irma](https://en.wikipedia.org/wiki/Hurricane_Irma "Hurricane Irma") [Maria](https://en.wikipedia.org/wiki/Hurricane_Maria "Hurricane Maria") [COVID-19 pandemic](https://en.wikipedia.org/wiki/COVID-19_pandemic_in_the_United_States "COVID-19 pandemic in the United States") [recession](https://en.wikipedia.org/wiki/COVID-19_recession "COVID-19 recession") [George Floyd protests](https://en.wikipedia.org/wiki/George_Floyd_protests "George Floyd protests") [Murder](https://en.wikipedia.org/wiki/Murder_of_George_Floyd "Murder of George Floyd") [Attempts to overturn the 2020 United States presidential election](https://en.wikipedia.org/wiki/Attempts_to_overturn_the_2020_United_States_presidential_election "Attempts to overturn the 2020 United States presidential election") [January 6 attack](https://en.wikipedia.org/wiki/January_6_United_States_Capitol_attack "January 6 United States Capitol attack") [Afghanistan withdrawal](https://en.wikipedia.org/wiki/2020%E2%80%932021_U.S._troop_withdrawal_from_Afghanistan "2020â2021 U.S. troop withdrawal from Afghanistan") *[Dobbs v. Jackson Women's Health Organization](https://en.wikipedia.org/wiki/Dobbs_v._Jackson_Women%27s_Health_Organization "Dobbs v. Jackson Women's Health Organization")* [Support of Ukraine](https://en.wikipedia.org/wiki/Foreign_involvement_in_the_Russian_invasion_of_Ukraine "Foreign involvement in the Russian invasion of Ukraine") [2023 labor strikes](https://en.wikipedia.org/wiki/Timeline_of_strikes_in_2023 "Timeline of strikes in 2023") [2023 banking crisis](https://en.wikipedia.org/wiki/2023_United_States_banking_crisis "2023 United States banking crisis") [Indictments of Donald Trump](https://en.wikipedia.org/wiki/Donald_Trump#Investigations,_criminal_charges,_civil_lawsuits "Donald Trump") [Attempted assassination of Donald Trump in Pennsylvania](https://en.wikipedia.org/wiki/Attempted_assassination_of_Donald_Trump_in_Pennsylvania "Attempted assassination of Donald Trump in Pennsylvania") [2025 shootings of Minnesota legislators](https://en.wikipedia.org/wiki/2025_shootings_of_Minnesota_legislators "2025 shootings of Minnesota legislators") [Assassination of Charlie Kirk](https://en.wikipedia.org/wiki/Assassination_of_Charlie_Kirk "Assassination of Charlie Kirk") |
| Topics | |
| **[American Century](https://en.wikipedia.org/wiki/American_Century "American Century")** **[Antisemitism](https://en.wikipedia.org/wiki/History_of_antisemitism_in_the_United_States "History of antisemitism in the United States")** **[Cultural](https://en.wikipedia.org/wiki/Cultural_history_of_the_United_States "Cultural history of the United States")** [Cinema](https://en.wikipedia.org/wiki/History_of_cinema_in_the_United_States "History of cinema in the United States") [Music](https://en.wikipedia.org/wiki/Music_history_of_the_United_States "Music history of the United States") [Newspapers](https://en.wikipedia.org/wiki/History_of_American_newspapers "History of American newspapers") [Sports](https://en.wikipedia.org/wiki/History_of_sports_in_the_United_States "History of sports in the United States") **[Demography](https://en.wikipedia.org/wiki/Demographic_history_of_the_United_States "Demographic history of the United States")** [Immigration](https://en.wikipedia.org/wiki/History_of_immigration_to_the_United_States "History of immigration to the United States") **[Economy](https://en.wikipedia.org/wiki/Economic_history_of_the_United_States "Economic history of the United States")** [Banking](https://en.wikipedia.org/wiki/History_of_banking_in_the_United_States "History of banking in the United States") **[Education](https://en.wikipedia.org/wiki/History_of_education_in_the_United_States "History of education in the United States")** [Higher education](https://en.wikipedia.org/wiki/History_of_higher_education_in_the_United_States "History of higher education in the United States") **[Flag](https://en.wikipedia.org/wiki/List_of_flags_of_the_United_States "List of flags of the United States")** **[Government](https://en.wikipedia.org/wiki/History_of_the_United_States_government "History of the United States government")** [Abortion](https://en.wikipedia.org/wiki/History_of_abortion_in_the_United_States "History of abortion in the United States") [Capital punishment](https://en.wikipedia.org/wiki/History_of_capital_punishment_in_the_United_States "History of capital punishment in the United States") [Civil Rights](https://en.wikipedia.org/wiki/History_of_civil_rights_in_the_United_States "History of civil rights in the United States") [Corruption](https://en.wikipedia.org/wiki/History_of_corruption_in_the_United_States "History of corruption in the United States") [The Constitution](https://en.wikipedia.org/wiki/History_of_the_United_States_Constitution "History of the United States Constitution") [Debt ceiling](https://en.wikipedia.org/wiki/History_of_the_United_States_debt_ceiling "History of the United States debt ceiling") [Direct democracy](https://en.wikipedia.org/wiki/History_of_direct_democracy_in_the_United_States "History of direct democracy in the United States") [Foreign policy](https://en.wikipedia.org/wiki/History_of_United_States_foreign_policy "History of United States foreign policy") [Law enforcement](https://en.wikipedia.org/wiki/History_of_law_enforcement_in_the_United_States "History of law enforcement in the United States") [Postal service](https://en.wikipedia.org/wiki/Postage_stamps_and_postal_history_of_the_United_States "Postage stamps and postal history of the United States") [Taxation](https://en.wikipedia.org/wiki/History_of_taxation_in_the_United_States "History of taxation in the United States") [Voting rights](https://en.wikipedia.org/wiki/Voting_rights_in_the_United_States "Voting rights in the United States") **[Journalism](https://en.wikipedia.org/wiki/History_of_American_journalism "History of American journalism")** **[Merchant Marine](https://en.wikipedia.org/wiki/History_of_the_United_States_Merchant_Marine "History of the United States Merchant Marine")** **[Military](https://en.wikipedia.org/wiki/Military_history_of_the_United_States "Military history of the United States")** [Army](https://en.wikipedia.org/wiki/History_of_the_United_States_Army "History of the United States Army") [Marine Corps](https://en.wikipedia.org/wiki/History_of_the_United_States_Marine_Corps "History of the United States Marine Corps") [Navy](https://en.wikipedia.org/wiki/History_of_the_United_States_Navy "History of the United States Navy") [Air Force](https://en.wikipedia.org/wiki/History_of_the_United_States_Air_Force "History of the United States Air Force") [Space Force](https://en.wikipedia.org/wiki/History_of_the_United_States_Space_Force "History of the United States Space Force") [Coast Guard](https://en.wikipedia.org/wiki/History_of_the_United_States_Coast_Guard "History of the United States Coast Guard") **[Party Systems](https://en.wikipedia.org/wiki/Political_eras_of_the_United_States "Political eras of the United States")** [First](https://en.wikipedia.org/wiki/First_Party_System "First Party System") [Second](https://en.wikipedia.org/wiki/Second_Party_System "Second Party System") [Third](https://en.wikipedia.org/wiki/Third_Party_System "Third Party System") [Fourth](https://en.wikipedia.org/wiki/Fourth_Party_System "Fourth Party System") [Fifth](https://en.wikipedia.org/wiki/Fifth_Party_System "Fifth Party System") [Sixth](https://en.wikipedia.org/wiki/Sixth_Party_System "Sixth Party System") [Seventh](https://en.wikipedia.org/wiki/Seventh_Party_System "Seventh Party System") **[Religion](https://en.wikipedia.org/wiki/History_of_religion_in_the_United_States "History of religion in the United States")** **[Genocide](https://en.wikipedia.org/wiki/Native_American_genocide_in_the_United_States "Native American genocide in the United States")** **[Slavery](https://en.wikipedia.org/wiki/Slavery_in_the_United_States "Slavery in the United States")** [Sexual slavery](https://en.wikipedia.org/wiki/History_of_sexual_slavery_in_the_United_States "History of sexual slavery in the United States") **[Technology and industry](https://en.wikipedia.org/wiki/Technological_and_industrial_history_of_the_United_States "Technological and industrial history of the United States")** [Agriculture](https://en.wikipedia.org/wiki/History_of_agriculture_in_the_United_States "History of agriculture in the United States") [Labor](https://en.wikipedia.org/wiki/Labor_history_of_the_United_States "Labor history of the United States") [Lumber](https://en.wikipedia.org/wiki/History_of_the_lumber_industry_in_the_United_States "History of the lumber industry in the United States") [Medicine](https://en.wikipedia.org/wiki/History_of_medicine_in_the_United_States "History of medicine in the United States") [Railway](https://en.wikipedia.org/wiki/History_of_rail_transportation_in_the_United_States "History of rail transportation in the United States") | |
| Groups | |
| **[African American](https://en.wikipedia.org/wiki/African-American_history "African-American history")** **[Asian American](https://en.wikipedia.org/wiki/History_of_Asian_Americans "History of Asian Americans")** [Chinese American](https://en.wikipedia.org/wiki/History_of_Chinese_Americans "History of Chinese Americans") [Filipino American](https://en.wikipedia.org/wiki/History_of_Filipino_Americans "History of Filipino Americans") [Indian American](https://en.wikipedia.org/wiki/Indian-American_history "Indian-American history") [Japanese American](https://en.wikipedia.org/wiki/History_of_Japanese_Americans "History of Japanese Americans") [Korean American](https://en.wikipedia.org/wiki/History_of_Korean_Americans "History of Korean Americans") [Thai American](https://en.wikipedia.org/wiki/History_of_Thai_Americans "History of Thai Americans") [Vietnamese American](https://en.wikipedia.org/wiki/History_of_Vietnamese_Americans "History of Vietnamese Americans") **[European American](https://en.wikipedia.org/wiki/European_American#History "European American")** [Albanian American](https://en.wikipedia.org/wiki/History_of_Albanian_Americans "History of Albanian Americans") [English American](https://en.wikipedia.org/wiki/History_of_English_Americans "History of English Americans") [Estonian American](https://en.wikipedia.org/wiki/History_of_Estonian_Americans "History of Estonian Americans") [Finnish American](https://en.wikipedia.org/wiki/History_of_Finnish_Americans "History of Finnish Americans") [Irish American](https://en.wikipedia.org/wiki/Irish_Americans#History "Irish Americans") [Italian American](https://en.wikipedia.org/wiki/Italian_American#History "Italian American") [Lithuanian American](https://en.wikipedia.org/wiki/History_of_Lithuanian_Americans "History of Lithuanian Americans") [Polish American](https://en.wikipedia.org/wiki/History_of_Poles_in_the_United_States "History of Poles in the United States") [Serbian American](https://en.wikipedia.org/wiki/History_of_Serbian_Americans "History of Serbian Americans") **[Hispanic and Latino American](https://en.wikipedia.org/wiki/History_of_Hispanic_and_Latino_Americans "History of Hispanic and Latino Americans")** [Mexican American](https://en.wikipedia.org/wiki/History_of_Mexican_Americans "History of Mexican Americans") **[Jewish American](https://en.wikipedia.org/wiki/History_of_the_Jews_in_the_United_States "History of the Jews in the United States")** **[Middle Eastern American](https://en.wikipedia.org/wiki/History_of_Middle_Eastern_Americans "History of Middle Eastern Americans")** [Egyptian American](https://en.wikipedia.org/wiki/History_of_Egyptian_Americans "History of Egyptian Americans") [Iranian American](https://en.wikipedia.org/wiki/History_of_Iranian_Americans "History of Iranian Americans") [Iraqi American](https://en.wikipedia.org/wiki/History_of_Iraqi_Americans "History of Iraqi Americans") [Lebanese American](https://en.wikipedia.org/wiki/History_of_Lebanese_Americans "History of Lebanese Americans") [Palestinian American](https://en.wikipedia.org/wiki/History_of_Palestinian_Americans "History of Palestinian Americans") [Saudi American](https://en.wikipedia.org/wiki/History_of_Saudi_Americans "History of Saudi Americans") **[Native Americans](https://en.wikipedia.org/wiki/History_of_Native_Americans_in_the_United_States "History of Native Americans in the United States")** [Cherokee](https://en.wikipedia.org/wiki/Cherokee_history "Cherokee history") [Comanche](https://en.wikipedia.org/wiki/Comanche_history "Comanche history") **[Women](https://en.wikipedia.org/wiki/History_of_women_in_the_United_States "History of women in the United States")** **[LGBTQ](https://en.wikipedia.org/wiki/LGBTQ_history_in_the_United_States "LGBTQ history in the United States")** [Gay men](https://en.wikipedia.org/wiki/History_of_gay_men_in_the_United_States "History of gay men in the United States") [Lesbians](https://en.wikipedia.org/wiki/History_of_lesbianism_in_the_United_States "History of lesbianism in the United States") [Transgender people](https://en.wikipedia.org/wiki/Transgender_history_in_the_United_States "Transgender history in the United States") | |
| Places | |
| | |
| [Territorial evolution](https://en.wikipedia.org/wiki/Territorial_evolution_of_the_United_States "Territorial evolution of the United States") | [Admission to the Union](https://en.wikipedia.org/wiki/List_of_U.S._states_by_date_of_admission_to_the_Union "List of U.S. states by date of admission to the Union") [Historical regions](https://en.wikipedia.org/wiki/Historical_regions_of_the_United_States "Historical regions of the United States") [American frontier](https://en.wikipedia.org/wiki/American_frontier "American frontier") [Manifest destiny](https://en.wikipedia.org/wiki/Manifest_destiny "Manifest destiny") [Indian removal](https://en.wikipedia.org/wiki/Indian_removal "Indian removal") |
| Regions | [New England](https://en.wikipedia.org/wiki/History_of_New_England "History of New England") [The South](https://en.wikipedia.org/wiki/History_of_the_Southern_United_States "History of the Southern United States") [The West Coast](https://en.wikipedia.org/wiki/History_of_the_west_coast_of_North_America "History of the west coast of North America") |
| States | [Alabama](https://en.wikipedia.org/wiki/History_of_Alabama "History of Alabama") [Alaska](https://en.wikipedia.org/wiki/History_of_Alaska "History of Alaska") [Arizona](https://en.wikipedia.org/wiki/History_of_Arizona "History of Arizona") [Arkansas](https://en.wikipedia.org/wiki/History_of_Arkansas "History of Arkansas") [California](https://en.wikipedia.org/wiki/History_of_California "History of California") [Colorado](https://en.wikipedia.org/wiki/History_of_Colorado "History of Colorado") [Connecticut](https://en.wikipedia.org/wiki/History_of_Connecticut "History of Connecticut") [Delaware](https://en.wikipedia.org/wiki/History_of_Delaware "History of Delaware") [Florida](https://en.wikipedia.org/wiki/History_of_Florida "History of Florida") [Georgia](https://en.wikipedia.org/wiki/History_of_Georgia_\(U.S._state\) "History of Georgia (U.S. state)") [Hawaii](https://en.wikipedia.org/wiki/History_of_Hawaii "History of Hawaii") [Idaho](https://en.wikipedia.org/wiki/History_of_Idaho "History of Idaho") [Illinois](https://en.wikipedia.org/wiki/History_of_Illinois "History of Illinois") [Indiana](https://en.wikipedia.org/wiki/History_of_Indiana "History of Indiana") [Iowa](https://en.wikipedia.org/wiki/History_of_Iowa "History of Iowa") [Kansas](https://en.wikipedia.org/wiki/History_of_Kansas "History of Kansas") [Kentucky](https://en.wikipedia.org/wiki/History_of_Kentucky "History of Kentucky") [Louisiana](https://en.wikipedia.org/wiki/History_of_Louisiana "History of Louisiana") [Maine](https://en.wikipedia.org/wiki/History_of_Maine "History of Maine") [Maryland](https://en.wikipedia.org/wiki/History_of_Maryland "History of Maryland") [Massachusetts](https://en.wikipedia.org/wiki/History_of_Massachusetts "History of Massachusetts") [Michigan](https://en.wikipedia.org/wiki/History_of_Michigan "History of Michigan") [Minnesota](https://en.wikipedia.org/wiki/History_of_Minnesota "History of Minnesota") [Mississippi](https://en.wikipedia.org/wiki/History_of_Mississippi "History of Mississippi") [Missouri](https://en.wikipedia.org/wiki/History_of_Missouri "History of Missouri") [Montana](https://en.wikipedia.org/wiki/History_of_Montana "History of Montana") [Nebraska](https://en.wikipedia.org/wiki/History_of_Nebraska "History of Nebraska") [Nevada](https://en.wikipedia.org/wiki/History_of_Nevada "History of Nevada") [New Hampshire](https://en.wikipedia.org/wiki/History_of_New_Hampshire "History of New Hampshire") [New Jersey](https://en.wikipedia.org/wiki/History_of_New_Jersey "History of New Jersey") [New Mexico](https://en.wikipedia.org/wiki/History_of_New_Mexico "History of New Mexico") [New York](https://en.wikipedia.org/wiki/History_of_New_York_\(state\) "History of New York (state)") [North Carolina](https://en.wikipedia.org/wiki/History_of_North_Carolina "History of North Carolina") [North Dakota](https://en.wikipedia.org/wiki/History_of_North_Dakota "History of North Dakota") [Ohio](https://en.wikipedia.org/wiki/History_of_Ohio "History of Ohio") [Oklahoma](https://en.wikipedia.org/wiki/History_of_Oklahoma "History of Oklahoma") [Oregon](https://en.wikipedia.org/wiki/History_of_Oregon "History of Oregon") [Pennsylvania](https://en.wikipedia.org/wiki/History_of_Pennsylvania "History of Pennsylvania") [Rhode Island](https://en.wikipedia.org/wiki/History_of_Rhode_Island "History of Rhode Island") [South Carolina](https://en.wikipedia.org/wiki/History_of_South_Carolina "History of South Carolina") [South Dakota](https://en.wikipedia.org/wiki/History_of_South_Dakota "History of South Dakota") [Tennessee](https://en.wikipedia.org/wiki/History_of_Tennessee "History of Tennessee") [Texas](https://en.wikipedia.org/wiki/History_of_Texas "History of Texas") [Utah](https://en.wikipedia.org/wiki/History_of_Utah "History of Utah") [Vermont](https://en.wikipedia.org/wiki/History_of_Vermont "History of Vermont") [Virginia](https://en.wikipedia.org/wiki/History_of_Virginia "History of Virginia") [Washington](https://en.wikipedia.org/wiki/History_of_Washington_\(state\) "History of Washington (state)") [West Virginia](https://en.wikipedia.org/wiki/History_of_West_Virginia "History of West Virginia") [Wisconsin](https://en.wikipedia.org/wiki/History_of_Wisconsin "History of Wisconsin") [Wyoming](https://en.wikipedia.org/wiki/History_of_Wyoming "History of Wyoming") |
| Federal District | [Washington, D.C.](https://en.wikipedia.org/wiki/History_of_Washington,_D.C. "History of Washington, D.C.") |
| Insular areas | [American Samoa](https://en.wikipedia.org/wiki/History_of_American_Samoa "History of American Samoa") [Guam](https://en.wikipedia.org/wiki/History_of_Guam "History of Guam") [Northern Mariana Islands](https://en.wikipedia.org/wiki/History_of_the_Northern_Mariana_Islands "History of the Northern Mariana Islands") [Puerto Rico](https://en.wikipedia.org/wiki/History_of_Puerto_Rico "History of Puerto Rico") [U.S. Virgin Islands](https://en.wikipedia.org/wiki/History_of_the_United_States_Virgin_Islands "History of the United States Virgin Islands") |
| Outlying islands | [Baker Island](https://en.wikipedia.org/wiki/History_of_Baker_Island "History of Baker Island") [Howland Island](https://en.wikipedia.org/wiki/History_of_Howland_Island "History of Howland Island") [Jarvis Island](https://en.wikipedia.org/wiki/History_of_Jarvis_Island "History of Jarvis Island") [Johnston Atoll](https://en.wikipedia.org/wiki/History_of_Johnston_Atoll "History of Johnston Atoll") [Kingman Reef](https://en.wikipedia.org/wiki/History_of_Kingman_Reef "History of Kingman Reef") [Midway Atoll](https://en.wikipedia.org/wiki/History_of_Midway_Atoll "History of Midway Atoll") [Navassa Island](https://en.wikipedia.org/wiki/History_of_Navassa_Island "History of Navassa Island") [Palmyra Atoll](https://en.wikipedia.org/wiki/History_of_Palmyra_Atoll "History of Palmyra Atoll") [Wake Island](https://en.wikipedia.org/wiki/History_of_Wake_Island "History of Wake Island") |
| Cities | [Urban history](https://en.wikipedia.org/wiki/American_urban_history "American urban history")  [Cities](https://en.wikipedia.org/wiki/Category:Histories_of_cities_in_the_United_States "Category:Histories of cities in the United States") |
| [List of years](https://en.wikipedia.org/wiki/List_of_years_in_the_United_States "List of years in the United States") [Historiography](https://en.wikipedia.org/wiki/Historiography_of_the_United_States "Historiography of the United States")  [Category](https://en.wikipedia.org/wiki/Category:History_of_the_United_States "Category:History of the United States") [](https://en.wikipedia.org/wiki/File:Symbol_portal_class.svg "Portal") [Portal](https://en.wikipedia.org/wiki/Portal:United_States "Portal:United States") | |
[Portals](https://en.wikipedia.org/wiki/Wikipedia:Contents/Portals "Wikipedia:Contents/Portals"):
- [](https://en.wikipedia.org/wiki/File:Emblem-money.svg) [Business and economics](https://en.wikipedia.org/wiki/Portal:Business_and_economics "Portal:Business and economics")
-  [Money](https://en.wikipedia.org/wiki/Portal:Money "Portal:Money")
-  [Banks](https://en.wikipedia.org/wiki/Portal:Banks "Portal:Banks")
| [Authority control databases](https://en.wikipedia.org/wiki/Help:Authority_control "Help:Authority control") [](https://www.wikidata.org/wiki/Q896666#identifiers "Edit this at Wikidata") | |
|---|---|
| International | [FAST](https://id.worldcat.org/fast/1755654) |
| National | [United States](https://id.loc.gov/authorities/sh2009003683) [France](https://catalogue.bnf.fr/ark:/12148/cb15957573q) [BnF data](https://data.bnf.fr/ark:/12148/cb15957573q) [Israel](https://www.nli.org.il/en/authorities/987007547395705171) |
| Other | [NARA](https://catalog.archives.gov/id/24740253) [Yale LUX](https://lux.collections.yale.edu/view/concept/8e508847-56a6-4b26-a2bc-3384707ce57d) |
1. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-449)** 18 high-ranking former ministers, Central Bank governors and/or officials in national or international institutions:
[Sergey\_Aleksashenko](https://en.wikipedia.org/wiki/Sergey_Aleksashenko "Sergey Aleksashenko") Former Deputy Governor, Central Bank of Russia. [Hamad\_Al\_Sayari](https://en.wikipedia.org/w/index.php?title=Hamad_Al_Sayari&action=edit&redlink=1 "Hamad Al Sayari (page does not exist)") Former Governor, Saudi Arabian Monetary Agency. [Jack\_T.\_Boorman](https://en.wikipedia.org/w/index.php?title=Jack_T._Boorman&action=edit&redlink=1 "Jack T. Boorman (page does not exist)") Former Department Director and Special Advisor to the Managing Director, IMF. [Michel\_Camdessus](https://en.wikipedia.org/wiki/Michel_Camdessus "Michel Camdessus") Former Managing Director, IMF. [Andrew Crockett](https://en.wikipedia.org/wiki/Andrew_Crockett_\(banker\) "Andrew Crockett (banker)") Former General Manager, BIS. [Guillermo\_De\_la\_Dehesa](https://en.wikipedia.org/w/index.php?title=Guillermo_De_la_Dehesa&action=edit&redlink=1 "Guillermo De la Dehesa (page does not exist)") Former State Secretary of Economy and Finance, Spain. [Arminio\_Fraga](https://en.wikipedia.org/wiki/Arminio_Fraga "Arminio Fraga") Former Governor, Central Bank of Brazil. [Toyoo\_Gyohten](https://en.wikipedia.org/w/index.php?title=Toyoo_Gyohten&action=edit&redlink=1 "Toyoo Gyohten (page does not exist)") Former Vice Minister of Finance, Japan. [Xiaolian\_Hu](https://en.wikipedia.org/w/index.php?title=Xiaolian_Hu&action=edit&redlink=1 "Xiaolian Hu (page does not exist)") Vice President of China Society of Finance and Banking. [AndrĂŠ\_Icard](https://en.wikipedia.org/w/index.php?title=Andr%C3%A9_Icard&action=edit&redlink=1 "AndrĂŠ Icard (page does not exist)") Former Deputy General Manager, BIS. [Horst\_Koehler](https://en.wikipedia.org/wiki/Horst_Koehler "Horst Koehler") Former Managing Director, IMF. [Alexandre\_Lamfalussy](https://en.wikipedia.org/wiki/Alexandre_Lamfalussy "Alexandre Lamfalussy") Former General Manager, BIS. [Guillermo Ortiz](https://en.wikipedia.org/wiki/Guillermo_Ortiz_Mart%C3%ADnez "Guillermo Ortiz MartĂnez") Former Governor, Banco de MĂŠxico. [Tommaso\_Padoa-Schioppa](https://en.wikipedia.org/wiki/Tommaso_Padoa-Schioppa "Tommaso Padoa-Schioppa") (â ) Former Minister of Finance, Italy. [Maria Ramos](https://en.wikipedia.org/wiki/Maria_Ramos_\(businesswoman\) "Maria Ramos (businesswoman)") Former Director General, National Treasury, South Africa. [Y. Venugopal Reddy](https://en.wikipedia.org/wiki/Y._V._Reddy "Y. V. Reddy") Former Governor, Reserve Bank of India. [Edwin\_M.\_Truman](https://en.wikipedia.org/wiki/Edwin_M._Truman "Edwin M. Truman") Former Assistant Secretary for International Affairs of the U.S. Treasury. [Paul\_A.\_Volcker](https://en.wikipedia.org/wiki/Paul_A._Volcker "Paul A. Volcker") Former Chairman, Federal Reserve Board. Joined by Isabelle Mateos y Lago Advisor, IMF. Pietro Catte Director, International Research Department, Banca dâItalia. Corrinne Ho Senior Economist, BIS. Irena Asmundson Economist, IMF.
Retrieved from "<https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&oldid=1346254796>"
[Categories](https://en.wikipedia.org/wiki/Help:Category "Help:Category"):
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- [2008 in economic history](https://en.wikipedia.org/wiki/Category:2008_in_economic_history "Category:2008 in economic history")
- [Economic bubbles](https://en.wikipedia.org/wiki/Category:Economic_bubbles "Category:Economic bubbles")
- [Economy of the United States](https://en.wikipedia.org/wiki/Category:Economy_of_the_United_States "Category:Economy of the United States")
- [Economy of the United Kingdom](https://en.wikipedia.org/wiki/Category:Economy_of_the_United_Kingdom "Category:Economy of the United Kingdom")
- [Financial crises in the United States](https://en.wikipedia.org/wiki/Category:Financial_crises_in_the_United_States "Category:Financial crises in the United States")
- [Great Recession in the United Kingdom](https://en.wikipedia.org/wiki/Category:Great_Recession_in_the_United_Kingdom "Category:Great Recession in the United Kingdom")
- [Great Recession in the United States](https://en.wikipedia.org/wiki/Category:Great_Recession_in_the_United_States "Category:Great Recession in the United States")
- [Presidency of Barack Obama](https://en.wikipedia.org/wiki/Category:Presidency_of_Barack_Obama "Category:Presidency of Barack Obama")
- [Presidency of George W. Bush](https://en.wikipedia.org/wiki/Category:Presidency_of_George_W._Bush "Category:Presidency of George W. Bush")
- [Premiership of Gordon Brown](https://en.wikipedia.org/wiki/Category:Premiership_of_Gordon_Brown "Category:Premiership of Gordon Brown")
- [September 2008 in North America](https://en.wikipedia.org/wiki/Category:September_2008_in_North_America "Category:September 2008 in North America")
- [Stock market crashes in the United States](https://en.wikipedia.org/wiki/Category:Stock_market_crashes_in_the_United_States "Category:Stock market crashes in the United States")
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- This page was last edited on 30 March 2026, at 20:50 (UTC).
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2008 financial crisis
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| Readable Markdown | [](https://en.wikipedia.org/wiki/File:Lehman_Brothers_Times_Square_by_David_Shankbone.jpg)
The [bankruptcy of Lehman Brothers](https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers "Bankruptcy of Lehman Brothers") ([headquarters](https://en.wikipedia.org/wiki/745_Seventh_Avenue "745 Seventh Avenue") pictured), the fourth-largest U.S. investment bank (behind [Goldman Sachs](https://en.wikipedia.org/wiki/Goldman_Sachs "Goldman Sachs"), [Morgan Stanley](https://en.wikipedia.org/wiki/Morgan_Stanley "Morgan Stanley"), and [Merrill Lynch](https://en.wikipedia.org/wiki/Merrill_Lynch "Merrill Lynch")), on September 15, 2008, is often considered the climax of the 2008 financial crisis.
[](https://en.wikipedia.org/wiki/File:TED_Spread.png)
The [TED spread](https://en.wikipedia.org/wiki/TED_spread "TED spread"), an indicator of perceived [credit risk](https://en.wikipedia.org/wiki/Credit_risk "Credit risk") in the financial system, increased significantly during the crisis. It spiked sharply in August 2007, remained volatile for a year, and spiked even higher in September 2008 to reach a record 4.65% on October 10, 2008.
A major worldwide [financial crisis](https://en.wikipedia.org/wiki/Financial_crisis "Financial crisis") centered in the United States took place in 2008. The causes included excessive [speculation](https://en.wikipedia.org/wiki/Speculation "Speculation") on property values by both homeowners and [financial institutions](https://en.wikipedia.org/wiki/Financial_institution "Financial institution"), leading to the [2000s United States housing bubble](https://en.wikipedia.org/wiki/2000s_United_States_housing_bubble "2000s United States housing bubble"). This was exacerbated by [predatory lending](https://en.wikipedia.org/wiki/Predatory_lending "Predatory lending") for [subprime mortgages](https://en.wikipedia.org/wiki/Subprime_mortgages "Subprime mortgages") and by deficiencies in [regulation](https://en.wikipedia.org/wiki/Regulation "Regulation"). [Cash out refinancings](https://en.wikipedia.org/wiki/Cash_out_refinancing "Cash out refinancing") had fueled an increase in consumption that could no longer be sustained when home prices declined. The first phase of the crisis was the [subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis"), which began in early 2007, as [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities") (MBS) tied to U.S. [real estate](https://en.wikipedia.org/wiki/Real_estate "Real estate"), and a vast web of [derivatives](https://en.wikipedia.org/wiki/Derivative_\(finance\) "Derivative (finance)") linked to those MBS, collapsed in value. A [liquidity crisis](https://en.wikipedia.org/wiki/Liquidity_crisis "Liquidity crisis") spread to global institutions by mid-2007 and climaxed with the [bankruptcy of Lehman Brothers](https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers "Bankruptcy of Lehman Brothers") in September 2008, which triggered a [stock market crash](https://en.wikipedia.org/wiki/Stock_market_crash "Stock market crash") and [bank runs](https://en.wikipedia.org/wiki/Bank_run "Bank run") in several countries.[\[1\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-1) The crisis exacerbated the [Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession"), a [global recession](https://en.wikipedia.org/wiki/Global_recession "Global recession") that began in mid-2007, as well as the [United States bear market of 2007â2009](https://en.wikipedia.org/wiki/United_States_bear_market_of_2007%E2%80%932009 "United States bear market of 2007â2009"). It was also a contributor to the [2008â2011 Icelandic financial crisis](https://en.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_financial_crisis "2008â2011 Icelandic financial crisis") and the [euro area crisis](https://en.wikipedia.org/wiki/Euro_area_crisis "Euro area crisis").
During the 1990s, the [U.S. Congress](https://en.wikipedia.org/wiki/U.S._Congress "U.S. Congress") had passed legislation that intended to expand [affordable housing](https://en.wikipedia.org/wiki/Affordable_housing_in_the_United_States "Affordable housing in the United States") through looser financing rules, and in 1999, parts of the [1933 Banking Act](https://en.wikipedia.org/wiki/1933_Banking_Act "1933 Banking Act") (GlassâSteagall Act) were [repealed](https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act "GrammâLeachâBliley Act"), enabling institutions to mix low-risk operations, such as [commercial banking](https://en.wikipedia.org/wiki/Commercial_bank "Commercial bank") and [insurance](https://en.wikipedia.org/wiki/Insurance#Insurance_companies "Insurance"), with higher-risk operations such as [investment banking](https://en.wikipedia.org/wiki/Investment_banking "Investment banking") and [proprietary trading](https://en.wikipedia.org/wiki/Proprietary_trading "Proprietary trading").[\[2\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-2) As the [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") ("Fed") lowered the [federal funds rate](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") from 2000 to 2003, institutions increasingly targeted low-income homebuyers, largely belonging to [racial minorities](https://en.wikipedia.org/wiki/Racial_minorities "Racial minorities"), with high-risk loans;[\[3\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-3) this development went unattended by regulators.[\[4\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-4) As interest rates rose from 2004 to 2006, the cost of [mortgages](https://en.wikipedia.org/wiki/Mortgage "Mortgage") rose and the demand for housing fell; in early 2007, as more U.S. subprime mortgage holders began [defaulting](https://en.wikipedia.org/wiki/Default_\(finance\) "Default (finance)") on their repayments, lenders went bankrupt, culminating in the bankruptcy of [New Century Financial](https://en.wikipedia.org/wiki/New_Century_Financial "New Century Financial") in April. As demand and prices continued to fall, the [financial contagion](https://en.wikipedia.org/wiki/Financial_contagion "Financial contagion") spread to global [credit markets](https://en.wikipedia.org/wiki/Credit_markets "Credit markets") by August 2007, and [central banks](https://en.wikipedia.org/wiki/Central_bank "Central bank") began injecting [liquidity](https://en.wikipedia.org/wiki/Liquidity "Liquidity"). In March 2008, [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns"), the fifth-largest U.S. investment bank, was sold to [JPMorgan Chase](https://en.wikipedia.org/wiki/JPMorgan_Chase "JPMorgan Chase") in a "[fire sale](https://en.wikipedia.org/wiki/Fire_sale "Fire sale")" backed by Fed financing.
In response to the growing crisis, governments around the world deployed massive [bailouts](https://en.wikipedia.org/wiki/Bailout "Bailout") of financial institutions and used [monetary policy](https://en.wikipedia.org/wiki/Monetary_policy "Monetary policy") and [fiscal policies](https://en.wikipedia.org/wiki/Fiscal_policies "Fiscal policies") to prevent an [economic collapse](https://en.wikipedia.org/wiki/Economic_collapse "Economic collapse") of the [global financial system](https://en.wikipedia.org/wiki/Global_financial_system "Global financial system").[\[5\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-5) By July 2008, [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae") and [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac"), companies which together owned or guaranteed half of the U.S. housing market, verged on collapse; the [Housing and Economic Recovery Act of 2008](https://en.wikipedia.org/wiki/Housing_and_Economic_Recovery_Act_of_2008 "Housing and Economic Recovery Act of 2008") enabled the federal government to seize them on September 7. [Lehman Brothers](https://en.wikipedia.org/wiki/Lehman_Brothers "Lehman Brothers") (the fourth-largest U.S. investment bank) filed for the largest bankruptcy in U.S. history on September 15, which was followed by a Fed bail-out of [American International Group](https://en.wikipedia.org/wiki/American_International_Group "American International Group") (the country's largest insurer) the next day, and the seizure of [Washington Mutual](https://en.wikipedia.org/wiki/Washington_Mutual "Washington Mutual") in the largest bank failure in U.S. history on September 25. On October 3, Congress passed the [Emergency Economic Stabilization Act](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act "Emergency Economic Stabilization Act"), authorizing the [Treasury Department](https://en.wikipedia.org/wiki/United_States_Department_of_the_Treasury "United States Department of the Treasury") to purchase [toxic assets](https://en.wikipedia.org/wiki/Toxic_assets "Toxic assets") and bank stocks through the \$700 billion [Troubled Asset Relief Program](https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program "Troubled Asset Relief Program") (TARP). The Fed began a program of [quantitative easing](https://en.wikipedia.org/wiki/Quantitative_easing "Quantitative easing") by buying treasury bonds and other assets, such as MBS, and the [American Recovery and Reinvestment Act](https://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act "American Recovery and Reinvestment Act"), signed in February 2009 by newly elected president [Barack Obama](https://en.wikipedia.org/wiki/Barack_Obama "Barack Obama"), included a range of measures intended to preserve existing jobs and create new ones. These initiatives combined, coupled with actions taken in other countries, ended the worst of the [Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession") by mid-2009.
Assessments of the crisis's impact in the U.S. vary, but suggest that some 8.7 million jobs were lost, causing unemployment to rise from 5% in 2007 to a high of 10% in October 2009. The percentage of citizens living in poverty rose from 12.5% in 2007 to 15.1% in 2010. The [Dow Jones Industrial Average](https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average "Dow Jones Industrial Average") fell by 53% between October 2007 and March 2009, and some estimates suggest that one in four households lost 75% or more of their [net worth](https://en.wikipedia.org/wiki/Net_worth "Net worth"). In 2010, the [DoddâFrank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act "DoddâFrank Wall Street Reform and Consumer Protection Act") was passed, overhauling financial regulations.[\[6\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-6) It was opposed by many [Republicans](https://en.wikipedia.org/wiki/Republican_Party_\(United_States\) "Republican Party (United States)"), and it was weakened by the [Economic Growth, Regulatory Relief, and Consumer Protection Act](https://en.wikipedia.org/wiki/Economic_Growth,_Regulatory_Relief,_and_Consumer_Protection_Act "Economic Growth, Regulatory Relief, and Consumer Protection Act") in 2018. The [Basel III](https://en.wikipedia.org/wiki/Basel_III "Basel III") capital and liquidity standards were also adopted by countries around the world.[\[7\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-7)[\[8\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-8)
[](https://en.wikipedia.org/wiki/File:GDP_Real_Growth_in_2009.svg)
World map showing [real GDP growth rates](https://en.wikipedia.org/wiki/List_of_countries_by_real_GDP_growth_rate "List of countries by real GDP growth rate") for 2009 (countries in brown were in recession)
[](https://en.wikipedia.org/wiki/File:NYUGDPFinancialShare.jpg)
Share in GDP of U.S. financial sector since 1860[\[9\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-9)
The crisis exacerbated the [Great Recession](https://en.wikipedia.org/wiki/Great_Recession "Great Recession"), a [global recession](https://en.wikipedia.org/wiki/Global_recession "Global recession") that began in mid-2007.[\[10\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-10)[\[11\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-11)[\[12\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-12)[\[13\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-13)[\[14\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-14) It was also followed by the [euro area crisis](https://en.wikipedia.org/wiki/Euro_area_crisis "Euro area crisis"), which began with the start of the [Greek government-debt crisis](https://en.wikipedia.org/wiki/Greek_government-debt_crisis "Greek government-debt crisis") in late 2009, and the [2008â2011 Icelandic financial crisis](https://en.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_financial_crisis "2008â2011 Icelandic financial crisis"), which involved the [bank failure](https://en.wikipedia.org/wiki/Bank_failure "Bank failure") of all three of the major banks in Iceland and, relative to the size of its economy, was the largest economic collapse suffered by any country in history.[\[15\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-15) It was among the five worst financial crises the world had experienced and led to a loss of more than \$2 trillion from the global economy.[\[16\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-16)[\[17\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-17) U.S. home mortgage debt relative to [GDP](https://en.wikipedia.org/wiki/GDP "GDP") increased from an average of 46% during the 1990s to 73% during 2008, reaching \$10.5 (~\$15 trillion in 2024) trillion.[\[18\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-headache-18) The increase in [cash out refinancings](https://en.wikipedia.org/wiki/Cash_out_refinancing "Cash out refinancing"), as home values rose, fueled an increase in consumption that could no longer be sustained when home prices declined.[\[20\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-freecash-20)[\[21\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-boosted-21) Many financial institutions owned investments whose value was based on home mortgages such as [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities"), or [credit derivatives](https://en.wikipedia.org/wiki/Credit_derivative "Credit derivative") used to insure them against failure, which declined in value significantly.[\[22\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-22)[\[23\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-23)[\[24\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-24) The [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund") estimated that large U.S. and European banks lost more than \$1 trillion on [toxic assets](https://en.wikipedia.org/wiki/Toxic_asset "Toxic asset") and from bad loans from January 2007 to September 2009.[\[25\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-25)
Lack of investor confidence in bank [solvency](https://en.wikipedia.org/wiki/Solvency "Solvency") and declines in credit availability led to plummeting stock and [commodity](https://en.wikipedia.org/wiki/Commodity "Commodity") prices in late 2008 and early 2009.[\[26\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-26) The crisis rapidly spread into a global economic shock, resulting in several [bank failures](https://en.wikipedia.org/wiki/Bank_failure "Bank failure").[\[27\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-27) Economies worldwide slowed during this period since credit tightened and international trade declined.[\[28\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-28) Housing markets suffered and unemployment soared, resulting in [evictions](https://en.wikipedia.org/wiki/Eviction "Eviction") and [foreclosures](https://en.wikipedia.org/wiki/Foreclosure "Foreclosure"). Several businesses failed.[\[29\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-gofromhere-29)[\[30\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-30) From its peak in the second quarter of 2007 at \$61.4 trillion, household wealth in the United States fell \$11 trillion, to \$50.4 trillion by the end of the first quarter of 2009, resulting in a decline in consumption, then a decline in business investment.[\[31\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-31)[\[32\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-greatcrash-32) In the fourth quarter of 2008, the quarter-over-quarter decline in real GDP in the U.S. was 8.4%.[\[33\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-33) The U.S. unemployment rate peaked at 11.0% in October 2009, the highest rate since 1983 and roughly twice the pre-crisis rate. The average hours per work week declined to 33, the lowest level since the government began collecting the data in 1964.[\[34\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-34)[\[35\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-35)
The economic crisis started in the U.S. but spread to the rest of the world.[\[29\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-gofromhere-29) U.S. consumption accounted for more than a third of the growth in global consumption between 2000 and 2007 and the rest of the world depended on the U.S. consumer as a source of demand.[\[36\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-36)[\[37\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-37) Toxic securities were owned by corporate and institutional investors globally. Derivatives such as [credit default swaps](https://en.wikipedia.org/wiki/Credit_default_swap "Credit default swap") also increased the linkage between large financial institutions. The [de-leveraging](https://en.wikipedia.org/wiki/De-leveraging "De-leveraging") of financial institutions, as assets were sold to pay back obligations that could not be refinanced in frozen credit markets, further accelerated the solvency crisis and caused a decrease in international trade. Reductions in the growth rates of [developing countries](https://en.wikipedia.org/wiki/Developing_countries "Developing countries") were due to falls in trade, commodity prices, investment and [remittances](https://en.wikipedia.org/wiki/Remittance "Remittance") sent from migrant workers (example: Armenia[\[38\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-38)). States with fragile political systems feared that investors from Western states would withdraw their money because of the crisis.[\[39\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-39)
As part of [national fiscal policy response to the Great Recession](https://en.wikipedia.org/wiki/National_fiscal_policy_response_to_the_Great_Recession "National fiscal policy response to the Great Recession"), governments and central banks, including the [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve"), the [European Central Bank](https://en.wikipedia.org/wiki/European_Central_Bank "European Central Bank") and the [Bank of England](https://en.wikipedia.org/wiki/Bank_of_England "Bank of England"), provided then-unprecedented trillions of dollars in [bailouts](https://en.wikipedia.org/wiki/Bailout "Bailout") and [stimulus](https://en.wikipedia.org/wiki/Stimulus_\(economics\) "Stimulus (economics)"), including expansive [fiscal policy](https://en.wikipedia.org/wiki/Fiscal_policy "Fiscal policy") and [monetary policy](https://en.wikipedia.org/wiki/Monetary_policy "Monetary policy") to offset the decline in consumption and lending capacity, avoid a further collapse, encourage lending, restore faith in the integral [commercial paper](https://en.wikipedia.org/wiki/Commercial_paper "Commercial paper") markets, avoid the risk of a [deflationary spiral](https://en.wikipedia.org/wiki/Deflationary_spiral "Deflationary spiral"), and provide banks with enough funds to allow customers to make withdrawals.[\[40\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-40) In effect, the central banks went from being the "[lender of last resort](https://en.wikipedia.org/wiki/Lender_of_last_resort "Lender of last resort")" to the "lender of only resort" for a significant portion of the economy. In some cases the Fed was considered the "buyer of last resort".[\[41\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-41)[\[42\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-42)[\[43\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-43)[\[44\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-44)[\[45\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-45) During the fourth quarter of 2008, these central banks purchased US\$2.5 trillion (~\$3.57 trillion in 2024) of government debt and troubled private assets from banks. This was the largest liquidity injection into the credit market, and the largest monetary policy action in world history. Following a model initiated by the [2008 United Kingdom bank rescue package](https://en.wikipedia.org/wiki/2008_United_Kingdom_bank_rescue_package "2008 United Kingdom bank rescue package"),[\[46\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Langley2015-46)[\[47\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-47) the governments of European nations and the United States guaranteed the debt issued by their banks and raised the capital of their national banking systems, ultimately purchasing \$1.5 trillion newly issued [preferred stock](https://en.wikipedia.org/wiki/Preferred_stock "Preferred stock") in major banks.[\[32\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-greatcrash-32) The [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") created then-significant amounts of new currency as a method to combat the [liquidity trap](https://en.wikipedia.org/wiki/Liquidity_trap "Liquidity trap").[\[48\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-48)
Bailouts came in the form of trillions of dollars of loans, asset purchases, guarantees, and direct spending.[\[49\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-49) Significant controversy accompanied the bailouts, such as in the case of the [AIG bonus payments controversy](https://en.wikipedia.org/wiki/AIG_bonus_payments_controversy "AIG bonus payments controversy"), leading to the development of a variety of "decision making frameworks", to help balance competing policy interests during times of financial crisis.[\[50\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-50) [Alistair Darling](https://en.wikipedia.org/wiki/Alistair_Darling "Alistair Darling"), the U.K.'s [Chancellor of the Exchequer](https://en.wikipedia.org/wiki/Chancellor_of_the_Exchequer "Chancellor of the Exchequer") at the time of the crisis, stated in 2018 that Britain came within hours of "a breakdown of law and order" the day that [Royal Bank of Scotland](https://en.wikipedia.org/wiki/Royal_Bank_of_Scotland "Royal Bank of Scotland") was bailed-out.[\[51\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-51) Instead of financing more domestic loans, some banks instead spent some of the stimulus money in more profitable areas such as investing in emerging markets and foreign currencies.[\[52\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-52)
In July 2010, the [DoddâFrank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act "DoddâFrank Wall Street Reform and Consumer Protection Act") was enacted in the United States to "promote the financial stability of the United States".[\[53\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-53) The [Basel III](https://en.wikipedia.org/wiki/Basel_III "Basel III") capital and liquidity standards were adopted worldwide.[\[54\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-54) Since the 2008 financial crisis, consumer regulators in America have more closely supervised sellers of credit cards and home mortgages in order to deter anticompetitive practices that led to the crisis.[\[55\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-55)
At least two major reports on the causes of the crisis were produced by the U.S. Congress: the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission") report, released January 2011, and a report by the [United States Senate Homeland Security Permanent Subcommittee on Investigations](https://en.wikipedia.org/wiki/United_States_Senate_Homeland_Security_Permanent_Subcommittee_on_Investigations "United States Senate Homeland Security Permanent Subcommittee on Investigations") entitled [Wall Street and the Financial Crisis: Anatomy of a Financial Collapse](https://en.wikipedia.org/wiki/Wall_Street_and_the_Financial_Crisis:_Anatomy_of_a_Financial_Collapse "Wall Street and the Financial Crisis: Anatomy of a Financial Collapse"), released April 2011.
In total, 47 bankers served jail time as a result of the crisis, over half of whom were from Iceland, where the crisis was the most severe and led to the collapse of all three major Icelandic banks.[\[56\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-jail-56) In April 2012, [Geir Haarde](https://en.wikipedia.org/wiki/Geir_Haarde "Geir Haarde") of Iceland became the only politician to be convicted as a result of the crisis.[\[57\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-57)[\[58\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-58) Only one banker in the United States served jail time as a result of the crisis, [Kareem Serageldin](https://en.wikipedia.org/wiki/Kareem_Serageldin "Kareem Serageldin"), a banker at [Credit Suisse](https://en.wikipedia.org/wiki/Credit_Suisse "Credit Suisse") who was sentenced to 30 months in jail and returned \$24.6 million in compensation for manipulating bond prices to hide \$1 billion of losses.[\[59\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-59)[\[56\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-jail-56) No individuals in the United Kingdom were convicted as a result of the crisis.[\[60\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-60)[\[61\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-61) In [*SEC v. Goldman Sachs*](https://en.wikipedia.org/wiki/SEC_v._Goldman_Sachs_ABACUS "SEC v. Goldman Sachs ABACUS"), [Goldman Sachs](https://en.wikipedia.org/wiki/Goldman_Sachs "Goldman Sachs") paid a \$550 million civil penalty and acknowledged that its marketing materials for CDO contained incomplete information, settling [securities fraud](https://en.wikipedia.org/wiki/Securities_fraud "Securities fraud") charges after allegedly anticipating the financial crisis and selling toxic investments to its clients.[\[62\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-62)[\[63\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:12-63)[\[64\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-64)
With fewer resources to risk in [creative destruction](https://en.wikipedia.org/wiki/Creative_destruction "Creative destruction"), the number of patent applications was flat, compared to exponential increases in patent application in prior years.[\[65\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-65)
[](https://en.wikipedia.org/wiki/File:2008_Top1percentUSA.svg)
Share of income going to the top 1% of earners, one measure of economic inequality in the US from 1913 to 2008.
Typical American families did not fare well, nor did the "wealthy-but-not-wealthiest" families just beneath the pyramid's top.[\[66\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-66)[\[67\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-67)[\[68\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-68) However, half of the poorest families in the United States did not have wealth declines at all during the crisis because they generally did not own financial investments whose value could fluctuate. The Federal Reserve surveyed 4,000 households from 2007 to 2009, and found that the total wealth of 63% of all Americans declined in that period and 77% of the richest families had a decrease in total wealth, while only 50% of those on the bottom of the pyramid suffered a decrease.[\[69\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-69)[\[70\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-70)[\[71\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-71)
The following is a timeline of the major events of the financial crisis, including government responses, and the subsequent economic recovery.[\[72\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-72)[\[73\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-73)[\[74\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-74)[\[75\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-75)
[](https://en.wikipedia.org/wiki/File:Cost_of_housing_by_State.webp)
Cost of housing by state from the year 2000 to 2022
- April 28, 2004: Meeting is held in the basement of the Federal Reserve with the Gang of Five (Goldman Sachs, Lehman Brothers, Merrill Lynch, Bear Stearns and Morgan Stanley) and the five members of the Securities and Exchange Commission to create an exemption for the five largest investment banks in the U.S. from having to adhere to the [Net Capital Rule](https://en.wikipedia.org/wiki/Net_capital_rule "Net capital rule").[\[76\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-76)
- May 19, 2005: Fund manager [Michael Burry](https://en.wikipedia.org/wiki/Michael_Burry "Michael Burry") closed a [credit default swap](https://en.wikipedia.org/wiki/Credit_default_swap "Credit default swap") against subprime mortgage bonds with [Deutsche Bank](https://en.wikipedia.org/wiki/Deutsche_Bank "Deutsche Bank") valued at \$60 million â the first such CDS. He projected they would become volatile within two years of the low "teaser rate" of the mortgages expiring.[\[77\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-77)[\[78\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-78)
- 2006: After years of above-average price increases, housing prices peaked and [mortgage loan](https://en.wikipedia.org/wiki/Mortgage_loan "Mortgage loan") delinquency roseâthe first sign of the bursting of the [United States housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble").[\[79\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-aspnewhome-79)[\[80\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Homeownership-80) Due to increasingly lax underwriting standards, one-third of all mortgages in 2006 were subprime or no-documentation loans,[\[81\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-81) which comprised 17% of home purchases that year.[\[82\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-newcentury-82)
- May 2006: [JPMorgan](https://en.wikipedia.org/wiki/JPMorgan "JPMorgan") warned clients of a housing downturn, especially in sub-prime housing.[\[83\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-ii2007-83)
- August 2006: The [yield curve](https://en.wikipedia.org/wiki/Yield_curve "Yield curve") inverted, signaling a recession was likely within a year or two.[\[84\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-84)
- November 2006: [UBS](https://en.wikipedia.org/wiki/UBS "UBS") warned of "an impending crisis in the U.S. housing market".[\[83\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-ii2007-83)
### 2007 (JanuaryâAugust)
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=4 "Edit section: 2007 (JanuaryâAugust)")\]
- February 27, 2007: Stock prices in China and the U.S. fell by the most since 2003 as reports of a decline in home prices and [durable goods](https://en.wikipedia.org/wiki/Durable_good "Durable good") orders stoked growth fears, with [Alan Greenspan](https://en.wikipedia.org/wiki/Alan_Greenspan "Alan Greenspan") predicting a recession.[\[85\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-85) Due to increased delinquency rates in [subprime lending](https://en.wikipedia.org/wiki/Subprime_lending "Subprime lending"), [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac") said that it would stop investing in certain subprime loans.[\[86\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-86)
- April 2, 2007: [New Century](https://en.wikipedia.org/wiki/New_Century "New Century"), an American [real estate investment trust](https://en.wikipedia.org/wiki/Real_estate_investment_trust "Real estate investment trust") specializing in [subprime lending](https://en.wikipedia.org/wiki/Subprime_lending "Subprime lending") and [securitization](https://en.wikipedia.org/wiki/Securitization "Securitization"), filed for [Chapter 11 bankruptcy protection](https://en.wikipedia.org/wiki/Chapter_11_bankruptcy_protection "Chapter 11 bankruptcy protection"). This propagated the [subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis").[\[87\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-87)[\[88\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-88)[\[82\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-newcentury-82)[\[89\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-usatodaytimeline-89)[\[90\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-BBC_Timeline-90)
- June 20, 2007: After receiving [margin calls](https://en.wikipedia.org/wiki/Margin_call "Margin call"), [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns") bailed out two of its hedge funds with \$20 billion of exposure to [collateralized debt obligations](https://en.wikipedia.org/wiki/Collateralized_debt_obligation "Collateralized debt obligation") including subprime mortgages.[\[91\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-91)
- July 19, 2007: [The Dow Jones Industrial Average (DJIA)](https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average "Dow Jones Industrial Average") closed above 14,000 for the first time, at 14,000.41.[\[92\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:5-92)
- July 30, 2007: [IKB Deutsche Industriebank](https://en.wikipedia.org/wiki/IKB_Deutsche_Industriebank "IKB Deutsche Industriebank"), the first banking casualty of the crisis, announces its bailout by German public financial institution [KfW](https://en.wikipedia.org/wiki/KfW "KfW").[\[93\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-93)
- July 31, 2007: [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns") liquidated the two hedge funds.[\[89\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-usatodaytimeline-89)
- August 6, 2007: [American Home Mortgage](https://en.wikipedia.org/wiki/American_Home_Mortgage "American Home Mortgage") filed for bankruptcy.[\[89\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-usatodaytimeline-89)
- August 9, 2007: [BNP Paribas](https://en.wikipedia.org/wiki/BNP_Paribas "BNP Paribas") blocked withdrawals from three of its [hedge funds](https://en.wikipedia.org/wiki/Hedge_fund "Hedge fund") with a total of \$2.2 billion in [assets under management](https://en.wikipedia.org/wiki/Assets_under_management "Assets under management"), due to "a complete evaporation of liquidity", making valuation of the funds impossible â a clear sign that banks were refusing to do business with each other.[\[90\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-BBC_Timeline-90)[\[94\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-94)[\[95\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-95)
- August 16, 2007: The DJIA closes at 12,945.78 after falling on 12 out of the previous 20 trading days following its peak. It had fallen 1,164.63 or 8.3%.[\[92\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:5-92)
### 2007 (SeptemberâDecember)
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=5 "Edit section: 2007 (SeptemberâDecember)")\]
[](https://en.wikipedia.org/wiki/File:Northern_Rock_Queue.jpg)
People queueing outside a [Northern Rock](https://en.wikipedia.org/wiki/Northern_Rock "Northern Rock") branch in the United Kingdom to withdraw their savings during the financial crisis
- September 14, 2007: [Northern Rock](https://en.wikipedia.org/wiki/Northern_Rock "Northern Rock"), a medium-sized and highly [leveraged](https://en.wikipedia.org/wiki/Leveraged "Leveraged") British bank, received support from the [Bank of England](https://en.wikipedia.org/wiki/Bank_of_England "Bank of England").[\[96\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-96) This led to investor panic and a [bank run](https://en.wikipedia.org/wiki/Bank_run "Bank run").[\[97\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-northernrock-97)
- September 18, 2007: The [Federal Open Market Committee](https://en.wikipedia.org/wiki/Federal_Open_Market_Committee "Federal Open Market Committee") began reducing the [federal funds rate](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") from its peak of 5.25% in response to worries about liquidity and confidence.[\[98\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-98)[\[99\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-99)
- September 28, 2007: [NetBank](https://en.wikipedia.org/wiki/NetBank "NetBank") suffered from [bank failure](https://en.wikipedia.org/wiki/Bank_failure "Bank failure") and filed bankruptcy due to exposure to home loans.[\[100\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-100)
- October 9, 2007: The DJIA hit its peak closing price of 14,164.53.[\[101\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-101)
- October 15, 2007: [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup"), [Bank of America](https://en.wikipedia.org/wiki/Bank_of_America "Bank of America"), and [JPMorgan Chase](https://en.wikipedia.org/wiki/JPMorgan_Chase "JPMorgan Chase") announced plans for the \$80 billion [Master Liquidity Enhancement Conduit](https://en.wikipedia.org/wiki/Master_Liquidity_Enhancement_Conduit "Master Liquidity Enhancement Conduit") to provide liquidity to [structured investment vehicles](https://en.wikipedia.org/wiki/Structured_investment_vehicle "Structured investment vehicle"). The plan was abandoned in December.[\[102\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-102)
- November 26, 2007: US markets enter a correction as worries about the financial sector continued to mount.[\[103\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-103)
- December 2007: Unemployment in the US hit 5%.[\[104\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:6-104)
- December 12, 2007: The [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") instituted the [Term auction facility](https://en.wikipedia.org/wiki/Term_auction_facility "Term auction facility") to supply short-term credit to banks with sub-prime mortgages.[\[105\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-105)
- December 17, 2007: [Delta Financial Corporation](https://en.wikipedia.org/wiki/Delta_Financial_Corporation "Delta Financial Corporation") filed bankruptcy after failing to [securitize](https://en.wikipedia.org/wiki/Securitize "Securitize") subprime loans.[\[106\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-106)
- December 19, 2007: the [Standard and Poor's](https://en.wikipedia.org/wiki/Standard_and_Poor%27s "Standard and Poor's") rating agency downgrades the ratings of many monoline insurers which pay out bonds that fail.[\[107\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-107)
- December 31, 2007: Despite volatility through the last part of the year, markets close above where they started the year, with the DJIA closing at 13,264.82, up 6.4% for the year.[\[108\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-108)
### 2008 (JanuaryâAugust)
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=6 "Edit section: 2008 (JanuaryâAugust)")\]
- January 11, 2008: [Bank of America](https://en.wikipedia.org/wiki/Bank_of_America "Bank of America") agreed to buy [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial") for \$4 billion in stock.[\[109\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-109)
- January 18, 2008: Stock markets fell to a yearly low as the credit rating of [Ambac](https://en.wikipedia.org/wiki/Ambac "Ambac"), a [bond insurance](https://en.wikipedia.org/wiki/Bond_insurance "Bond insurance") company, was downgraded. Meanwhile, an increase in the amount of withdrawals caused Scottish Equitable to implement delays of up to 12 months on people wishing to withdraw money.[\[110\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-110)
- January 21, 2008: As US markets were closed for [Martin Luther King Jr. Day](https://en.wikipedia.org/wiki/Martin_Luther_King_Jr._Day "Martin Luther King Jr. Day"), the [FTSE 100 Index](https://en.wikipedia.org/wiki/FTSE_100_Index "FTSE 100 Index") in the United Kingdom tumbled 323.5 points or 5.5% in its largest crash since the [September 11 attacks](https://en.wikipedia.org/wiki/September_11_attacks "September 11 attacks").[\[111\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:7-111)
- January 22, 2008: The US Federal Reserve cut interest rates by 0.75% to stimulate the economy, the largest drop in 25 years and the first emergency cut since 2001.[\[111\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:7-111)
- January 2008: U.S. stocks had the worst January since 2000 over concerns about the exposure of companies that issue [bond insurance](https://en.wikipedia.org/wiki/Bond_insurance "Bond insurance").[\[112\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-112)
- February 13, 2008: The [Economic Stimulus Act of 2008](https://en.wikipedia.org/wiki/Economic_Stimulus_Act_of_2008 "Economic Stimulus Act of 2008") was enacted, which included a tax rebate.[\[113\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-113)[\[114\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-114)
- February 22, 2008: The [nationalisation of Northern Rock](https://en.wikipedia.org/wiki/Nationalisation_of_Northern_Rock "Nationalisation of Northern Rock") was completed.[\[97\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-northernrock-97)
- March 5, 2008: [The Carlyle Group](https://en.wikipedia.org/wiki/The_Carlyle_Group "The Carlyle Group") received [margin calls](https://en.wikipedia.org/wiki/Margin_calls "Margin calls") on its mortgage bond fund.[\[115\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-115)
- March 17, 2008: [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns"), with \$46 billion of [mortgage](https://en.wikipedia.org/wiki/Mortgage "Mortgage") assets that had not been written down and \$10 trillion in total assets, faced bankruptcy; instead, in its first emergency meeting in 30 years, the Federal Reserve agreed to guarantee its bad loans to facilitate its acquisition by [JPMorgan Chase](https://en.wikipedia.org/wiki/JPMorgan_Chase "JPMorgan Chase") for \$2/share. A week earlier, the stock was trading at \$60/share and a year earlier it traded for \$178/share. The buyout price was increased to \$10/share the following week.[\[116\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-116)[\[117\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-117)[\[118\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-118)
- March 18, 2008: In a contentious meeting, the Federal Reserve cut the [federal funds rate](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") by 75 basis points, its 6th cut in 6 months.[\[119\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-119) It also allowed [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae") & [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac") to buy \$200 billion in subprime mortgages from banks. Officials thought this would contain the possible crisis. The [U.S. dollar](https://en.wikipedia.org/wiki/U.S._dollar "U.S. dollar") weakened and commodity prices soared.\[*[data missing](https://en.wikipedia.org/wiki/Wikipedia:Cleanup "Wikipedia:Cleanup")*\][\[120\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-120)[\[121\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-121)[\[122\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-122)
- Late June 2008: Despite the U.S. stock market falling to 20% below its highs, commodity-related stocks soared as oil traded above \$140/barrel for the first time and steel prices rose above \$1,000 per ton. Worries about [inflation](https://en.wikipedia.org/wiki/Inflation "Inflation") combined with strong demand from China encouraged people to invest in [commodities](https://en.wikipedia.org/wiki/Commodities "Commodities") during the [2000s commodities boom](https://en.wikipedia.org/wiki/2000s_commodities_boom "2000s commodities boom").[\[123\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-123)[\[124\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-124)
- July 11, 2008: [IndyMac](https://en.wikipedia.org/wiki/IndyMac "IndyMac") failed. Oil prices peaked at \$147.50[\[125\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-indymactaken-125)[\[111\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:7-111)
- July 30, 2008: The [Housing and Economic Recovery Act of 2008](https://en.wikipedia.org/wiki/Housing_and_Economic_Recovery_Act_of_2008 "Housing and Economic Recovery Act of 2008") was enacted.[\[126\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-126)
- August 2008: Unemployment hit 6% in the US.[\[104\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:6-104)
- September 7, 2008: The [Federal takeover of Fannie Mae and Freddie Mac](https://en.wikipedia.org/wiki/Federal_takeover_of_Fannie_Mae_and_Freddie_Mac "Federal takeover of Fannie Mae and Freddie Mac") was implemented.[\[127\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-127)
- September 15, 2008: After the Federal Reserve declined to guarantee its loans as it did for Bear Stearns, the [bankruptcy of Lehman Brothers](https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers "Bankruptcy of Lehman Brothers") led to a 504.48-point (4.42%) drop in the DJIA, its worst decline in seven years. To avoid bankruptcy, [Merrill Lynch](https://en.wikipedia.org/wiki/Merrill_Lynch "Merrill Lynch") was acquired by [Bank of America](https://en.wikipedia.org/wiki/Bank_of_America "Bank of America") for \$50 billion in a transaction facilitated by the government.[\[128\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-128) Lehman had been in talks to be sold to either Bank of America or [Barclays](https://en.wikipedia.org/wiki/Barclays "Barclays") but neither bank wanted to acquire the entire company.[\[129\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-129)
- September 16, 2008: The [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") took over [American International Group](https://en.wikipedia.org/wiki/American_International_Group "American International Group") with \$85 billion in debt and equity funding. The [Reserve Primary Fund](https://en.wikipedia.org/wiki/Reserve_Primary_Fund "Reserve Primary Fund") "[broke the buck](https://en.wikipedia.org/wiki/Break_the_buck "Break the buck")" as a result of its exposure to [Lehman Brothers](https://en.wikipedia.org/wiki/Lehman_Brothers "Lehman Brothers") securities.[\[130\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-130)
- September 17, 2008: Investors withdrew \$144 billion from U.S. [money market funds](https://en.wikipedia.org/wiki/Money_market_fund "Money market fund"), the equivalent of a [bank run](https://en.wikipedia.org/wiki/Bank_run "Bank run") on [money market funds](https://en.wikipedia.org/wiki/Money_market_fund "Money market fund"), which frequently invest in [commercial paper](https://en.wikipedia.org/wiki/Commercial_paper "Commercial paper") issued by corporations to fund their operations and payrolls, causing the short-term lending market to freeze. The withdrawal compared to \$7.1 billion in withdrawals the week prior. This interrupted the ability of corporations to rollover their [short-term debt](https://en.wikipedia.org/wiki/Short-term_debt "Short-term debt"). The U.S. government extended insurance for money market accounts analogous to bank [deposit insurance](https://en.wikipedia.org/wiki/Deposit_insurance "Deposit insurance") via a temporary guarantee[\[131\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-131) and with Federal Reserve programs to purchase commercial paper.
- September 18, 2008: In a dramatic meeting, [United States Secretary of the Treasury](https://en.wikipedia.org/wiki/United_States_Secretary_of_the_Treasury "United States Secretary of the Treasury") [Henry Paulson](https://en.wikipedia.org/wiki/Henry_Paulson "Henry Paulson") and [Chair of the Federal Reserve](https://en.wikipedia.org/wiki/Chair_of_the_Federal_Reserve "Chair of the Federal Reserve") [Ben Bernanke](https://en.wikipedia.org/wiki/Ben_Bernanke "Ben Bernanke") met with [Speaker of the United States House of Representatives](https://en.wikipedia.org/wiki/Speaker_of_the_United_States_House_of_Representatives "Speaker of the United States House of Representatives") [Nancy Pelosi](https://en.wikipedia.org/wiki/Nancy_Pelosi "Nancy Pelosi") and warned that the credit markets were close to a complete meltdown. Bernanke requested a \$700 billion fund to acquire toxic mortgages and reportedly told them: "If we don't do this, we may not have an economy on Monday".[\[132\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-132)
- September 19, 2008: The Federal Reserve created the [Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility](https://en.wikipedia.org/wiki/Asset_Backed_Commercial_Paper_Money_Market_Mutual_Fund_Liquidity_Facility "Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility") to temporarily insure money market funds and allow the credit markets to continue operating.[\[133\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-133)
- September 20, 2008: Paulson requested the U.S. Congress authorize a \$700 billion fund to acquire toxic mortgages, telling Congress "If it doesn't pass, then heaven help us all".[\[134\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-134)
- September 21, 2008: [Goldman Sachs](https://en.wikipedia.org/wiki/Goldman_Sachs "Goldman Sachs") and [Morgan Stanley](https://en.wikipedia.org/wiki/Morgan_Stanley "Morgan Stanley") converted from [investment banks](https://en.wikipedia.org/wiki/Investment_banks "Investment banks") to [bank holding companies](https://en.wikipedia.org/wiki/Bank_holding_companies "Bank holding companies") to increase their protection by the Federal Reserve.[\[135\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-135)[\[136\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-136)[\[137\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-137)[\[138\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-138)
- September 22, 2008: [MUFG Bank](https://en.wikipedia.org/wiki/MUFG_Bank "MUFG Bank") acquired 20% of [Morgan Stanley](https://en.wikipedia.org/wiki/Morgan_Stanley "Morgan Stanley").[\[139\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-139)
- September 23, 2008: [Berkshire Hathaway](https://en.wikipedia.org/wiki/Berkshire_Hathaway "Berkshire Hathaway") made a \$5 billion investment in [Goldman Sachs](https://en.wikipedia.org/wiki/Goldman_Sachs "Goldman Sachs").[\[140\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-140)
- September 26, 2008: [Washington Mutual](https://en.wikipedia.org/wiki/Washington_Mutual "Washington Mutual") went bankrupt and was seized by the [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation") after a [bank run](https://en.wikipedia.org/wiki/Bank_run "Bank run") in which panicked depositors withdrew \$16.7 billion in 10 days.[\[141\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-141)
- September 29, 2008: By a vote of 225â208, with most Democrats in support and Republicans against, the House of Representatives rejected the [Emergency Economic Stabilization Act of 2008](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 "Emergency Economic Stabilization Act of 2008"), which included the \$700 billion [Troubled Asset Relief Program](https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program "Troubled Asset Relief Program"). In response, the DJIA dropped 777.68 points, or 6.98%, then the largest point drop in history. The S\&P 500 Index fell 8.8% and the Nasdaq Composite fell 9.1%.[\[142\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-142) Several stock market indices worldwide fell 10%. Gold prices soared to \$900/ounce. The Federal Reserve doubled its credit swaps with foreign central banks as they all needed to provide liquidity. [Wachovia](https://en.wikipedia.org/wiki/Wachovia "Wachovia") reached a deal to sell itself to Citigroup; however, the deal would have made shares worthless and required government funding.[\[143\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-143)
- September 30, 2008: President [George W. Bush](https://en.wikipedia.org/wiki/George_W._Bush "George W. Bush") addressed the country, saying "Congress must act. ... Our economy is depending on decisive action from the government. The sooner we address the problem, the sooner we can get back on the path of growth and job creation". The DJIA rebounded 4.7%.[\[144\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-144)
- October 1, 2008: The U.S. Senate passed the [Emergency Economic Stabilization Act of 2008](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 "Emergency Economic Stabilization Act of 2008").[\[145\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-145)
- October 2, 2008: Stock market indices fell 4% as investors were nervous ahead of a vote in the U.S. House of Representatives on the [Emergency Economic Stabilization Act of 2008](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 "Emergency Economic Stabilization Act of 2008").[\[146\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-146)
- October 3, 2008: The House of Representatives passed the [Emergency Economic Stabilization Act of 2008](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008 "Emergency Economic Stabilization Act of 2008") and the \$700 billion Troubled Asset Relief Program.[\[147\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-147) Bush signed the legislation that same day.[\[148\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-148) Wachovia reached a deal to be acquired by [Wells Fargo](https://en.wikipedia.org/wiki/Wells_Fargo "Wells Fargo") in a deal that did not require government funding.[\[149\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-149)
- October 6â10, 2008: From October 6â10, 2008, the Dow Jones Industrial Average (DJIA) closed lower in all five sessions. Volume levels were record-breaking. The DJIA fell 1,874.19 points, or 18.2%, in its worst weekly decline ever on both a points and percentage basis. The S\&P 500 fell more than 20%.[\[150\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-150)
- October 7, 2008: In the U.S., per the Emergency Economic Stabilization Act of 2008, the [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation") increased deposit insurance coverage to \$250,000 per depositor.[\[151\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-151)
[](https://en.wikipedia.org/wiki/File:S%26P_BSE_SENSEX_chart.svg)
During the 2008 global financial crisis, the [BSE SENSEX](https://en.wikipedia.org/wiki/BSE_SENSEX "BSE SENSEX") experienced a sharp decline. It dropped from over 21,000 points in January 2008 to below 8,000 points in October 2008.[\[152\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-152)
- October 8, 2008: The [Indonesian stock market](https://en.wikipedia.org/wiki/Indonesia_Stock_Exchange "Indonesia Stock Exchange") halted trading after a 10% drop in one day.[\[153\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-153) Global central banks held emergency meetings and coordinated interest rate cuts before the US stock markets opened.[\[154\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-154)
- October 11, 2008: The head of the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund") (IMF) warned that the world financial system was teetering on the "brink of systemic meltdown".[\[155\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-155)
- October 14, 2008: Having been suspended for three successive trading days (October 9, 10 and 13), the Icelandic stock market reopened on October 14, with the main index, the [OMX Iceland 15](https://en.wikipedia.org/wiki/OMX_Iceland_15 "OMX Iceland 15"), closing at 678.4, which was about 77% lower than the 3,004.6 at the close on October 8, after the value of the three big banks, which had formed 73.2% of the value of the OMX Iceland 15, had been set to zero, leading to the [2008â2011 Icelandic financial crisis](https://en.wikipedia.org/wiki/2008%E2%80%932011_Icelandic_financial_crisis "2008â2011 Icelandic financial crisis").[\[156\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-156) The [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation") created the [Temporary Liquidity Guarantee Program](https://en.wikipedia.org/wiki/Temporary_Liquidity_Guarantee_Program "Temporary Liquidity Guarantee Program") to guarantee the senior debt of all FDIC-insured institutions through June 30, 2009.[\[157\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-157)
- October 16, 2008: A rescue plan was unveiled for Swiss banks [UBS AG](https://en.wikipedia.org/wiki/UBS_AG "UBS AG") and [Credit Suisse](https://en.wikipedia.org/wiki/Credit_Suisse "Credit Suisse").[\[158\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-158)
- October 24, 2008: Many of the world's stock exchanges experienced the worst declines in their history, with drops of around 10% in most indices.[\[159\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-159) In the U.S., the DJIA fell 3.6%, although not as much as other markets.[\[160\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-160) The [United States dollar](https://en.wikipedia.org/wiki/United_States_dollar "United States dollar"), the [Japanese yen](https://en.wikipedia.org/wiki/Japanese_yen "Japanese yen") and the [Swiss franc](https://en.wikipedia.org/wiki/Swiss_franc "Swiss franc") soared against other major currencies, particularly the [British pound](https://en.wikipedia.org/wiki/British_pound "British pound") and [Canadian dollar](https://en.wikipedia.org/wiki/Canadian_dollar "Canadian dollar"), as world investors sought safe havens. A [currency crisis](https://en.wikipedia.org/wiki/Currency_crisis "Currency crisis") developed, with investors transferring vast capital resources into stronger currencies, leading many governments of emerging economies to seek aid from the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund").[\[161\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-161)[\[162\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-162) Later that day, the deputy governor of the [Bank of England](https://en.wikipedia.org/wiki/Bank_of_England "Bank of England"), [Charlie Bean](https://en.wikipedia.org/wiki/Charlie_Bean_\(economist\) "Charlie Bean (economist)"), suggested that "This is a once in a lifetime crisis, and possibly the largest financial crisis of its kind in human history".[\[163\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-163) In a transaction pushed by regulators, [PNC Financial Services](https://en.wikipedia.org/wiki/PNC_Financial_Services "PNC Financial Services") agreed to acquire [National City Corp.](https://en.wikipedia.org/wiki/National_City_Corp. "National City Corp.")[\[164\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-164)
### 2008 (NovemberâDecember)
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=9 "Edit section: 2008 (NovemberâDecember)")\]
[](https://en.wikipedia.org/wiki/File:22_2007-2008_global_financial_crisis_effect_in_Bristol_UK_-_credit_crunch_lunch.jpg)
Restaurant in [Bristol](https://en.wikipedia.org/wiki/Bristol "Bristol"), United Kingdom, advertising cheap "Credit Crunch Lunch"
- November 6, 2008: The IMF predicted a worldwide recession of â0.3% for 2009. On the same day, the [Bank of England](https://en.wikipedia.org/wiki/Bank_of_England "Bank of England") and the [European Central Bank](https://en.wikipedia.org/wiki/European_Central_Bank "European Central Bank"), respectively, reduced their interest rates from 4.5% to 3%, and from 3.75% to 3.25%.[\[165\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-165)
- November 10, 2008: [American Express](https://en.wikipedia.org/wiki/American_Express "American Express") converted to a [bank holding company](https://en.wikipedia.org/wiki/Bank_holding_company "Bank holding company").[\[166\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-166)
- November 20, 2008: Iceland obtained an emergency loan from the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund") after the failure of banks in Iceland resulted in a devaluation of the [Icelandic krĂłna](https://en.wikipedia.org/wiki/Icelandic_kr%C3%B3na "Icelandic krĂłna") and threatened the government with bankruptcy.[\[167\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-167)
- November 25, 2008: The [Term Asset-Backed Securities Loan Facility](https://en.wikipedia.org/wiki/Term_Asset-Backed_Securities_Loan_Facility "Term Asset-Backed Securities Loan Facility") was announced.[\[168\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-168)
- November 29, 2008: Economist [Dean Baker](https://en.wikipedia.org/wiki/Dean_Baker "Dean Baker") observed:
> There is a really good reason for tighter credit. Tens of millions of homeowners who had substantial equity in their homes two years ago have little or nothing today. Businesses are facing the worst downturn since the [Great Depression](https://en.wikipedia.org/wiki/Great_Depression "Great Depression"). This matters for credit decisions. A homeowner with equity in her home is very unlikely to default on a car loan or credit card debt. They will draw on this equity rather than lose their car and/or have a default placed on their credit record. On the other hand, a homeowner who has no equity is a serious default risk. In the case of businesses, their creditworthiness depends on their future profits. Profit prospects look much worse in November 2008 than they did in November 2007 ... While many banks are obviously at the brink, consumers and businesses would be facing a much harder time getting credit right now even if the financial system were rock solid. The problem with the economy is the loss of close to \$6 trillion in housing wealth and an even larger amount of stock wealth.[\[169\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-169)
- December 1, 2008: The NBER announced the US was in a recession and had been since December 2007. The Dow tumbled 679.95 points or 7.8% on the news.[\[170\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-170)[\[92\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:5-92)
- December 6, 2008: The [2008 Greek riots](https://en.wikipedia.org/wiki/2008_Greek_riots "2008 Greek riots") began, sparked in part by economic conditions in the country.\[*[citation needed](https://en.wikipedia.org/wiki/Wikipedia:Citation_needed "Wikipedia:Citation needed")*\]
- December 16, 2008: The federal funds rate was lowered to 0%.[\[171\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-171)
- December 20, 2008: Financing under the [Troubled Asset Relief Program](https://en.wikipedia.org/wiki/Troubled_Asset_Relief_Program "Troubled Asset Relief Program") was made available to [General Motors](https://en.wikipedia.org/wiki/General_Motors "General Motors") and [Chrysler](https://en.wikipedia.org/wiki/Chrysler "Chrysler").[\[172\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-172)
[](https://en.wikipedia.org/wiki/File:Payroll_tax_history.jpg)
The [American Recovery and Reinvestment Act of 2009](https://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009 "American Recovery and Reinvestment Act of 2009") provided a [payroll tax](https://en.wikipedia.org/wiki/Payroll_tax "Payroll tax") credit repealed in late 2010.
- January 6, 2009: Citi claimed that Singapore would experience "the most severe recession in \[its\] history" in 2009. In the end, the economy grew in 2009 by 0.1% and in 2010 by 14.5%.[\[173\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:62-173)[\[174\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-174)[\[175\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-175)
- January 20â26, 2009: The [2009 Icelandic financial crisis protests](https://en.wikipedia.org/wiki/2009_Icelandic_financial_crisis_protests "2009 Icelandic financial crisis protests") intensified and the Icelandic government collapsed.[\[176\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-176)
- February 13, 2009: Congress approved the [American Recovery and Reinvestment Act of 2009](https://en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009 "American Recovery and Reinvestment Act of 2009"), a \$787 billion economic stimulus package. President Barack Obama signed it February 17.[\[177\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-177)[\[178\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-arraecon-178)[\[179\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-179)[\[180\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-180)
- February 20, 2009: The DJIA closed at a six-year low, amidst worries that the largest banks in the United States would have to be [nationalized](https://en.wikipedia.org/wiki/Nationalized "Nationalized").[\[181\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-181)
- February 27, 2009: The [DJIA](https://en.wikipedia.org/wiki/DJIA "DJIA") closed at its lowest value since 1997 as the U.S. government increased its stake in [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup") to 36%, raising further fears of nationalization and a report showed that GDP shrank at the sharpest pace in 26 years.[\[182\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-182)
- Early March 2009: The drop in stock prices was compared to that of the [Great Depression](https://en.wikipedia.org/wiki/Great_Depression "Great Depression").[\[183\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-183)[\[184\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-184)
- March 3, 2009: President Obama stated that "Buying stocks is a potentially good deal if you've got a long-term perspective on it".[\[185\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-185)
- March 6, 2009: The Dow Jones hit its lowest level of 6,469.95, a drop of 54% from its peak of 14,164 on October 9, 2007, over a span of 17 months, before beginning to recover.[\[186\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-186)
- March 10, 2009: Shares of [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup") rose 38% after the CEO said that the company was profitable in the first two months of the year and expressed optimism about its capital position going forward. Major stock market indices rose 5â7%, marking the bottom of the stock market decline.[\[187\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-187)
- March 12, 2009: Stock market indices in the U.S. rose another 4% after [Bank of America](https://en.wikipedia.org/wiki/Bank_of_America "Bank of America") said it was profitable in January and February and would likely not need more government funding. [Bernie Madoff](https://en.wikipedia.org/wiki/Bernie_Madoff "Bernie Madoff") was convicted.[\[188\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-188)
- First quarter of 2009: For the first quarter of 2009, the annualized rate of decline in GDP was 14.4% in Germany, 15.2% in Japan, 7.4% in the UK, 18% in Latvia,[\[189\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-189) 9.8% in the Euro area and 21.5% for Mexico.[\[29\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-gofromhere-29)
- April 2, 2009: Unrest over [economic policy](https://en.wikipedia.org/wiki/Economic_policy "Economic policy") and bonuses paid to bankers resulted in the [2009 G20 London summit protests](https://en.wikipedia.org/wiki/2009_G20_London_summit_protests "2009 G20 London summit protests").
- April 10, 2009: *[Time](https://en.wikipedia.org/wiki/Time_\(magazine\) "Time (magazine)")* magazine declared "More Quickly Than It Began, The Banking Crisis Is Over".[\[190\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-190)
- April 29, 2009: The Federal Reserve projected GDP growth of 2.5â3% in 2010; an unemployment plateau in 2009 and 2010 around 10% with moderation in 2011; and inflation rates around 1â2%.[\[191\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-191)
- May 1, 2009: People protested economic conditions globally during the [2009 May Day protests](https://en.wikipedia.org/wiki/2009_May_Day_protests "2009 May Day protests").
- May 20, 2009: President Obama signed the [Fraud Enforcement and Recovery Act of 2009](https://en.wikipedia.org/wiki/Fraud_Enforcement_and_Recovery_Act_of_2009 "Fraud Enforcement and Recovery Act of 2009").
- June 2009: The [National Bureau of Economic Research](https://en.wikipedia.org/wiki/National_Bureau_of_Economic_Research "National Bureau of Economic Research") (NBER) declared June 2009 as the end date of the U.S. recession.[\[192\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-192) The [Federal Open Market Committee](https://en.wikipedia.org/wiki/Federal_Open_Market_Committee "Federal Open Market Committee") release in June 2009 stated:
> ... the pace of economic contraction is slowing. Conditions in financial markets have generally improved in recent months. Household spending has shown further signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Businesses are cutting back on fixed investment and staffing but appear to be making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable [economic growth](https://en.wikipedia.org/wiki/Economic_growth "Economic growth") in a context of price stability.[\[193\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-193)
- June 17, 2009: [Barack Obama](https://en.wikipedia.org/wiki/Barack_Obama "Barack Obama") and key advisers introduced a series of regulatory proposals that addressed [consumer protection](https://en.wikipedia.org/wiki/Consumer_protection "Consumer protection"), [executive pay](https://en.wikipedia.org/wiki/Executive_pay "Executive pay"), bank capital requirements, expanded regulation of the [shadow banking system](https://en.wikipedia.org/wiki/Shadow_banking_system "Shadow banking system") and [derivatives](https://en.wikipedia.org/wiki/Derivative_\(finance\) "Derivative (finance)"), and enhanced authority for the Federal Reserve to safely wind down systemically important institutions.[\[194\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-194)[\[195\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-195)[\[196\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-196)
- December 11, 2009: [United States House of Representatives](https://en.wikipedia.org/wiki/United_States_House_of_Representatives "United States House of Representatives") passed bill H.R. 4173, a precursor to what became the [DoddâFrank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act "DoddâFrank Wall Street Reform and Consumer Protection Act").[\[197\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-197)
- January 22, 2010: President Obama introduced "The [Volcker Rule](https://en.wikipedia.org/wiki/Volcker_Rule "Volcker Rule")" limiting the ability of banks to engage in [proprietary trading](https://en.wikipedia.org/wiki/Proprietary_trading "Proprietary trading"), named after [Paul Volcker](https://en.wikipedia.org/wiki/Paul_Volcker "Paul Volcker"), who publicly argued for the proposed changes.[\[198\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-198)[\[199\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-199) Obama also proposed a [Financial Crisis Responsibility Fee](https://en.wikipedia.org/wiki/Financial_Crisis_Responsibility_Fee "Financial Crisis Responsibility Fee") on large banks.
- January 27, 2010: President Obama declared on "the markets are now stabilized, and we've recovered most of the money we spent on the banks".[\[200\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-200)
- First quarter 2010: Delinquency rates in the United States peaked at 11.54%.[\[201\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-201)
- April 15, 2010: U.S. Senate introduced bill S.3217, [Restoring American Financial Stability Act of 2010](https://en.wikipedia.org/wiki/Restoring_American_Financial_Stability_Act_of_2010 "Restoring American Financial Stability Act of 2010").[\[202\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-202)
- May 2010: The U.S. Senate passed the [Dodd-Frank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd-Frank_Wall_Street_Reform_and_Consumer_Protection_Act "Dodd-Frank Wall Street Reform and Consumer Protection Act"). The Volcker Rule against proprietary trading was not part of the legislation.[\[203\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-203)
- July 21, 2010: [DoddâFrank Wall Street Reform and Consumer Protection Act](https://en.wikipedia.org/wiki/Dodd%E2%80%93Frank_Wall_Street_Reform_and_Consumer_Protection_Act "DoddâFrank Wall Street Reform and Consumer Protection Act") enacted.[\[204\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-204)[\[205\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-205)
- September 12, 2010: European regulators introduced [Basel III](https://en.wikipedia.org/wiki/Basel_III "Basel III") regulations for banks, which increased capital ratios, limits on leverage, narrowed the definition of capital to exclude subordinated debt, limited counter-party risk, and added liquidity requirements.[\[206\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-206)[\[207\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-207) Critics argued that Basel III didn't address the problem of faulty risk-weightings. Major banks suffered losses from AAA-rated created by [financial engineering](https://en.wikipedia.org/wiki/Financial_engineering "Financial engineering") (which creates apparently risk-free assets out of high risk collateral) that required less capital according to Basel II. Lending to AA-rated sovereigns has a risk-weight of zero, thus increasing lending to governments and leading to the next crisis.[\[208\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-208) [Johan Norberg](https://en.wikipedia.org/wiki/Johan_Norberg "Johan Norberg") argued that regulations (Basel III among others) have indeed led to excessive lending to risky governments (see [Euro area crisis](https://en.wikipedia.org/wiki/Euro_area_crisis "Euro area crisis")) and the [European Central Bank](https://en.wikipedia.org/wiki/European_Central_Bank "European Central Bank") pursues even more lending as the solution.[\[209\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-209)
- November 3, 2010: To improve economic growth, the Federal Reserve announced another round of [quantitative easing](https://en.wikipedia.org/wiki/Quantitative_easing "Quantitative easing"), dubbed QE2, which included the purchase of \$600 billion in long-term [Treasuries](https://en.wikipedia.org/wiki/United_States_Treasury_security "United States Treasury security") over the following eight months.[\[210\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-210)
- March 2011: Two years after the [nadir](https://en.wikipedia.org/wiki/Nadir "Nadir") of the crisis, many stock market indices were 75% above their lows set in March 2009. Nevertheless, the lack of fundamental changes in banking and financial markets worried many market participants, including the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund").[\[211\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Over-211)
- 2011: Median household wealth fell 35% in the U.S., from \$106,591 to \$68,839 between 2005 and 2011.[\[212\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Kurtzleben-212)
- May 2012: The [Manhattan District Attorney](https://en.wikipedia.org/wiki/Manhattan_District_Attorney "Manhattan District Attorney") indicted [Abacus Federal Savings Bank](https://en.wikipedia.org/wiki/Abacus_Federal_Savings_Bank "Abacus Federal Savings Bank") and 19 employees for selling fraudulent mortgages to [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae"). The bank was acquitted in 2015. Abacus was the only bank prosecuted for misbehavior that precipitated the crisis.
- July 26, 2012: During the [European debt crisis](https://en.wikipedia.org/wiki/European_debt_crisis "European debt crisis"), [President of the European Central Bank](https://en.wikipedia.org/wiki/President_of_the_European_Central_Bank "President of the European Central Bank") [Mario Draghi](https://en.wikipedia.org/wiki/Mario_Draghi "Mario Draghi") announced that "The ECB is ready to do whatever it takes to preserve the euro".[\[213\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-213)
- August 2012: In the United States, many homeowners still faced foreclosure and could not refinance or modify their mortgages. Foreclosure rates remained high.[\[214\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-214)
- September 13, 2012: To improve lower interest rates, support mortgage markets, and make financial conditions more accommodative, the Federal Reserve announced another round of [quantitative easing](https://en.wikipedia.org/wiki/Quantitative_easing "Quantitative easing"), dubbed QE3, which included the purchase of \$40 billion in long-term [Treasuries](https://en.wikipedia.org/wiki/United_States_Treasury_security "United States Treasury security") each month.[\[215\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-215)
- 2014: A report showed that the distribution of household incomes in the United States became more unequal during the post-2008 [economic recovery](https://en.wikipedia.org/wiki/Economic_recovery "Economic recovery"), a first for the United States but in line with the trend over the last ten economic recoveries since 1949.[\[216\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-216)[\[217\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-217) [Income inequality in the United States](https://en.wikipedia.org/wiki/Income_inequality_in_the_United_States "Income inequality in the United States") grew from 2005 to 2012 in more than 2 out of 3 metropolitan areas.[\[218\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-218)
- June 2015: A study commissioned by the [ACLU](https://en.wikipedia.org/wiki/ACLU "ACLU") found that white home-owning households recovered from the financial crisis faster than black home-owning households, widening the [racial wealth gap](https://en.wikipedia.org/wiki/Racial_wealth_gap "Racial wealth gap") in the U.S.[\[219\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-219)
- 2017: Per the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund"), from 2007 to 2017, "advanced" economies accounted for only 26.5% of global [GDP](https://en.wikipedia.org/wiki/GDP "GDP") ([PPP](https://en.wikipedia.org/wiki/Purchasing_power_parity "Purchasing power parity")) growth while emerging and developing economies accounted for 73.5% of global GDP (PPP) growth.[\[220\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-220)
- August 2023: [UBS](https://en.wikipedia.org/wiki/UBS "UBS") reaches an agreement with the [United States Department of Justice](https://en.wikipedia.org/wiki/United_States_Department_of_Justice "United States Department of Justice") to pay a combined \$1.435 billion in civil penalties to settle a legacy matter from 2006â2007 related to the issuance, underwriting and sale of residential mortgage-backed securities.[\[221\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-221)
- In 2023, the failure of [Silicon Valley Bank](https://en.wikipedia.org/wiki/Collapse_of_Silicon_Valley_Bank "Collapse of Silicon Valley Bank") kicked off a banking crisis in the United States, triggering a sharp decline in global bank stock prices and swift response by regulators to prevent potential global contagion. Many investors feared it would evolve into a global financial crisis. Fears of âtoo big to failâ US banks were reminiscent of the 2008 crisis.
In the table, the names of emerging and developing economies are shown in boldface type, while the names of developed economies are in Roman (regular) type.
| Economy | Incremental GDP (billions in USD) |
|---|---|
| (01) ** China** | 14,147 |
| (02) ** India** | 5,348 |
| (03)  United States | 4,913 |
| (â)  European Union | 4,457 |
| (04) ** Indonesia** | 1,632 |
| (05) ** Turkey** | 1,024 |
| (06)  Japan | 1,003 |
| (07)  Germany | 984 |
| (08) ** Russia** | 934 |
| (09) ** Brazil** | 919 |
| (10)  South Korea | 744 |
| (11) ** Mexico** | 733 |
| (12) ** Saudi Arabia** | 700 |
| (13)  United Kingdom | 671 |
| (14)  France | 566 |
| (15) ** Nigeria** | 523 |
| (16) ** Egypt** | 505 |
| (17)  Canada | 482 |
| (18) ** Iran** | 462 |
| (19) ** Thailand** | 447 |
| (20) ** Philippines** | 440 |
| The twenty largest economies contributing to global GDP (PPP) growth (2007â2017)[\[222\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-222) | |
## Federal actions towards the crisis
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=13 "Edit section: Federal actions towards the crisis")\]
[](https://en.wikipedia.org/wiki/File:HOUSING_FINANCE_REFORM-_ESSENTIAL_ELEMENTS_OF_A_GOVERNMENT_GUARANTEE_FOR_MORTGAGE-BACKED_SECURITIES_\(IA_gov.gpo.fdsys.CHRG-113shrg86598\).pdf)
Housing Finance Reform Bill
The expansion of central bank lending in response to the crisis was not confined to the [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve")'s provision of aid to individual financial institutions. The Federal Reserve has also conducted several innovative lending programs to improve liquidity and strengthen different financial institutions and markets, such as [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac") and [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae"). In this case, the major problem in the market is the lack of free cash reserves and flows to secure the loans. The Federal Reserve took many steps to deal with financial market liquidity worries. One of these steps was a credit line for major traders, who act as the Fed's partners in open market activities.[\[223\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-223) Also, loan programs were set up to make the money market mutual funds and commercial paper market more flexible. Also, the [Term Asset-Backed Securities Loan Facility](https://en.wikipedia.org/wiki/Term_Asset-Backed_Securities_Loan_Facility "Term Asset-Backed Securities Loan Facility") (TALF) was put in place thanks to a joint effort with the US Department of the Treasury. This plan made it easier for consumers and businesses to get credit by giving Americans who owned high-quality asset-backed securities more credit.
Before the crisis, the Federal Reserve's stocks of Treasury securities were sold to pay for the increase in credit. This method was meant to keep banks from trying to give out their extra savings, which could cause the federal funds rate to drop below where it was supposed to be.[\[224\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-224) However, in October 2008, the Federal Reserve was granted the power to provide banks with interest payments on their surplus reserves. This created a motivation for banks to retain their reserves instead of disbursing them, thus reducing the need for the Federal Reserve to hedge its increased lending by decreases in alternative assets.[\[225\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-225)
Money market funds also went through runs when people lost faith in the market. To keep it from getting worse, the Fed said it would give money to mutual fund companies. Also, the [Department of Treasury](https://en.wikipedia.org/wiki/United_States_Department_of_the_Treasury "United States Department of the Treasury") said that it would briefly cover the assets of the fund. Both of these things helped get the fund market back to normal, which helped the commercial paper market, which most businesses use to run. The [FDIC](https://en.wikipedia.org/wiki/FDIC "FDIC") also did several things, such as raising the insurance cap from \$100,000 to \$250,000, to boost customer trust.
[](https://en.wikipedia.org/wiki/File:Marriner_S._Eccles_Federal_Reserve_Board_Building.jpg)
Headquarters of the United States Federal Reserve System
They engaged in [quantitative easing](https://en.wikipedia.org/wiki/Quantitative_easing "Quantitative easing"), which added more than \$4 trillion to the financial system and got banks to start lending again, both to each other and to people. Many homeowners who were trying to keep their homes from going into default got housing credits. A package of policies was passed that let borrowers refinance their loans even though the value of their homes was less than what they still owed on their [mortgages](https://en.wikipedia.org/wiki/Mortgage "Mortgage").[\[226\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:03-226)
[](https://en.wikipedia.org/wiki/File:FFR_treasuries.webp)
The [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") raised the [Federal funds rate](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") causing an [Inverted yield curve](https://en.wikipedia.org/wiki/Inverted_yield_curve "Inverted yield curve") to slow inflation and get prices and [commodity](https://en.wikipedia.org/wiki/Commodity "Commodity") prices down, that usually puts the economy into a [recession](https://en.wikipedia.org/wiki/Recession "Recession").
10 Year Treasury Bond
2 Year Treasury Bond
3 month Treasury Bond
Effective Federal Funds Rate
[Recessions](https://en.wikipedia.org/wiki/List_of_recessions_in_the_United_States "List of recessions in the United States")
While the causes of the bubble and subsequent crash are disputed, the precipitating factor for the Financial Crisis of 2007â2008 was the bursting of the [United States housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble") and the subsequent [subprime mortgage crisis](https://en.wikipedia.org/wiki/Subprime_mortgage_crisis "Subprime mortgage crisis"), which occurred due to a high default rate and resulting foreclosures of [mortgage loans](https://en.wikipedia.org/wiki/Mortgage_loan "Mortgage loan"), particularly [adjustable-rate mortgages](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage"). Some or all of the following factors contributed to the crisis:[\[227\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-4questions-227)[\[79\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-aspnewhome-79)[\[80\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Homeownership-80)
- In its January 2011 report, the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission") (FCIC, a committee of U.S. congressmen) concluded that the financial crisis was avoidable and was caused by:[\[228\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-228)[\[229\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-229)[\[230\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-230)[\[231\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-231)[\[232\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-232)
- "widespread failures in [financial regulation](https://en.wikipedia.org/wiki/Financial_regulation "Financial regulation") and supervision", including the Federal Reserve's failure to stem the tide of [toxic assets](https://en.wikipedia.org/wiki/Toxic_asset "Toxic asset").
- "dramatic failures of [corporate governance](https://en.wikipedia.org/wiki/Corporate_governance "Corporate governance") and [risk management](https://en.wikipedia.org/wiki/Risk_management "Risk management") at many systemically important [financial institutions](https://en.wikipedia.org/wiki/Financial_institutions "Financial institutions")" including too many financial firms acting recklessly and taking on too much risk.
- "a combination of excessive borrowing, risky investments, and lack of transparency" by financial institutions and by households that put the financial system on a collision course with crisis.
- ill preparation and inconsistent action by government and key policy makers lacking a full understanding of the financial system they oversaw that "added to the uncertainty and panic".
- a "systemic breakdown in accountability and ethics" at all levels.
- "collapsing mortgage-lending standards and the mortgage securitization pipeline".
- deregulation of '[over-the-counter](https://en.wikipedia.org/wiki/Over-the-counter_\(finance\) "Over-the-counter (finance)")' [derivatives](https://en.wikipedia.org/wiki/Derivative_\(finance\) "Derivative (finance)"), especially [credit default swaps](https://en.wikipedia.org/wiki/Credit_default_swap "Credit default swap").
- "the failures of credit rating agencies" to correctly price risk.
- "[Wall Street and the Financial Crisis: Anatomy of a Financial Collapse](https://en.wikipedia.org/wiki/Wall_Street_and_the_Financial_Crisis:_Anatomy_of_a_Financial_Collapse "Wall Street and the Financial Crisis: Anatomy of a Financial Collapse")" (known as the LevinâCoburn Report) by the [United States Senate](https://en.wikipedia.org/wiki/United_States_Senate "United States Senate") concluded that the crisis was the result of "high risk, complex financial products; undisclosed conflicts of interest; the failure of regulators, the credit rating agencies, and the market itself to rein in the excesses of Wall Street".[\[233\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-233)
- The high delinquency and default rates by homeowners, particularly those with subprime credit, led to a rapid devaluation of mortgage-backed securities including bundled loan portfolios, derivatives and credit default swaps. As the value of these assets plummeted, buyers for these securities evaporated and banks who were heavily invested in these assets began to experience a liquidity crisis.
- [Securitization](https://en.wikipedia.org/wiki/Securitization "Securitization"), a process in which many mortgages were bundled together and formed into new financial instruments called [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities"), allowed for shifting of risk and lax underwriting standards. These bundles could be sold as (ostensibly) low-risk securities partly because they were often backed by [credit default swap](https://en.wikipedia.org/wiki/Credit_default_swap "Credit default swap") insurance.[\[234\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-234) Because mortgage lenders could pass these mortgages (and the associated risks) on in this way, they could and did adopt loose underwriting criteria.
- Lax regulation allowed [predatory lending](https://en.wikipedia.org/wiki/Predatory_lending "Predatory lending") in the private sector,[\[235\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-235)[\[236\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-236) especially after the federal government overrode anti-predatory state laws in 2004.[\[237\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-237)
- The [Community Reinvestment Act](https://en.wikipedia.org/wiki/Community_Reinvestment_Act "Community Reinvestment Act") (CRA),[\[238\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-238) a 1977 U.S. federal law designed to help low- and moderate-income Americans get mortgage loans required banks to grant mortgages to higher risk families.[\[239\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-239)[\[240\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-240)[\[241\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-241)[\[242\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-242) Granted, in 2009, Federal Reserve economists found that "only a small portion of subprime mortgage originations \[related\] to the CRA", and that "CRA-related loans appear\[ed\] to perform comparably to other types of subprime loans". These findings "run counter to the contention that the CRA contributed in any substantive way to the \[mortgage crisis\]."[\[243\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-243)
- Reckless lending by lenders such as Bank of America's [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial") unit was increasingly incentivized and even mandated by government regulation.[\[244\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:1-244)[\[245\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:3-245)[\[246\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-246) This may have caused [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae") and [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac") to lose market share and to respond by lowering their own standards.[\[247\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-247)
- Mortgage guarantees by Fannie Mae and Freddie Mac, quasi-government agencies, which purchased many subprime loan securitizations.[\[248\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-248) The implicit guarantee by the U.S. federal government created a [moral hazard](https://en.wikipedia.org/wiki/Moral_hazard "Moral hazard") and contributed to a glut of risky lending.
- Government policies that encouraged home ownership, providing easier access to loans for subprime borrowers; overvaluation of bundled subprime mortgages based on the theory that housing prices would continue to escalate; questionable trading practices on behalf of both buyers and sellers; compensation structures by banks and mortgage originators that prioritize short-term deal flow over long-term value creation; and a lack of adequate capital holdings from banks and insurance companies to back the financial commitments they were making.[\[249\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-249)[\[250\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-250)
- The 1999 [Gramm-Leach-Bliley Act](https://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act "Gramm-Leach-Bliley Act"), which partially repealed the [Glass-Steagall Act](https://en.wikipedia.org/wiki/Glass-Steagall_Act "Glass-Steagall Act"), effectively removed the separation between [investment banks](https://en.wikipedia.org/wiki/Investment_bank "Investment bank") and depository banks in the United States and increased speculation on the part of depository banks.[\[251\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-251)
- [Credit rating agencies](https://en.wikipedia.org/wiki/Credit_rating_agencies "Credit rating agencies") and investors failed to accurately price the [financial risk](https://en.wikipedia.org/wiki/Financial_risk "Financial risk") involved with [mortgage loan](https://en.wikipedia.org/wiki/Mortgage_loan "Mortgage loan")\-related financial products, and governments did not adjust their regulatory practices to address changes in financial markets.[\[252\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-252)[\[253\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-253)[\[254\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-declaration-254)
- Variations in the cost of borrowing.[\[255\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-255)
- [Fair value accounting](https://en.wikipedia.org/wiki/Fair_value_accounting_and_the_subprime_mortgage_crisis "Fair value accounting and the subprime mortgage crisis") was issued as U.S. accounting standard [SFAS 157](https://en.wikipedia.org/wiki/SFAS_157 "SFAS 157") in 2006 by the privately run [Financial Accounting Standards Board](https://en.wikipedia.org/wiki/Financial_Accounting_Standards_Board "Financial Accounting Standards Board") (FASB)âto which the SEC had delegated the task of establishing financial reporting standards.[\[256\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-256) This required that tradable assets such as [mortgage securities](https://en.wikipedia.org/wiki/Mortgage_securities "Mortgage securities") be valued according to their current market value rather than their historic cost or some future expected value. When the market for such securities became volatile and collapsed, the resulting loss of value had a major financial effect upon the institutions holding them even if they had no immediate plans to sell them.[\[257\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-257)
- Easy availability of credit in the US, fueled by large inflows of foreign funds after the [1998 Russian financial crisis](https://en.wikipedia.org/wiki/1998_Russian_financial_crisis "1998 Russian financial crisis") and [1997 Asian financial crisis](https://en.wikipedia.org/wiki/1997_Asian_financial_crisis "1997 Asian financial crisis") of the 1997â1998 period, led to a housing construction boom and facilitated debt-financed consumer spending. As banks began to give out more loans to potential home owners, housing prices began to rise. Lax lending standards and rising real estate prices also contributed to the real estate bubble. Loans of various types (e.g., mortgage, credit card, and auto) were easy to obtain and consumers assumed an unprecedented debt load.[\[258\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-258)[\[227\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-4questions-227)[\[259\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-259)
- As part of the housing and credit booms, the number of [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities") (MBS) and [collateralized debt obligations](https://en.wikipedia.org/wiki/Collateralized_debt_obligation "Collateralized debt obligation") (CDO), which derived their value from mortgage payments and housing prices, greatly increased. Such [financial innovation](https://en.wikipedia.org/wiki/Financial_innovation "Financial innovation") enabled institutions and investors to invest in the U.S. housing market. As housing prices declined, these investors reported significant losses.[\[260\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-imfloss-260)
- Falling prices also resulted in homes worth less than the mortgage loans, providing borrowers with a financial incentive to enter foreclosure. Foreclosure levels were elevated until early 2014.[\[261\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-261) drained significant wealth from consumers, losing up to \$4.2 [trillion](https://en.wikipedia.org/wiki/Trillion_\(short_scale\) "Trillion (short scale)")[\[262\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-262) Defaults and losses on other loan types also increased significantly as the crisis expanded from the housing market to other parts of the economy. Total losses were estimated in the trillions of U.S. dollars globally.[\[260\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-imfloss-260)
- [Financialization](https://en.wikipedia.org/wiki/Financialization "Financialization") â the increased use of leverage in the financial system.
- Financial institutions such as investment banks and hedge funds, as well as certain, differently regulated banks, assumed significant debt burdens while providing the loans described above and did not have a financial cushion sufficient to absorb large loan defaults or losses.[\[263\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-263) These losses affected the ability of financial institutions to lend, slowing economic activity.
- Some critics contend that government mandates forced banks to extend loans to borrowers previously considered uncreditworthy, leading to increasingly lax underwriting standards and high mortgage approval rates.[\[264\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:0-264)[\[244\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:1-244)[\[265\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:2-265)[\[245\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:3-245) These, in turn, led to an increase in the number of homebuyers, which drove up housing prices. This appreciation in value led many homeowners to borrow against the equity in their homes as an apparent windfall, leading to over-leveraging.
[](https://en.wikipedia.org/wiki/File:U.S._Home_Ownership_and_Subprime_Origination_Share.png)
US subprime lending expanded dramatically 2004â2006
The relaxing of credit lending standards by investment banks and commercial banks allowed for a significant increase in [subprime lending](https://en.wikipedia.org/wiki/Subprime_lending "Subprime lending"). Subprime had not become less risky; Wall Street just accepted this higher risk.[\[266\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-266)
Due to competition between mortgage lenders for revenue and market share, and when the supply of creditworthy borrowers was limited, mortgage lenders relaxed underwriting standards and originated riskier mortgages to less creditworthy borrowers. In the view of some analysts, the relatively conservative [government-sponsored enterprises](https://en.wikipedia.org/wiki/Government-sponsored_enterprise "Government-sponsored enterprise") (GSEs) policed mortgage originators and maintained relatively high underwriting standards prior to 2003. However, as market power shifted from securitizers to originators, and as intense competition from private securitizers undermined GSE power, mortgage standards declined and risky loans proliferated. The riskiest loans were originated in 2004â2007, the years of the most intense competition between securitizers and the lowest market share for the GSEs. The GSEs eventually relaxed their standards to try to catch up with the private banks.[\[267\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-267)[\[268\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-268)
A contrarian view is that [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae") and [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac") led the way to relaxed underwriting standards, starting in 1995, by advocating the use of easy-to-qualify automated underwriting and appraisal systems, by designing no-down-payment products issued by lenders, by the promotion of thousands of small mortgage brokers, and by their close relationship to subprime loan aggregators such as [Countrywide](https://en.wikipedia.org/wiki/Bank_of_America_Home_Loans "Bank of America Home Loans").[\[269\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-269)[\[270\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-270)
Depending on how "subprime" mortgages are defined, they remained below 10% of all mortgage originations until 2004, when they rose to nearly 20% and remained there through the 2005â2006 peak of the [United States housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble").[\[271\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-271)
#### Role of affordable housing programs
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=16 "Edit section: Role of affordable housing programs")\]
The majority report of the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission"), written by the six Democratic appointees, the minority report, written by three of the four Republican appointees, studies by [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") economists, and the work of several independent scholars generally contend that government [affordable housing](https://en.wikipedia.org/wiki/Affordable_housing "Affordable housing") policy was not the primary cause of the financial crisis. Although they concede that governmental policies had some role in causing the crisis, they contend that GSE loans performed better than loans securitized by private investment banks, and performed better than some loans originated by institutions that held loans in their own portfolios.
In his dissent to the majority report of the Financial Crisis Inquiry Commission, conservative [American Enterprise Institute](https://en.wikipedia.org/wiki/American_Enterprise_Institute "American Enterprise Institute") [fellow](https://en.wikipedia.org/wiki/Fellow "Fellow") [Peter J. Wallison](https://en.wikipedia.org/wiki/Peter_J._Wallison "Peter J. Wallison")[\[272\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-272) stated his belief that the roots of the financial crisis can be traced directly and primarily to affordable housing policies initiated by the [United States Department of Housing and Urban Development](https://en.wikipedia.org/wiki/United_States_Department_of_Housing_and_Urban_Development "United States Department of Housing and Urban Development") (HUD) in the 1990s and to massive risky loan purchases by government-sponsored entities Fannie Mae and Freddie Mac. Based upon information in the SEC's December 2011 securities fraud case against six former executives of Fannie and Freddie, Peter Wallison and Edward Pinto estimated that, in 2008, Fannie and Freddie held 13 million substandard loans totaling over \$2 trillion.[\[273\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-273)
In the early and mid-2000s, the [Bush administration](https://en.wikipedia.org/wiki/Presidency_of_George_W._Bush "Presidency of George W. Bush") called numerous times for investigations into the safety and soundness of the GSEs and their swelling portfolio of subprime mortgages\[*[citation needed](https://en.wikipedia.org/wiki/Wikipedia:Citation_needed "Wikipedia:Citation needed")*\]. On September 10, 2003, the [United States House Committee on Financial Services](https://en.wikipedia.org/wiki/United_States_House_Committee_on_Financial_Services "United States House Committee on Financial Services") held a hearing, at the urging of the administration, to assess safety and soundness issues and to review a recent report by the [Office of Federal Housing Enterprise Oversight](https://en.wikipedia.org/wiki/Office_of_Federal_Housing_Enterprise_Oversight "Office of Federal Housing Enterprise Oversight") (OFHEO) that had uncovered accounting discrepancies within the two entities.[\[274\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-274)[\[275\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-275) The hearings never resulted in new legislation or formal investigation of Fannie Mae and Freddie Mac, as many of the committee members refused to accept the report and instead rebuked OFHEO for their attempt at regulation.[\[276\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-276) Some, such as Wallison, believe this was an early warning to the systemic risk that the growing market in subprime mortgages posed to the U.S. financial system that went unheeded.[\[277\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-277)
A 2000 [United States Department of the Treasury](https://en.wikipedia.org/wiki/United_States_Department_of_the_Treasury "United States Department of the Treasury") study of lending trends for 305 cities from 1993 to 1998 showed that \$467 billion of mortgage lending was made by [Community Reinvestment Act](https://en.wikipedia.org/wiki/Community_Reinvestment_Act "Community Reinvestment Act") (CRA)-covered lenders into low and mid-level income (LMI) borrowers and neighborhoods, representing 10% of all U.S. mortgage lending during the period. The majority of these were prime loans. Sub-prime loans made by CRA-covered institutions constituted a 3% market share of LMI loans in 1998,[\[278\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-278) but in the run-up to the crisis, fully 25% of all subprime lending occurred at CRA-covered institutions and another 25% of subprime loans had some connection with CRA.[\[279\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-279) However, most sub-prime loans were not made to the LMI borrowers targeted by the CRA,[\[280\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-280)[\[281\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:4-281) especially in the years 2005â2006 leading up to the crisis,[\[282\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-282)[\[281\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:4-281)[\[283\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-283) nor did it find any evidence that lending under the CRA rules increased delinquency rates or that the CRA indirectly influenced independent mortgage lenders to ramp up sub-prime lending.[\[284\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-284)\[*[verification needed](https://en.wikipedia.org/wiki/Wikipedia:Verifiability "Wikipedia:Verifiability")*\]
To other analysts the delay between CRA rule changes in 1995 and the explosion of subprime lending is not surprising, and does not exonerate the CRA. They contend that there were two, connected causes to the crisis: the relaxation of underwriting standards in 1995 and the ultra-low interest rates initiated by the Federal Reserve after the terrorist attack on September 11, 2001. Both causes had to be in place before the crisis could take place.[\[285\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-285) Critics also point out that publicly announced CRA loan commitments were massive, totaling \$4.5 trillion in the years between 1994 and 2007.[\[286\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-286) They also argue that the Federal Reserve's classification of CRA loans as "prime" is based on the faulty and self-serving assumption that high-interest-rate loans (3 percentage points over average) equal "subprime" loans.[\[287\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-287)
Others have pointed out that there were not enough of these loans made to cause a crisis of this magnitude. In an article in *Portfolio* magazine, [Michael Lewis](https://en.wikipedia.org/wiki/Michael_Lewis "Michael Lewis") spoke with one trader who noted that "There weren't enough Americans with \[bad\] credit taking out \[bad loans\] to satisfy investors' appetite for the end product." Essentially, investment banks and hedge funds used financial innovation to enable large wagers to be made, far beyond the actual value of the underlying mortgage loans, using [derivatives](https://en.wikipedia.org/wiki/Derivative_\(finance\) "Derivative (finance)") called credit default swaps, collateralized debt obligations and [synthetic CDOs](https://en.wikipedia.org/wiki/Synthetic_CDO "Synthetic CDO").
By March 2011, the FDIC had paid out \$9 billion (c. \$12.3 billion in 2024[\[288\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-inflation-USGDP-288)) to cover losses on bad loans at 165 failed financial institutions.[\[289\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-post-289)[\[290\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-290) The Congressional Budget Office estimated, in June 2011, that the bailout to Fannie Mae and Freddie Mac exceeds \$300 billion (c. \$411 billion in 2024[\[288\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-inflation-USGDP-288)) (calculated by adding the fair value deficits of the entities to the direct bailout funds at the time).[\[291\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-291)
Economist [Paul Krugman](https://en.wikipedia.org/wiki/Paul_Krugman "Paul Krugman") argued in January 2010 that the simultaneous growth of the residential and commercial real estate pricing bubbles and the global nature of the crisis undermines the case made by those who argue that Fannie Mae, Freddie Mac, CRA, or predatory lending were primary causes of the crisis. In other words, bubbles in both markets developed even though only the residential market was affected by these potential causes.[\[292\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-292)
Countering Krugman, Wallison wrote: "It is not true that every bubbleâeven a large bubbleâhas the potential to cause a financial crisis when it deflates." Wallison notes that other developed countries had "large bubbles during the 1997â2007 period" but "the losses associated with mortgage delinquencies and defaults when these bubbles deflated were far lower than the losses suffered in the United States when the 1997â2007 \[bubble\] deflated." According to Wallison, the reason the U.S. *residential housing* bubble (as opposed to other types of bubbles) led to financial crisis was that it was supported by a huge number of substandard loansâgenerally with low or no downpayments.[\[293\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-293)
Krugman's contention (that the growth of a commercial real estate bubble indicates that U.S. housing policy was not the cause of the crisis) is challenged by additional analysis. After researching the default of commercial loans during the financial crisis, Xudong An and Anthony B. Sanders reported (in December 2010): "We find limited evidence that substantial deterioration in [CMBS](https://en.wikipedia.org/wiki/CMBS "CMBS") \[commercial mortgage-backed securities\] loan underwriting occurred prior to the crisis."[\[294\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-294) Other analysts support the contention that the crisis in commercial real estate and related lending took place *after* the crisis in residential real estate. Business journalist Kimberly Amadeo reported: "The first signs of decline in residential real estate occurred in 2006. Three years later, commercial real estate started feeling the effects."\[*[verification needed](https://en.wikipedia.org/wiki/Wikipedia:Verifiability "Wikipedia:Verifiability")*\][\[295\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-295) Denice A. Gierach, a real estate attorney and CPA, wrote:
> ... most of the commercial real estate loans were good loans destroyed by a really bad economy. In other words, the borrowers did not cause the loans to go bad-it was the economy.[\[296\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-296)
### Growth of the housing bubble
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=17 "Edit section: Growth of the housing bubble")\]
[](https://en.wikipedia.org/wiki/File:Median_and_Average_Sales_Prices_of_New_Homes_Sold_in_United_States_1963-2016_annual.svg)
A graph showing the median and average sales prices of new homes sold in the United States between 1963 and 2016 (not adjusted for inflation)[\[79\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-aspnewhome-79)
Between 1998 and 2006, the price of the typical American house increased by 124%.[\[297\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-297) During the 1980s and 1990s, the national median home price ranged from 2.9 to 3.1 times median household income. By contrast, this ratio increased to 4.0 in 2004, and 4.6 in 2006.[\[298\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-298) This [housing bubble](https://en.wikipedia.org/wiki/Housing_bubble "Housing bubble") resulted in many homeowners refinancing their homes at lower interest rates, or financing consumer spending by taking out [second mortgages](https://en.wikipedia.org/wiki/Second_mortgage "Second mortgage") secured by the price appreciation.
In a [Peabody Award](https://en.wikipedia.org/wiki/Peabody_Award "Peabody Award")\-winning program, [NPR](https://en.wikipedia.org/wiki/NPR "NPR") correspondents argued that a "Giant Pool of Money" (represented by \$70 trillion in worldwide fixed income investments) sought higher yields than those offered by U.S. Treasury bonds early in the decade. This pool of money had roughly doubled in size from 2000 to 2007, yet the supply of relatively safe, income generating investments had not grown as fast. Investment banks on Wall Street answered this demand with products such as the [mortgage-backed security](https://en.wikipedia.org/wiki/Mortgage-backed_security "Mortgage-backed security") and the [collateralized debt obligation](https://en.wikipedia.org/wiki/Collateralized_debt_obligation "Collateralized debt obligation") that were assigned safe [ratings](https://en.wikipedia.org/wiki/Credit_rating "Credit rating") by the [credit rating agencies](https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis "Credit rating agencies and the subprime crisis").[\[299\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-giantpool-299)
In effect, Wall Street connected this pool of money to the mortgage market in the US, with enormous fees accruing to those throughout the mortgage [supply chain](https://en.wikipedia.org/wiki/Supply_chain "Supply chain"), from the mortgage broker selling the loans to small banks that funded the brokers and the large investment banks behind them. By approximately 2003, the supply of mortgages originated at traditional lending standards had been exhausted, and continued strong demand began to drive down lending standards.[\[299\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-giantpool-299)
The collateralized debt obligation in particular enabled financial institutions to obtain investor funds to finance subprime and other lending, extending or increasing the housing bubble and generating large fees. This essentially places cash payments from multiple mortgages or other debt obligations into a single pool from which specific securities draw in a specific sequence of priority. Those securities first in line received investment-grade ratings from rating agencies. Securities with lower priority had lower credit ratings but theoretically a higher rate of return on the amount invested.[\[300\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-300)
By September 2008, average U.S. housing prices had declined by over 20% from their mid-2006 peak.[\[301\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-301)[\[302\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-302) As prices declined, borrowers with [adjustable-rate mortgages](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage") could not refinance to avoid the higher payments associated with rising interest rates and began to default. During 2007, lenders began foreclosure proceedings on nearly 1.3 million properties, a 79% increase over 2006.[\[303\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-303) This increased to 2.3 million in 2008, an 81% increase vs. 2007.[\[304\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-304) By August 2008, approximately 9% of all U.S. mortgages outstanding were either delinquent or in foreclosure.[\[305\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-305) By September 2009, this had risen to 14.4%.[\[306\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-306)[\[307\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-307)
After the bubble burst, Australian economist [John Quiggin](https://en.wikipedia.org/wiki/John_Quiggin "John Quiggin") wrote: "And, unlike the Great Depression, this crisis was entirely the product of financial markets. There was nothing like the postwar turmoil of the 1920s, the struggles over gold convertibility and reparations, or the [Smoot-Hawley tariff](https://en.wikipedia.org/wiki/Smoot-Hawley_tariff "Smoot-Hawley tariff"), all of which have shared the blame for the Great Depression." Instead, Quiggin lays the blame for the 2008 near-meltdown on financial markets, on political decisions to lightly regulate them, and on rating agencies which had self-interested incentives to give good ratings.[\[308\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-308)
### Easy credit conditions
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=18 "Edit section: Easy credit conditions")\]
Lower interest rates encouraged borrowing. From 2000 to 2003, the [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") lowered the [federal funds rate](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") target from 6.5% to 1.0%.[\[309\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-309)[\[310\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-310) This was done to soften the effects of the collapse of the [dot-com bubble](https://en.wikipedia.org/wiki/Dot-com_bubble "Dot-com bubble") and the [September 11 attacks](https://en.wikipedia.org/wiki/September_11_attacks "September 11 attacks"), as well as to combat a perceived risk of [deflation](https://en.wikipedia.org/wiki/Deflation "Deflation").[\[311\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-311) As early as 2002, it was apparent that credit was fueling housing instead of business investment as some economists went so far as to advocate that the Fed "needs to create a housing bubble to replace the Nasdaq bubble".[\[312\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-312) Moreover, empirical studies using data from advanced countries show that excessive credit growth contributed greatly to the severity of the crisis.[\[313\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-313)
[](https://en.wikipedia.org/wiki/File:U.S._Trade_Deficit_Dollars_and_percentage_GDP.png)
US current account deficit
Additional downward pressure on interest rates was created by a growing U.S. [current account](https://en.wikipedia.org/wiki/Current_account_\(balance_of_payments\) "Current account (balance of payments)") deficit, which peaked along with the housing bubble in 2006. Federal Reserve chairman [Ben Bernanke](https://en.wikipedia.org/wiki/Ben_Bernanke "Ben Bernanke") explained how trade deficits required the U.S. to borrow money from abroad, in the process bidding up bond prices and lowering interest rates.[\[314\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-314)
Bernanke explained that between 1996 and 2004, the U.S. current account deficit increased by \$650 billion, from 1.5% to 5.8% of GDP. Financing these deficits required the country to borrow large sums from abroad, much of it from countries running trade surpluses. These were mainly the emerging economies in Asia and oil-exporting nations. The [balance of payments](https://en.wikipedia.org/wiki/Balance_of_payments "Balance of payments") [identity](https://en.wikipedia.org/wiki/Accounting_identity "Accounting identity") requires that a country (such as the US) running a [current account](https://en.wikipedia.org/wiki/Current_account_\(balance_of_payments\) "Current account (balance of payments)") deficit also have a [capital account](https://en.wikipedia.org/wiki/Capital_account "Capital account") (investment) surplus of the same amount. Hence large and growing amounts of foreign funds (capital) flowed into the U.S. to finance its imports.
All of this created demand for various types of financial assets, raising the prices of those assets while lowering interest rates. Foreign investors had these funds to lend either because they had very high personal savings rates (as high as 40% in China) or because of high oil prices. [Ben Bernanke](https://en.wikipedia.org/wiki/Ben_Bernanke "Ben Bernanke") referred to this as a "[saving glut](https://en.wikipedia.org/wiki/Saving_glut "Saving glut")".[\[315\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Bernanke-315)
A flood of funds ([capital](https://en.wikipedia.org/wiki/Financial_capital "Financial capital") or [liquidity](https://en.wikipedia.org/wiki/Liquidity "Liquidity")) reached the U.S. financial markets. Foreign governments supplied funds by purchasing [Treasury bonds](https://en.wikipedia.org/wiki/Treasury_bond "Treasury bond") and thus avoided much of the direct effect of the crisis. U.S. households used funds borrowed from foreigners to finance consumption or to bid up the prices of housing and financial assets. Financial institutions invested foreign funds in [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities").\[*[citation needed](https://en.wikipedia.org/wiki/Wikipedia:Citation_needed "Wikipedia:Citation needed")*\]
The Fed then raised the Fed funds rate significantly between July 2004 and July 2006.[\[316\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-316) This contributed to an increase in one-year and five-year [adjustable-rate mortgage](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage") (ARM) rates, making ARM interest rate resets more expensive for homeowners.[\[317\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-317) This may have also contributed to the deflation of the housing bubble, as asset prices generally move inversely to interest rates. It became riskier to speculate in housing.[\[318\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-318)[\[319\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-319) U.S. housing and financial assets dramatically declined in value after the housing bubble burst.[\[320\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-320)[\[32\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-greatcrash-32)
### Weak and fraudulent underwriting practices
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=19 "Edit section: Weak and fraudulent underwriting practices")\]
Subprime lending standards declined in the U.S.: in early 2000, a subprime borrower had a FICO score of 660 or less. By 2005, many lenders dropped the required FICO score to 620, making it much easier to qualify for prime loans and making subprime lending a riskier business. Proof of income and assets were de-emphasized. Loans at first required full documentation, then low documentation, then no documentation. One subprime mortgage product that gained wide acceptance was the no income, no job, no asset verification required (NINJA) mortgage. Informally, these loans were aptly referred to as "[liar loans](https://en.wikipedia.org/wiki/Liar_loans "Liar loans")" because they encouraged borrowers to be less than honest in the loan application process.[\[321\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-321) Testimony given to the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission") by [whistleblower](https://en.wikipedia.org/wiki/Whistleblower "Whistleblower") [Richard M. Bowen III](https://en.wikipedia.org/wiki/Richard_M._Bowen_III "Richard M. Bowen III") on events during his tenure as the Business Chief Underwriter for Correspondent Lending in the Consumer Lending Group for [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup"), where he was responsible for over 220 professional underwriters, suggests that by 2006 and 2007, the collapse of [mortgage underwriting](https://en.wikipedia.org/wiki/Mortgage_underwriting "Mortgage underwriting") standards was endemic. His testimony stated that by 2006, 60% of mortgages purchased by [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup") from some 1,600 mortgage companies were "defective" (were not underwritten to policy, or did not contain all policy-required documents). This, despite the fact that each of these 1,600 originators was contractually responsible (certified via representations and warrantees) that its mortgage originations met [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup") standards. Moreover, during 2007, "defective mortgages (from mortgage originators contractually bound to perform underwriting to [Citi's](https://en.wikipedia.org/wiki/Citigroup "Citigroup") standards) increased to over 80% of production".[\[322\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-322)
In separate testimony to the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission"), officers of Clayton Holdings, the largest residential loan due diligence and securitization surveillance company in the United States and Europe, testified that Clayton's review of over 900,000 mortgages issued from January 2006 to June 2007 revealed that scarcely 54% of the loans met their originators' underwriting standards. The analysis, conducted on behalf of 23 investment and commercial banks, including 7 "[too big to fail](https://en.wikipedia.org/wiki/Too_big_to_fail "Too big to fail")" banks, additionally showed that 28% of the sampled loans did not meet the minimal standards of any issuer. Clayton's analysis further showed that 39% of these loans (i.e. those not meeting *any* issuer's minimal underwriting standards) were subsequently securitized and sold to investors.[\[323\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-323)[\[324\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-324)
[Predatory lending](https://en.wikipedia.org/wiki/Predatory_lending "Predatory lending") refers to the practice of unscrupulous lenders enticing borrowers to enter into unfair or abusive secured loans for inappropriate purposes.[\[325\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-325)[\[326\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-326)[\[327\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-327)
In June 2008, [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial") was sued by then [California Attorney General](https://en.wikipedia.org/wiki/California_Attorney_General "California Attorney General") [Jerry Brown](https://en.wikipedia.org/wiki/Jerry_Brown "Jerry Brown") for unfair business practices and false advertising, alleging that Countrywide used "deceptive tactics to push homeowners into complicated, risky, and expensive loans so that the company could sell as many loans as possible to third-party investors".[\[328\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-328) In May 2009, Bank of America modified 64,000 Countrywide loans as a result.[\[329\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-329) When housing prices decreased, homeowners in ARMs then had little incentive to pay their monthly payments, since their home equity had disappeared. This caused Countrywide's financial condition to deteriorate, ultimately resulting in a decision by the [Office of Thrift Supervision](https://en.wikipedia.org/wiki/Office_of_Thrift_Supervision "Office of Thrift Supervision") to seize the lender. One Countrywide employee, who would later plead guilty to two counts of [wire fraud](https://en.wikipedia.org/wiki/Wire_fraud "Wire fraud") and spent 18 months in prison, stated that, "If you had a pulse, we gave you a loan."[\[330\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-330)
Former employees from [Ameriquest](https://en.wikipedia.org/wiki/Ameriquest "Ameriquest"), which was the United States' leading wholesale lender, described a system in which they were pushed to falsify mortgage documents and then sell the mortgages to Wall Street banks eager to make fast profits. There is growing evidence that such [mortgage frauds](https://en.wikipedia.org/wiki/Mortgage_fraud "Mortgage fraud") may be a cause of the crisis.[\[331\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-331)
### Deregulation and lack of regulation
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=21 "Edit section: Deregulation and lack of regulation")\]
According to Barry Eichengreen, the roots of the financial crisis lay in the deregulation of financial markets.[\[332\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:02-332) A 2012 OECD study[\[333\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-333) suggested that bank regulation based on the Basel accords encouraged unconventional business practices and contributed to or reinforced the financial crisis. In other cases, laws were changed or enforcement weakened in parts of the financial system. Key examples include:
- [Jimmy Carter](https://en.wikipedia.org/wiki/Jimmy_Carter "Jimmy Carter")'s [Depository Institutions Deregulation and Monetary Control Act](https://en.wikipedia.org/wiki/Depository_Institutions_Deregulation_and_Monetary_Control_Act "Depository Institutions Deregulation and Monetary Control Act") of 1980 (DIDMCA), which phased out several restrictions on banks' financial practices, broadened their lending powers, allowed [credit unions](https://en.wikipedia.org/wiki/Credit_union "Credit union") and [savings and loans](https://en.wikipedia.org/wiki/Savings_and_loan "Savings and loan") to offer [checkable deposits](https://en.wikipedia.org/wiki/Checkable_deposit "Checkable deposit"), and raised the [deposit insurance](https://en.wikipedia.org/wiki/Deposit_insurance "Deposit insurance") limit from \$40,000 to \$100,000 (thereby potentially lessening depositor scrutiny of lenders' risk management policies).[\[334\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-334)
- In October 1982, U.S. President [Ronald Reagan](https://en.wikipedia.org/wiki/Ronald_Reagan "Ronald Reagan") signed into law the [GarnâSt. Germain Depository Institutions Act](https://en.wikipedia.org/wiki/Garn%E2%80%93St._Germain_Depository_Institutions_Act "GarnâSt. Germain Depository Institutions Act"), which provided for [adjustable-rate mortgage](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage") loans, began the process of banking deregulation, and contributed to the [savings and loan crisis](https://en.wikipedia.org/wiki/Savings_and_loan_crisis "Savings and loan crisis") of the late 1980s/early 1990s.[\[335\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-335)[\[336\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-336)
- In November 1999, U.S. President Bill Clinton signed into law the Republican-sponsored [GrammâLeachâBliley Act](https://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act "GrammâLeachâBliley Act"), which repealed provisions of the Glass-Steagall Act that prohibited a [bank holding company](https://en.wikipedia.org/wiki/Bank_holding_company "Bank holding company") from owning other financial companies. The repeal effectively removed the separation that previously existed between Wall Street investment banks and depository banks, providing a government stamp of approval for a universal risk-taking banking model. Investment banks such as Lehman became competitors with commercial banks.[\[337\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-337) Some analysts say that this repeal directly contributed to the severity of the crisis, while others downplay its impact since the institutions that were greatly affected did not fall under the jurisdiction of the act itself.[\[338\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-338)[\[339\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-339)
- In 2004, the [U.S. Securities and Exchange Commission](https://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission "U.S. Securities and Exchange Commission") relaxed the [net capital rule](https://en.wikipedia.org/wiki/Net_capital_rule "Net capital rule"), which enabled investment banks to substantially increase the level of debt they were taking on, fueling the growth in mortgage-backed securities supporting subprime mortgages. The SEC conceded that self-regulation of investment banks contributed to the crisis.[\[340\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-340)[\[341\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-341)
- Financial institutions in the [shadow banking system](https://en.wikipedia.org/wiki/Shadow_banking_system "Shadow banking system") are not subject to the same regulation as depository banks, allowing them to assume additional debt obligations relative to their financial cushion or capital base.[\[342\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Krugman_2009-342) This was despite the [Long-Term Capital Management](https://en.wikipedia.org/wiki/Long-Term_Capital_Management "Long-Term Capital Management") debacle in 1998, in which a highly leveraged shadow institution failed with systemic implications and was bailed out.
- Regulators and accounting standard-setters allowed depository banks like [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup") to move significant assets and liabilities off-balance sheet into complex legal entities called [structured investment vehicles](https://en.wikipedia.org/wiki/Structured_investment_vehicles "Structured investment vehicles"), masking the weakness of the capital base of the firm or degree of [leverage](https://en.wikipedia.org/wiki/Financial_leverage "Financial leverage") or risk taken. [Bloomberg News](https://en.wikipedia.org/wiki/Bloomberg_News "Bloomberg News") estimated that the top four U.S. banks will have to return between \$500 billion and \$1 trillion to their balance sheets during 2009.[\[343\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-343) This increased uncertainty during the crisis regarding the financial position of the major banks.[\[344\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-344) Off-balance sheet entities were also used in the [Enron scandal](https://en.wikipedia.org/wiki/Enron_scandal "Enron scandal"), which brought down [Enron](https://en.wikipedia.org/wiki/Enron "Enron") in 2001.[\[345\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-345)
- As early as 1997, Federal Reserve chairman [Alan Greenspan](https://en.wikipedia.org/wiki/Alan_Greenspan "Alan Greenspan") fought to keep the derivatives market unregulated.[\[346\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-346) With the advice of the [Working Group on Financial Markets](https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets "Working Group on Financial Markets"),[\[347\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-347) the U.S. Congress and President Bill Clinton and the Republican-controlled U.S. Congress allowed the self-regulation of the [over-the-counter](https://en.wikipedia.org/wiki/Over-the-counter_\(finance\) "Over-the-counter (finance)") derivatives market when they enacted the [Commodity Futures Modernization Act of 2000](https://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000 "Commodity Futures Modernization Act of 2000"). Written by Congress with lobbying from the financial industry, it banned the further regulation of the derivatives market. Derivatives such as [credit default swaps](https://en.wikipedia.org/wiki/Credit_default_swaps "Credit default swaps") (CDS) could be used to hedge or speculate against particular credit risks without necessarily owning the underlying debt instruments. The volume of CDS outstanding increased 100-fold from 1998 to 2008, with estimates of the debt covered by CDS contracts, as of November 2008, ranging from US\$33 to \$47 trillion. Total over-the-counter (OTC) derivative [notional value](https://en.wikipedia.org/wiki/Notional_value "Notional value") rose to \$683 trillion by June 2008.[\[348\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-348) [Warren Buffett](https://en.wikipedia.org/wiki/Warren_Buffett "Warren Buffett") famously referred to derivatives as "financial weapons of mass destruction" in early 2003.[\[349\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-349)[\[350\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-350)
A 2011 paper suggested that Canada's avoidance of a banking crisis in 2008 (as well as in prior eras) could be attributed to Canada possessing a single, powerful, overarching regulator, while the United States had a weak, crisis prone and fragmented banking system with multiple competing regulatory bodies.[\[351\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-351)
### Increased debt burden or overleveraging
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=22 "Edit section: Increased debt burden or overleveraging")\]
[](https://en.wikipedia.org/wiki/File:Leverage_ratios_for_major_investment_banks.svg)
Leverage ratios of investment banks increased significantly between 2003 and 2007
[](https://en.wikipedia.org/wiki/File:U.S._Household_Debt_Relative_to_Disposable_Income_and_GDP.png)
[Household debt](https://en.wikipedia.org/wiki/Household_debt "Household debt") relative to disposable income and GDP
Prior to the crisis, financial institutions became highly leveraged, increasing their appetite for risky investments and reducing their resilience in case of losses. Much of this leverage was achieved using complex financial instruments such as off-balance sheet securitization and derivatives, which made it difficult for creditors and regulators to monitor and try to reduce financial institution risk levels.[\[352\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-352)\[*[verification needed](https://en.wikipedia.org/wiki/Wikipedia:Verifiability "Wikipedia:Verifiability")*\]
U.S. households and financial institutions became increasingly indebted or [overleveraged](https://en.wikipedia.org/wiki/Financial_leverage "Financial leverage") during the years preceding the crisis.[\[353\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-endaffair-353) This increased their vulnerability to the collapse of the housing bubble and worsened the ensuing economic downturn.[\[354\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Yellen_on_Minsky-354) Key statistics include:
Free cash used by consumers from home equity extraction doubled from \$627 billion in 2001 to \$1,428 billion in 2005 as the housing bubble built, a total of nearly \$5 trillion over the period, contributing to economic growth worldwide.[\[20\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-freecash-20)[\[21\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-boosted-21) U.S. home mortgage debt relative to GDP increased from an average of 46% during the 1990s to 73% during 2008, reaching \$10.5 trillion (c. \$15 trillion in 2024[\[288\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-inflation-USGDP-288)).[\[18\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-headache-18)
U.S. household debt as a percentage of annual [disposable personal income](https://en.wikipedia.org/wiki/Disposable_personal_income "Disposable personal income") was 127% at the end of 2007, versus 77% in 1990.[\[353\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-endaffair-353) In 1981, U.S. private debt was 123% of GDP; by the third quarter of 2008, it was 290%.[\[355\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-355)
From 2004 to 2007, the top five U.S. [investment banks](https://en.wikipedia.org/wiki/Investment_banks "Investment banks") each significantly increased their financial leverage, which increased their vulnerability to a financial shock. Changes in capital requirements, intended to keep U.S. banks competitive with their European counterparts, allowed lower *risk weightings* for AAA-rated securities. The shift from first-loss [tranches](https://en.wikipedia.org/wiki/Tranches "Tranches") to AAA-rated tranches was seen by regulators as a risk reduction that compensated the higher leverage.[\[356\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-356) These five institutions reported over \$4.1 trillion in debt for fiscal year 2007, about 30% of U.S. nominal GDP for 2007. [Lehman Brothers](https://en.wikipedia.org/wiki/Lehman_Brothers "Lehman Brothers") [went bankrupt and was liquidated](https://en.wikipedia.org/wiki/Bankruptcy_of_Lehman_Brothers "Bankruptcy of Lehman Brothers"), [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns") and [Merrill Lynch](https://en.wikipedia.org/wiki/Merrill_Lynch "Merrill Lynch") were sold at fire-sale prices, and [Goldman Sachs](https://en.wikipedia.org/wiki/Goldman_Sachs "Goldman Sachs") and [Morgan Stanley](https://en.wikipedia.org/wiki/Morgan_Stanley "Morgan Stanley") became commercial banks, subjecting themselves to more stringent regulation. With the exception of Lehman, these companies required or received government support.[\[357\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-357)
Fannie Mae and Freddie Mac, two U.S. [government-sponsored enterprises](https://en.wikipedia.org/wiki/Government-sponsored_enterprise "Government-sponsored enterprise"), owned or guaranteed nearly \$5 trillion (c. \$7.13 trillion in 2024[\[288\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-inflation-USGDP-288)) trillion in mortgage obligations at the time they were placed into [conservatorship](https://en.wikipedia.org/wiki/Conservatorship "Conservatorship") by the U.S. government in September 2008.[\[358\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-358)[\[359\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-359)
These seven entities were highly leveraged and had \$9 trillion in debt or guarantee obligations; yet they were not subject to the same regulation as depository banks.[\[342\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Krugman_2009-342)[\[360\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-360)
Behavior that may be optimal for an individual, such as saving more during adverse economic conditions, can be detrimental if too many individuals pursue the same behavior, as ultimately one person's consumption is another person's income. Too many consumers attempting to save or pay down debt simultaneously is called the [paradox of thrift](https://en.wikipedia.org/wiki/Paradox_of_thrift "Paradox of thrift") and can cause or deepen a recession. Economist [Hyman Minsky](https://en.wikipedia.org/wiki/Hyman_Minsky "Hyman Minsky") also described a "paradox of deleveraging" as financial institutions that have too much leverage (debt relative to equity) cannot all de-leverage simultaneously without significant declines in the value of their assets.[\[354\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Yellen_on_Minsky-354)
In April 2009, [Federal Reserve](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") vice-chair [Janet Yellen](https://en.wikipedia.org/wiki/Janet_Yellen "Janet Yellen") discussed these paradoxes:
> Once this massive credit crunch hit, it didn't take long before we were in a recession. The recession, in turn, deepened the credit crunch as demand and employment fell, and credit losses of financial institutions surged. Indeed, we have been in the grips of precisely this adverse feedback loop for more than a year. A process of balance sheet deleveraging has spread to nearly every corner of the economy. Consumers are pulling back on purchases, especially on durable goods, to build their savings. Businesses are cancelling planned investments and laying off workers to preserve cash. And financial institutions are shrinking assets to bolster capital and improve their chances of weathering the current storm. Once again, Minsky understood this dynamic. He spoke of the paradox of deleveraging, in which precautions that may be smart for individuals and firmsâand indeed essential to return the economy to a normal stateânevertheless magnify the distress of the economy as a whole.[\[354\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Yellen_on_Minsky-354)
### Financial innovation and complexity
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=23 "Edit section: Financial innovation and complexity")\]
[](https://en.wikipedia.org/wiki/File:CDO_-_FCIC_and_IMF_Diagram.png)
IMF Diagram of CDO and RMBS
The term [financial innovation](https://en.wikipedia.org/wiki/Financial_innovation "Financial innovation") refers to the ongoing development of financial products designed to achieve particular client objectives, such as offsetting a particular risk exposure (such as the default of a borrower) or to assist with obtaining financing. Examples pertinent to this crisis included: the [adjustable-rate mortgage](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage"); the bundling of subprime mortgages into [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities") (MBS) or [collateralized debt obligations](https://en.wikipedia.org/wiki/Collateralized_debt_obligation "Collateralized debt obligation") (CDO) for sale to investors, a type of [securitization](https://en.wikipedia.org/wiki/Securitization "Securitization"); and a form of credit insurance called credit default swaps (CDS). The usage of these products expanded dramatically in the years leading up to the crisis. These products vary in complexity and the ease with which they can be valued on the books of financial institutions.\[*[citation needed](https://en.wikipedia.org/wiki/Wikipedia:Citation_needed "Wikipedia:Citation needed")*\]
CDO issuance grew from an estimated \$20 billion in Q1 2004 to its peak of over \$180 billion by Q1 2007, then declined back under \$20 billion by Q1 2008. Further, the credit quality of CDO's declined from 2000 to 2007, as the level of subprime and other non-prime mortgage debt increased from 5% to 36% of CDO assets. As described in the section on subprime lending, the CDS and portfolio of CDS called [synthetic CDO](https://en.wikipedia.org/wiki/Synthetic_CDO "Synthetic CDO") enabled a theoretically infinite amount to be wagered on the finite value of housing loans outstanding, provided that buyers and sellers of the derivatives could be found. For example, buying a CDS to insure a CDO ended up giving the seller the same risk as if they owned the CDO, when those CDO's became worthless.[\[361\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-361)
[](https://en.wikipedia.org/wiki/File:Complexity_and_the_mortgage_market_-_an_example.svg)
Diagram of CMLTI 2006 â NC2
This boom in innovative financial products went hand in hand with more complexity. It multiplied the number of actors connected to a single mortgage (including mortgage brokers, specialized originators, the securitizers and their due diligence firms, managing agents and trading desks, and finally investors, insurances and providers of repo funding). With increasing distance from the underlying asset these actors relied more and more on indirect information (including FICO scores on creditworthiness, appraisals and due diligence checks by third party organizations, and most importantly the computer models of rating agencies and risk management desks). Instead of spreading risk this provided the ground for fraudulent acts, misjudgments and finally market collapse.[\[362\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-362) Economists have studied the crisis as an instance of [cascades in financial networks](https://en.wikipedia.org/wiki/Cascades_in_financial_networks "Cascades in financial networks"), where institutions' instability destabilized other institutions and led to knock-on effects.[\[363\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-363)[\[364\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-364)
[Martin Wolf](https://en.wikipedia.org/wiki/Martin_Wolf "Martin Wolf"), chief economics commentator at the *[Financial Times](https://en.wikipedia.org/wiki/Financial_Times "Financial Times")*, wrote in June 2009 that certain financial innovations enabled firms to circumvent regulations, such as off-balance sheet financing that affects the leverage or capital cushion reported by major banks, stating: "an enormous part of what banks did in the early part of this decadeâthe off-balance-sheet vehicles, the derivatives and the 'shadow banking system' itselfâwas to find a way round regulation."[\[365\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-365)
### Incorrect pricing of risk
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=24 "Edit section: Incorrect pricing of risk")\]
[](https://en.wikipedia.org/wiki/File:AIG_Protester_on_Pine_Street.jpg)
A protester on [Wall Street](https://en.wikipedia.org/wiki/Wall_Street "Wall Street") in the wake of the [AIG bonus payments controversy](https://en.wikipedia.org/wiki/AIG_bonus_payments_controversy "AIG bonus payments controversy") is interviewed by news media.
Mortgage risks were underestimated by almost all institutions in the chain from originator to investor by underweighting the possibility of falling housing prices based on historical trends of the past 50 years. Limitations of default and prepayment models, the heart of pricing models, led to overvaluation of mortgage and asset-backed products and their derivatives by originators, securitizers, broker-dealers, rating-agencies, insurance underwriters and the vast majority of investors (with the exception of certain hedge funds).[\[366\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-366)[\[367\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-kourlas-367) While financial derivatives and structured products helped partition and shift risk between financial participants, it was the underestimation of falling housing prices and the resultant losses that led to aggregate risk.[\[367\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-kourlas-367)
For a variety of reasons, market participants did not accurately measure the risk inherent with financial innovation such as MBS and CDOs or understand its effect on the overall stability of the financial system.[\[254\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-declaration-254) The pricing model for CDOs clearly did not reflect the level of risk they introduced into the system. Banks estimated that \$450 billion of CDO were sold between "late 2005 to the middle of 2007"; among the \$102 billion of those that had been liquidated, JPMorgan estimated that the average recovery rate for "high quality" CDOs was approximately 32 cents on the dollar, while the recovery rate for [mezzanine capital](https://en.wikipedia.org/wiki/Mezzanine_capital "Mezzanine capital") CDO was approximately five cents for every dollar.
[AIG](https://en.wikipedia.org/wiki/AIG "AIG") insured obligations of various financial institutions through the usage of [credit default swaps](https://en.wikipedia.org/wiki/Credit_default_swap "Credit default swap"). The basic CDS transaction involved AIG receiving a premium in exchange for a promise to pay money to party A in the event party B defaulted. However, AIG did not have the financial strength to support its many CDS commitments as the crisis progressed and was taken over by the government in September 2008. U.S. taxpayers provided over \$180 billion in government loans and investments in AIG during 2008 and early 2009, through which the money flowed to various counterparties to CDS transactions, including many large global financial institutions.[\[368\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-368)\[*[unreliable source?](https://en.wikipedia.org/wiki/Wikipedia:Reliable_sources "Wikipedia:Reliable sources")*\][\[369\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-369)
The [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission") (FCIC) made the major government study of the crisis. It concluded in January 2011:
> The Commission concludes [AIG](https://en.wikipedia.org/wiki/AIG "AIG") failed and was rescued by the government primarily because its enormous sales of credit default swaps were made without putting up the initial collateral, setting aside capital reserves, or hedging its exposureâa profound failure in corporate governance, particularly its risk management practices. AIG's failure was possible because of the sweeping deregulation of over-the-counter (OTC) derivatives, including credit default swaps, which effectively eliminated federal and state regulation of these products, including capital and margin requirements that would have lessened the likelihood of AIG's failure.[\[370\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-370)[\[371\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-371)[\[372\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-372)
The limitations of a widely used financial model also were not properly understood.[\[373\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-373)[\[374\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Felix1-374) This formula assumed that the price of CDS was correlated with and could predict the correct price of mortgage-backed securities. Because it was highly tractable, it rapidly came to be used by a huge percentage of CDO and CDS investors, issuers, and rating agencies.[\[374\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Felix1-374) According to one *Wired* article:
> Then the model fell apart. Cracks started appearing early on, when financial markets began behaving in ways that users of [Li's](https://en.wikipedia.org/wiki/David_X._Li "David X. Li") formula hadn't expected. The cracks became full-fledged canyons in 2008âwhen ruptures in the financial system's foundation swallowed up trillions of dollars and put the survival of the global banking system in serious peril ... Li's [Gaussian copula](https://en.wikipedia.org/wiki/Gaussian_copula "Gaussian copula") formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees.[\[374\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Felix1-374)
As financial assets became more complex and harder to value, investors were reassured by the fact that the international [bond rating](https://en.wikipedia.org/wiki/Bond_rating "Bond rating") agencies and bank regulators accepted as valid some complex mathematical models that showed the risks were much smaller than they actually were.[\[375\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-RISKS1-375) [George Soros](https://en.wikipedia.org/wiki/George_Soros "George Soros") commented that "The super-boom got out of hand when the new products became so complicated that the authorities could no longer calculate the risks and started relying on the risk management methods of the banks themselves. Similarly, the rating agencies relied on the information provided by the originators of synthetic products. It was a shocking abdication of responsibility."[\[376\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-376)
A [conflict of interest](https://en.wikipedia.org/wiki/Conflict_of_interest "Conflict of interest") between [investment management](https://en.wikipedia.org/wiki/Investment_management "Investment management") professional and [institutional investors](https://en.wikipedia.org/wiki/Institutional_investor "Institutional investor"), combined with a global glut in investment capital, led to bad investments by asset managers in over-priced credit assets. Professional investment managers generally are compensated based on the volume of client [assets under management](https://en.wikipedia.org/wiki/Assets_under_management "Assets under management"). There is, therefore, an incentive for asset managers to expand their assets under management in order to maximize their compensation. As the glut in global investment capital caused the yields on credit assets to decline, asset managers were faced with the choice of either investing in assets where returns did not reflect true credit risk or returning funds to clients. Many asset managers continued to invest client funds in over-priced (under-yielding) investments, to the detriment of their clients, so they could maintain their assets under management. They supported this choice with a "plausible deniability" of the risks associated with subprime-based credit assets because the loss experience with early "vintages" of subprime loans was so low.[\[377\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-377)
Despite the dominance of the above formula, there are documented attempts of the financial industry, occurring before the crisis, to address the formula limitations, specifically the lack of dependence dynamics and the poor representation of extreme events.[\[378\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-378) The volume *Credit Correlation: Life After Copulas*, published in 2007 by [World Scientific](https://en.wikipedia.org/wiki/World_Scientific "World Scientific"), summarizes a 2006 conference held by Merrill Lynch in London where several practitioners attempted to propose models rectifying some of the copula limitations. See also the article by Donnelly and Embrechts[\[379\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-379) and the book by Brigo, Pallavicini and Torresetti, that reports relevant warnings and research on CDOs appeared in 2006.[\[380\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-380)
### Boom and collapse of the shadow banking system
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=25 "Edit section: Boom and collapse of the shadow banking system")\]
[](https://en.wikipedia.org/wiki/File:Securitization_Market_Activity.png)
Securitization markets were impaired during the crisis
There is strong evidence that the riskiest, worst performing mortgages were funded through the "[shadow banking system](https://en.wikipedia.org/wiki/Shadow_banking_system "Shadow banking system")" and that competition from the [shadow banking system](https://en.wikipedia.org/wiki/Shadow_banking_system "Shadow banking system") may have pressured more traditional institutions to lower their underwriting standards and originate riskier loans.
In a June 2008 speech, President and CEO of the [Federal Reserve Bank of New York](https://en.wikipedia.org/wiki/Federal_Reserve_Bank_of_New_York "Federal Reserve Bank of New York") [Timothy Geithner](https://en.wikipedia.org/wiki/Timothy_Geithner "Timothy Geithner")âwho in 2009 became [United States Secretary of the Treasury](https://en.wikipedia.org/wiki/United_States_Secretary_of_the_Treasury "United States Secretary of the Treasury")âplaced significant blame for the freezing of credit markets on a [run](https://en.wikipedia.org/wiki/Bank_run "Bank run") on the entities in the "parallel" banking system, also called the [shadow banking system](https://en.wikipedia.org/wiki/Shadow_banking_system "Shadow banking system"). These entities became critical to the credit markets underpinning the financial system, but were not subject to the same regulatory controls. Further, these entities were vulnerable because of [assetâliability mismatch](https://en.wikipedia.org/wiki/Asset%E2%80%93liability_mismatch "Assetâliability mismatch"), meaning that they borrowed short-term in liquid markets to purchase long-term, illiquid and risky assets. This meant that disruptions in credit markets would force them to engage in rapid deleveraging, selling their long-term assets at depressed prices. He described the significance of these entities:
> In early 2007, asset-backed commercial paper conduits, in structured investment vehicles, in auction-rate preferred securities, tender option bonds and variable rate demand notes, had a combined asset size of roughly \$2.2 trillion. Assets financed overnight in tri-party repo grew to \$2.5 trillion. Assets held in hedge funds grew to roughly \$1.8 trillion. The combined balance sheets of the five largest investment banks totaled \$4 trillion. In comparison, the total assets of the top five bank holding companies in the United States at that point were just over \$6 trillion, and total assets of the entire banking system were about \$10 trillion. The combined effect of these factors was a financial system vulnerable to self-reinforcing asset price and credit cycles.[\[381\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-reducing-381)
Economist [Paul Krugman](https://en.wikipedia.org/wiki/Paul_Krugman "Paul Krugman"), laureate of the [Nobel Memorial Prize in Economic Sciences](https://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Economic_Sciences "Nobel Memorial Prize in Economic Sciences"), described the run on the shadow banking system as the "core of what happened" to cause the crisis. He referred to this lack of controls as "[malign neglect](https://en.wikipedia.org/wiki/Benign_neglect "Benign neglect")" and argued that regulation should have been imposed on all banking-like activity.[\[342\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Krugman_2009-342) Without the ability to obtain investor funds in exchange for most types of [mortgage-backed securities](https://en.wikipedia.org/wiki/Mortgage-backed_securities "Mortgage-backed securities") or [asset-backed commercial paper](https://en.wikipedia.org/wiki/Asset-backed_commercial_paper "Asset-backed commercial paper"), investment banks and other entities in the [shadow banking](https://en.wikipedia.org/wiki/Shadow_banking "Shadow banking") system could not provide funds to mortgage firms and other corporations.[\[381\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-reducing-381)[\[342\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Krugman_2009-342)
This meant that nearly one-third of the U.S. lending mechanism was frozen and continued to be frozen into June 2009.[\[382\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Uncrunch-382) According to the [Brookings Institution](https://en.wikipedia.org/wiki/Brookings_Institution "Brookings Institution"), at that time the traditional banking system did not have the capital to close this gap: "It would take a number of years of strong profits to generate sufficient capital to support that additional lending volume." The authors also indicate that some forms of [securitization](https://en.wikipedia.org/wiki/Securitization "Securitization") were "likely to vanish forever, having been an artifact of excessively loose credit conditions". While traditional banks raised their lending standards, it was the collapse of the shadow banking system that was the primary cause of the reduction in funds available for borrowing.[\[29\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-gofromhere-29)
[](https://en.wikipedia.org/wiki/File:Copper_Price_History_USD.png)
Global copper prices
[](https://en.wikipedia.org/wiki/File:Fertilizer_prices.webp)
Fertilizer prices
In a 2008 paper, [Ricardo J. Caballero](https://en.wikipedia.org/wiki/Ricardo_J._Caballero "Ricardo J. Caballero"), [Emmanuel Farhi](https://en.wikipedia.org/wiki/Emmanuel_Farhi "Emmanuel Farhi"), and [Pierre-Olivier Gourinchas](https://en.wikipedia.org/wiki/Pierre-Olivier_Gourinchas "Pierre-Olivier Gourinchas") argued that the financial crisis was attributable to "global asset scarcity, which led to large capital flows toward the United States and to the creation of asset bubbles that eventually burst".[\[383\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Caballero-383) Caballero, Farhi, and Gourinchas argued "that the sharp rise in oil prices following the subprime crisis â nearly 100 percent in just a matter of months and on the face of recessionary shocks â was the result of a speculative response to the financial crisis itself, in an attempt to rebuild asset supply. That is, the global economy was subject to one shock with multiple implications rather than to two separate shocks (financial and oil)."[\[383\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Caballero-383)
Long-only commodity index funds became popular â by one estimate investment increased from \$90 billion in 2006 to \$200 billion at the end of 2007, while commodity prices increased 71% â which raised concern as to whether these index funds caused the commodity bubble. The empirical research has been mixed.[\[384\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-IrwinSanders2010-384)
### The Globals Savings Glut
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=27 "Edit section: The Globals Savings Glut")\]
The cause of the global asset bubble can be partially attributable to the global savings glut. As theorized by [Andrew Metrick](https://en.wikipedia.org/wiki/Andrew_Metrick "Andrew Metrick"), the demand for safe assets following the Asian Financial Crisis coupled with the lack of circulating treasuries created an unmet demand for "risk free" assets. Thus, institutional investors like sovereign wealth funds and pension funds began purchasing synthetic safe assets like Triple-A Mortgage Backed Securities.[\[385\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-385)
As a consequence, the demand for so-called safe assets fueled the free flow of capital into housing in the United States. This greatly worsened the crisis as banks and other financial institutions were incentivized to issue more mortgages than before.
Some commentators and economists associated with the [Austrian School of economics](https://en.wikipedia.org/wiki/Austrian_school_of_economics "Austrian school of economics"), including former [U.S. Congressman Ron Paul](https://en.wikipedia.org/wiki/Ron_Paul "Ron Paul") and historian [Tom Woods](https://en.wikipedia.org/wiki/Tom_Woods "Tom Woods"), have offered a [libertarian](https://en.wikipedia.org/wiki/Libertarianism_in_the_United_States "Libertarianism in the United States") interpretation of the crisis which differs from the explanations centered on deregulation and government oversight. In Ron Paul's book, *[End the Fed](https://en.wikipedia.org/wiki/End_the_Fed "End the Fed"),* Paul argues that the [Federal Reserve's](https://en.wikipedia.org/wiki/Federal_Reserve "Federal Reserve") prolonged policy of [artificially low interest rates](https://en.wikipedia.org/wiki/Federal_funds_rate "Federal funds rate") in the early 2000s created a [credit bubble](https://en.wikipedia.org/wiki/Credit_bubble "Credit bubble") that allowed for speculative investments and unsustainable levels of debt, particularly in housing.[\[386\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:8-386)[\[387\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-387)[\[388\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-388) In Tom Woods' book *[Meltdown](https://en.wikipedia.org/wiki/Meltdown_\(Woods_book\) "Meltdown (Woods book)")*, he also contends that Federal Reserve manipulation of the money supply and credit markets distorted normal price signals, leading to widespread malinvestment, resulting in an inevitable correction.[\[389\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:9-389)[\[390\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-390)
Paul and Woods also criticized [Fannie Mae](https://en.wikipedia.org/wiki/Fannie_Mae "Fannie Mae")'s and [Freddie Mac](https://en.wikipedia.org/wiki/Freddie_Mac "Freddie Mac")'s role in the crisis, asserting that the entities engaged in excessive risk-taking by expanding homeownership beyond sustainable levels.[\[391\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-391)[\[392\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-392)[\[386\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:8-386) In doing this, the government intervention created [moral hazard](https://en.wikipedia.org/wiki/Moral_hazard "Moral hazard") by assuring large financial institutions that they would receive government support in times of crisis, which Paul and Woods believe encouraged riskier behavior.[\[389\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-:9-389)[\[393\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-393)
### Systemic crisis of capitalism
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=29 "Edit section: Systemic crisis of capitalism")\]
In a 1998 book, [John McMurtry](https://en.wikipedia.org/wiki/John_McMurtry_\(academic\) "John McMurtry (academic)") suggested that a financial crisis is a systemic crisis of [capitalism](https://en.wikipedia.org/wiki/Capitalism "Capitalism") itself.[\[394\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-394)
In his 1978 book, *[The Downfall of Capitalism and Communism](https://en.wikipedia.org/wiki/The_Downfall_of_Capitalism_and_Communism "The Downfall of Capitalism and Communism")*, [Ravi Batra](https://en.wikipedia.org/wiki/Ravi_Batra "Ravi Batra") suggests that growing inequality of [financial capitalism](https://en.wikipedia.org/wiki/Financial_capitalism "Financial capitalism") produces speculative bubbles that burst and result in depression and major political changes. He also suggested that a "demand gap" related to differing wage and productivity growth explains deficit and debt dynamics important to stock market developments.[\[395\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-395)
[John Bellamy Foster](https://en.wikipedia.org/wiki/John_Bellamy_Foster "John Bellamy Foster"), a political economy analyst and editor of the *[Monthly Review](https://en.wikipedia.org/wiki/Monthly_Review "Monthly Review")*, believed that the decrease in GDP growth rates since the early 1970s is due to increasing [market saturation](https://en.wikipedia.org/wiki/Market_saturation "Market saturation").[\[396\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-396)
[Marxian economics](https://en.wikipedia.org/wiki/Marxian_economics "Marxian economics") followers [Andrew Kliman](https://en.wikipedia.org/wiki/Andrew_Kliman "Andrew Kliman"), Michael Roberts, and Guglielmo Carchedi, in contradistinction to the *Monthly Review* school represented by Foster, pointed to capitalism's long-term tendency of the [rate of profit](https://en.wikipedia.org/wiki/Rate_of_profit "Rate of profit") to fall as the underlying cause of crises generally. From this point of view, the problem was the inability of capital to grow or accumulate at sufficient rates through productive investment alone. Low rates of profit in productive sectors led to speculative investment in riskier assets, where there was potential for greater return on investment. The speculative frenzy of the late 1990s and 2000s was, in this view, a consequence of a rising organic composition of capital, expressed through the fall in the rate of profit. According to Michael Roberts, the fall in the rate of profit "eventually triggered the credit crunch of 2007 when credit could no longer support profits".[\[397\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-397)
In 2005 book, *The Battle for the Soul of Capitalism*, [John C. Bogle](https://en.wikipedia.org/wiki/John_C._Bogle "John C. Bogle") wrote that "Corporate America went astray largely because the power of managers went virtually unchecked by our gatekeepers for far too long". Echoing the central thesis of [James Burnham](https://en.wikipedia.org/wiki/James_Burnham "James Burnham")'s 1941 seminal book, *[The Managerial Revolution](https://en.wikipedia.org/wiki/James_Burnham#The_Managerial_Revolution "James Burnham")*, Bogle cites issues, including:[\[398\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-398)
- that "manager's capitalism" replaced "owner's capitalism", meaning management runs the firm for its benefit rather than for the shareholders, a variation on the [principalâagent problem](https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem "Principalâagent problem");
- the burgeoning executive compensation;
- the management of earnings, mainly a focus on share price rather than the creation of genuine value; and
- the failure of gatekeepers, including auditors, boards of directors, Wall Street analysts, and career politicians.
In his book *[The Big Mo](https://en.wikipedia.org/wiki/The_Big_Mo_\(book\) "The Big Mo (book)")*, [Mark Roeder](https://en.wikipedia.org/wiki/Mark_Roeder "Mark Roeder"), a former executive at the Swiss-based [UBS](https://en.wikipedia.org/wiki/UBS "UBS") Bank, suggested that large-scale momentum, or [The Big Mo](https://en.wikipedia.org/wiki/The_Big_Mo "The Big Mo"), "played a pivotal role" in the financial crisis. Roeder suggested that "recent technological advances, such as computer-driven trading programs, together with the increasingly interconnected nature of markets, has magnified the momentum effect. This has made the financial sector inherently unstable."[\[399\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-399)
[Robert Reich](https://en.wikipedia.org/wiki/Robert_Reich "Robert Reich") attributed the economic downturn to the stagnation of wages in the United States, particularly those of the hourly workers who comprise 80% of the workforce. This stagnation forced the population to borrow to meet the cost of living.[\[400\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-400)
Economists [Ailsa McKay](https://en.wikipedia.org/wiki/Ailsa_McKay "Ailsa McKay") and [Margunn Bjørnholt](https://en.wikipedia.org/wiki/Margunn_Bj%C3%B8rnholt "Margunn Bjørnholt") argued that the financial crisis and the response to it revealed a crisis of ideas in mainstream economics and within the economics profession, and call for a reshaping of both the economy, economic theory and the economics profession.[\[401\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-401)
### Wrong banking model: resilience of credit unions
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=30 "Edit section: Wrong banking model: resilience of credit unions")\]
A report by the [International Labour Organization](https://en.wikipedia.org/wiki/International_Labour_Organization "International Labour Organization") concluded that [cooperative banking](https://en.wikipedia.org/wiki/Cooperative_banking "Cooperative banking") institutions were less likely to fail than their competitors during the crisis. The cooperative banking sector had 20% market share of the European banking sector, but accounted for only 7% of all the write-downs and losses between the third quarter of 2007 and first quarter of 2011.[\[402\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-402) In 2008, in the U.S., the rate of commercial bank failures was almost triple that of [credit unions](https://en.wikipedia.org/wiki/Credit_union "Credit union"), and almost five times the credit union rate in 2010.[\[403\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-403) Credit unions increased their lending to small- and medium-sized businesses while overall lending to those businesses decreased.[\[404\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-404)
## Prediction by economists
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=31 "Edit section: Prediction by economists")\]
Economists, particularly followers of [mainstream economics](https://en.wikipedia.org/wiki/Mainstream_economics "Mainstream economics"), mostly failed to predict the crisis.[\[405\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-405) The [Wharton School of the University of Pennsylvania](https://en.wikipedia.org/wiki/Wharton_School_of_the_University_of_Pennsylvania "Wharton School of the University of Pennsylvania")'s online business journal examined why economists failed to predict a major global financial crisis and concluded that economists used mathematical models that failed to account for the critical roles that banks and other financial institutions, as opposed to producers and consumers of goods and services, play in the economy.[\[406\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-406)
Several followers of [heterodox economics](https://en.wikipedia.org/wiki/Heterodox_economics "Heterodox economics") predicted the crisis, with varying arguments. [Dirk Bezemer](https://en.wikipedia.org/wiki/Dirk_Bezemer "Dirk Bezemer")[\[407\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-407) credits 12 economists with predicting the crisis: [Dean Baker](https://en.wikipedia.org/wiki/Dean_Baker "Dean Baker") (US), [Wynne Godley](https://en.wikipedia.org/wiki/Wynne_Godley "Wynne Godley") (UK), [Fred Harrison](https://en.wikipedia.org/wiki/Fred_Harrison_\(author\) "Fred Harrison (author)") (UK), [Michael Hudson](https://en.wikipedia.org/wiki/Michael_Hudson_\(economist\) "Michael Hudson (economist)") (US), [Eric Janszen](https://en.wikipedia.org/w/index.php?title=Eric_Janszen&action=edit&redlink=1 "Eric Janszen (page does not exist)") (US), [Steve Keen](https://en.wikipedia.org/wiki/Steve_Keen "Steve Keen") (Australia), [Jakob Broechner Madsen](https://en.wikipedia.org/wiki/Jakob_Broechner_Madsen "Jakob Broechner Madsen") & Jens Kjaer Sørensen (Denmark), [Med Jones](https://en.wikipedia.org/wiki/Med_Jones "Med Jones") (US)[\[408\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-408) [Kurt Richebächer](https://en.wikipedia.org/wiki/Kurt_Richeb%C3%A4cher "Kurt Richebächer") (US), [Nouriel Roubini](https://en.wikipedia.org/wiki/Nouriel_Roubini "Nouriel Roubini") (US), [Peter Schiff](https://en.wikipedia.org/wiki/Peter_Schiff "Peter Schiff") (US), and [Robert Shiller](https://en.wikipedia.org/wiki/Robert_Shiller "Robert Shiller") (US).
Shiller, a founder of the [CaseâShiller index](https://en.wikipedia.org/wiki/Case%E2%80%93Shiller_index "CaseâShiller index") that measures home prices, wrote an article a year before the collapse of Lehman Brothers in which he predicted that a slowing U.S. housing market would cause the housing bubble to burst, leading to financial collapse.[\[409\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-409) Peter Schiff regularly appeared on television in the years before the crisis and warned of the impending real estate collapse.[\[410\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-410)
The [Austrian School](https://en.wikipedia.org/wiki/Austrian_School "Austrian School") regarded the crisis as a vindication and classic example of a predictable credit-fueled bubble caused by laxity in monetary supply.[\[411\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-411)
There were other economists that did warn of a pending crisis.[\[412\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-412)
The former Governor of the [Reserve Bank of India](https://en.wikipedia.org/wiki/Reserve_Bank_of_India "Reserve Bank of India"), [Raghuram Rajan](https://en.wikipedia.org/wiki/Raghuram_Rajan "Raghuram Rajan"), had predicted the crisis in 2005 when he became chief economist at the [International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund"). In 2005, at a celebration honoring [Alan Greenspan](https://en.wikipedia.org/wiki/Alan_Greenspan "Alan Greenspan"), who was about to retire as chairman of the [US Federal Reserve](https://en.wikipedia.org/wiki/US_Federal_Reserve "US Federal Reserve"), Rajan delivered a controversial paper that was critical of the financial sector.[\[413\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-413) In that paper, Rajan "argued that disaster might loom".[\[414\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-414) Rajan argued that financial sector managers were encouraged to "take risks that generate severe adverse consequences with small probability but, in return, offer generous compensation the rest of the time. These risks are known as tail risks. But perhaps the most important concern is whether banks will be able to provide liquidity to financial markets so that if the tail risk does materialize, financial positions can be unwound and losses allocated so that the consequences to the real economy are minimized."
Stock trader and financial risk engineer [Nassim Nicholas Taleb](https://en.wikipedia.org/wiki/Nassim_Nicholas_Taleb "Nassim Nicholas Taleb"), author of the 2007 book *[The Black Swan](https://en.wikipedia.org/wiki/The_Black_Swan:_The_Impact_of_the_Highly_Improbable "The Black Swan: The Impact of the Highly Improbable")*, spent years warning against the breakdown of the banking system in particular and the economy in general owing to their use of and reliance on bad risk models and reliance on forecasting, and framed the problem as part of "robustness and fragility".[\[415\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-415)[\[416\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-416) He also took action against the establishment view by making a big financial bet on banking stocks and making a fortune from the crisis ("They didn't listen, so I took their money").[\[417\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-417) According to [David Brooks](https://en.wikipedia.org/wiki/David_Brooks_\(commentator\) "David Brooks (commentator)") from *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")*, "Taleb not only has an explanation for what's happening, he saw it coming."[\[418\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-418)
Popular articles published in the mass media have led the general public to believe that the majority of economists have failed in their obligation to predict the financial crisis. For example, an article in *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")* noted that economist [Nouriel Roubini](https://en.wikipedia.org/wiki/Nouriel_Roubini "Nouriel Roubini") warned of such crisis as early as September 2006, and stated that the profession of economics is bad at predicting recessions.[\[419\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-419) According to *[The Guardian](https://en.wikipedia.org/wiki/The_Guardian "The Guardian")*, Roubini was ridiculed for predicting a collapse of the housing market and worldwide recession, while *The New York Times* labelled him "Dr. Doom".[\[420\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-420)
In a 2012 article in the journal *[Japan and the World Economy](https://en.wikipedia.org/wiki/Japan_and_the_World_Economy "Japan and the World Economy")*, Andrew K. Rose and Mark M. Spiegel used a Multiple Indicator Multiple Cause (MIMIC) model on a cross-section of 107 countries to evaluate potential causes of the 2008 crisis. The authors examined various economic indicators, ignoring [contagion effects](https://en.wikipedia.org/wiki/Financial_contagion "Financial contagion") across countries. The authors concluded: "We include over sixty potential causes of the crisis, covering such categories as: financial system policies and conditions; asset price appreciation in real estate and equity markets; international imbalances and foreign reserve adequacy; macroeconomic policies; and institutional and geographic features. Despite the fact that we use a wide number of possible causes in a flexible statistical framework, we are unable to link most of the commonly cited causes of the crisis to its incidence across countries. This negative finding in the cross-section makes us skeptical of the accuracy of 'early warning' systems of potential crises, which must also predict their timing."[\[421\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-421)
The first visible institution to run into trouble in the United States was the Southern Californiaâbased [IndyMac](https://en.wikipedia.org/wiki/IndyMac "IndyMac"), a spin-off of [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial"). Before its failure, IndyMac Bank was the largest [savings and loan association](https://en.wikipedia.org/wiki/Savings_and_loan_association "Savings and loan association") in the Los Angeles market and the seventh-largest [mortgage loan](https://en.wikipedia.org/wiki/Mortgage_loan "Mortgage loan") originator in the United States.[\[422\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-422) The failure of IndyMac Bank on July 11, 2008, was (until the crisis precipitated even larger failures) the fourth-largest [bank failure](https://en.wikipedia.org/wiki/Bank_failure "Bank failure") in United States history,[\[423\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-423) and the second-largest failure of a regulated [thrift](https://en.wikipedia.org/wiki/Savings_and_loan_association "Savings and loan association").[\[424\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-shutsdown-424) IndyMac Bank's parent corporation was IndyMac Bancorp until the FDIC seized IndyMac Bank.[\[425\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Liquidate-425) IndyMac Bancorp filed for [Chapter 7 bankruptcy](https://en.wikipedia.org/wiki/Chapter_7_bankruptcy "Chapter 7 bankruptcy") in July 2008.[\[425\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Liquidate-425)
IndyMac Bank was founded as Countrywide Mortgage Investment in 1985 by [David S. Loeb](https://en.wikipedia.org/wiki/David_S._Loeb "David S. Loeb") and [Angelo Mozilo](https://en.wikipedia.org/wiki/Angelo_Mozilo "Angelo Mozilo")[\[426\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-426)[\[427\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-427) as a means of [collateralizing](https://en.wikipedia.org/wiki/Cross-collateralization "Cross-collateralization") [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial") loans too big to be sold to Freddie Mac and Fannie Mae. In 1997, Countrywide spun off IndyMac as an independent company run by Mike Perry, who remained its CEO until the downfall of the bank in July 2008.[\[428\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Paletta-428)
The primary causes of its failure were largely associated with its business strategy of originating and securitizing [Alt-A](https://en.wikipedia.org/wiki/Alt-A "Alt-A") loans on a large scale. This strategy resulted in rapid growth and a high concentration of risky assets. From its inception as a savings association in 2000, IndyMac grew to the seventh largest savings and loan and ninth largest originator of mortgage loans in the United States. During 2006, IndyMac originated over \$90 billion (~\$134 billion in 2024) of mortgages.
IndyMac's aggressive growth strategy, use of Alt-A and other nontraditional loan products, insufficient underwriting, credit concentrations in residential real estate in the [California](https://en.wikipedia.org/wiki/California "California") and [Florida](https://en.wikipedia.org/wiki/Florida "Florida") marketsâstates, alongside Nevada and Arizona, where the [housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble") was most pronouncedâand heavy reliance on costly funds borrowed from a [Federal Home Loan Bank](https://en.wikipedia.org/wiki/Federal_Home_Loan_Bank "Federal Home Loan Bank") (FHLB) and from brokered deposits, led to its demise when the mortgage market declined in 2007.
IndyMac often made loans without verification of the borrower's income or assets, and to borrowers with poor credit histories. Appraisals obtained by IndyMac on underlying collateral were often questionable as well. As an Alt-A lender, IndyMac's business model was to offer loan products to fit the borrower's needs, using an extensive array of risky option-[adjustable-rate mortgages](https://en.wikipedia.org/wiki/Adjustable-rate_mortgage "Adjustable-rate mortgage") (option ARMs), subprime loans, 80/20 loans, and other nontraditional products. Ultimately, loans were made to many borrowers who simply could not afford to make their payments. The thrift remained profitable only as long as it was able to sell those loans in the [secondary mortgage market](https://en.wikipedia.org/wiki/Secondary_mortgage_market "Secondary mortgage market"). IndyMac resisted efforts to regulate its involvement in those loans or tighten their issuing criteria: see the comment by Ruthann Melbourne, Chief Risk Officer, to the regulating agencies.[\[429\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-lossreview-429)[\[430\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-430)[\[431\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-431)
On May 12, 2008, in the "Capital" section of its last 10-Q, [IndyMac](https://en.wikipedia.org/wiki/IndyMac "IndyMac") revealed that it may not be well capitalized in the future.[\[432\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-indymac10Q-432)
IndyMac reported that during April 2008, [Moody's](https://en.wikipedia.org/wiki/Moody%27s "Moody's") and [Standard & Poor's](https://en.wikipedia.org/wiki/Standard_%26_Poor%27s "Standard & Poor's") downgraded the ratings on a significant number of [Mortgage-backed security](https://en.wikipedia.org/wiki/Mortgage-backed_security "Mortgage-backed security") (MBS) bondsâincluding \$160 million (~\$228 million in 2024) issued by IndyMac that the bank retained in its MBS portfolio. IndyMac concluded that these downgrades would have harmed its risk-based capital ratio as of June 30, 2008. Had these lowered ratings been in effect on March 31, 2008, IndyMac concluded that the bank's capital ratio would have been 9.27% total risk-based. IndyMac warned that if its regulators found its capital position to have fallen below "well capitalized" (minimum 10% risk-based capital ratio) to "adequately capitalized" (8â10% risk-based capital ratio) the bank might no longer be able to use brokered deposits as a source of funds.
Senator [Charles Schumer](https://en.wikipedia.org/wiki/Charles_Schumer "Charles Schumer") (D-NY) later pointed out that brokered deposits made up more than 37% of IndyMac's total deposits, and asked the [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation") (FDIC) whether it had considered ordering IndyMac to reduce its reliance on these deposits.[\[433\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-433) With \$18.9 billion in total deposits reported on March 31,[\[432\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-indymac10Q-432) Senator Schumer would have been referring to a little over \$7 billion in brokered deposits. While the breakout of maturities of these deposits is not known exactly, a simple averaging would have put the threat of brokered deposits loss to IndyMac at \$500 million a month, had the regulator disallowed IndyMac from acquiring new brokered deposits on June 30.
IndyMac was taking new measures to preserve capital, such as deferring interest payments on some preferred securities. Dividends on common shares had already been suspended for the first quarter of 2008, after being cut in half the previous quarter. The company still had not secured a significant capital infusion nor found a ready buyer.[\[434\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-434)
IndyMac reported that the bank's risk-based capital was only \$47 million above the minimum required for this 10% mark. But it did not reveal some of that \$47 million (~\$67 million in 2024) capital it claimed it had, as of March 31, 2008, was fabricated.[\[435\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-435)
[](https://en.wikipedia.org/wiki/File:Wikinews-logo.svg)
When home prices declined in the latter half of 2007 and the secondary mortgage market collapsed, IndyMac was forced to hold \$10.7 billion (~\$15.5 billion in 2024) of loans it could not sell in the secondary market. Its reduced liquidity was further exacerbated in late June 2008 when account holders withdrew \$1.55 billion (~\$2.21 billion in 2024) or about 7.5% of IndyMac's deposits.[\[432\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-indymac10Q-432) This [bank run](https://en.wikipedia.org/wiki/Bank_run "Bank run") on the thrift followed the public release of a letter from Senator Charles Schumer to the FDIC and OTS. The letter outlined the Senator's concerns with IndyMac. While the run was a contributing factor in the timing of IndyMac's demise, the underlying cause of the failure was the unsafe and unsound way it was operated.[\[429\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-lossreview-429)
On June 26, 2008, Senator [Charles Schumer](https://en.wikipedia.org/wiki/Charles_Schumer "Charles Schumer") (D-NY), a member of the [Senate Banking Committee](https://en.wikipedia.org/wiki/Senate_Banking_Committee "Senate Banking Committee"), chairman of Congress' [Joint Economic Committee](https://en.wikipedia.org/wiki/Joint_Economic_Committee "Joint Economic Committee") and the third-ranking Democrat in the Senate, released several letters he had sent to regulators, in which he was"concerned that IndyMac's financial deterioration poses significant risks to both taxpayers and borrowers." Some worried depositors began to withdraw money.[\[436\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-436)[\[437\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-437)
On July 7, 2008, IndyMac announced on the company blog that it:
- Had failed to raise [capital](https://en.wikipedia.org/wiki/Capital_\(economics\) "Capital (economics)") since its May 12, 2008, quarterly earnings report;
- Had been notified by bank and thrift regulators that IndyMac Bank was no longer deemed "well-capitalized".
IndyMac announced the closure of both its retail lending and wholesale divisions, halted new loan submissions, and cut 3,800 jobs.[\[438\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-438)
On July 11, 2008, citing liquidity concerns, the FDIC put IndyMac Bank into [conservatorship](https://en.wikipedia.org/wiki/Conservatorship "Conservatorship"). A [bridge bank](https://en.wikipedia.org/wiki/Bridge_bank_\(United_States\) "Bridge bank (United States)"), IndyMac Federal Bank, FSB, was established to assume control of IndyMac Bank's assets, its secured liabilities, and its insured deposit accounts. The FDIC announced plans to open IndyMac Federal Bank, FSB on July 14, 2008. Until then, depositors would have access to their insured deposits through ATMs, their existing checks, and their existing debit cards. Telephone and Internet account access was restored when the bank reopened.[\[125\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-indymactaken-125)[\[439\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-439)[\[440\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-fn1-440) The FDIC guarantees the funds of all insured accounts up to US\$100,000, and declared a special advance dividend to the roughly 10,000 depositors with funds in excess of the insured amount, guaranteeing 50% of any amounts in excess of \$100,000.[\[424\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-shutsdown-424) Yet, even with the pending sale of Indymac to IMB Management Holdings, an estimated 10,000 uninsured depositors of Indymac are still at a loss of over \$270 million.[\[441\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-441)[\[442\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-442)
With \$32 billion in assets, IndyMac Bank was one of the largest bank failures in American history.[\[443\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-443)
IndyMac Bancorp filed for [Chapter 7 bankruptcy](https://en.wikipedia.org/wiki/Chapter_7_bankruptcy "Chapter 7 bankruptcy") on July 31, 2008.[\[425\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-Liquidate-425)
Initially the companies affected were those directly involved in home construction and mortgage lending such as Northern Rock and [Countrywide Financial](https://en.wikipedia.org/wiki/Countrywide_Financial "Countrywide Financial"), as they could no longer obtain financing through the credit markets. Over 100 mortgage lenders went bankrupt during 2007 and 2008. Concerns that investment bank [Bear Stearns](https://en.wikipedia.org/wiki/Bear_Stearns "Bear Stearns") would collapse in March 2008 resulted in its fire-sale to [JP Morgan Chase](https://en.wikipedia.org/wiki/JP_Morgan_Chase "JP Morgan Chase"). The financial institution crisis hit its peak in September and October 2008. Several major institutions either failed, were acquired under duress, or were subject to government takeover. These included [Lehman Brothers](https://en.wikipedia.org/wiki/Lehman_Brothers "Lehman Brothers"), [Merrill Lynch](https://en.wikipedia.org/wiki/Merrill_Lynch "Merrill Lynch"), Fannie Mae, Freddie Mac, [Washington Mutual](https://en.wikipedia.org/wiki/Washington_Mutual "Washington Mutual"), [Wachovia](https://en.wikipedia.org/wiki/Wachovia "Wachovia"), [Citigroup](https://en.wikipedia.org/wiki/Citigroup "Citigroup"), and [AIG](https://en.wikipedia.org/wiki/AIG "AIG").[\[32\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-greatcrash-32) On October 6, 2008, three weeks after Lehman Brothers filed the largest bankruptcy in U.S. history, Lehman's former CEO [Richard S. Fuld Jr.](https://en.wikipedia.org/wiki/Richard_S._Fuld_Jr. "Richard S. Fuld Jr.") found himself before Representative [Henry A. Waxman](https://en.wikipedia.org/wiki/Henry_A._Waxman "Henry A. Waxman"), the California Democrat who chaired the [House Committee on Oversight and Government Reform](https://en.wikipedia.org/wiki/House_Committee_on_Oversight_and_Government_Reform "House Committee on Oversight and Government Reform"). Fuld said he was a victim of the collapse, blaming a "crisis of confidence" in the markets for dooming his firm.[\[444\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-444)
## Notable books and movies
\[[edit](https://en.wikipedia.org/w/index.php?title=2008_financial_crisis&action=edit§ion=33 "Edit section: Notable books and movies")\]
- In 2006, [Peter Schiff](https://en.wikipedia.org/wiki/Peter_Schiff "Peter Schiff") authored a book titled *[Crash Proof: How to Profit From the Coming Economic Collapse](https://en.wikipedia.org/wiki/Crash_Proof:_How_to_Profit_From_the_Coming_Economic_Collapse "Crash Proof: How to Profit From the Coming Economic Collapse")*, which was published in February 2007 by [Wiley](https://en.wikipedia.org/wiki/Wiley_\(publisher\) "Wiley (publisher)"). The book describes various features of the economy and housing market that led to the [United States housing bubble](https://en.wikipedia.org/wiki/United_States_housing_bubble "United States housing bubble"), and warns of the impending decline. After many of the predictions came to pass, a second edition titled *Crash Proof 2.0* was published in 2009, which included a "2009 update" addendum at the end of each chapter. It was featured on [The New York Times Best Seller list](https://en.wikipedia.org/wiki/The_New_York_Times_Best_Seller_list "The New York Times Best Seller list").
- *[Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and the Government Bailout Will Make Things Worse](https://en.wikipedia.org/wiki/Meltdown_\(Woods_book\) "Meltdown (Woods book)")*, by [Tom Woods](https://en.wikipedia.org/wiki/Tom_Woods "Tom Woods"), was published in February 2009 by [Regnery Publishing](https://en.wikipedia.org/wiki/Regnery_Publishing "Regnery Publishing"). It was featured on [The New York Times Best Seller list](https://en.wikipedia.org/wiki/The_New_York_Times_Best_Seller_list "The New York Times Best Seller list") for 10 weeks.
- The American documentary program *[Frontline](https://en.wikipedia.org/wiki/Frontline_\(American_TV_program\) "Frontline (American TV program)")* produced several episodes investigating various aspects of the crisis:
- "[Inside the Meltdown](https://www.pbs.org/wgbh/frontline/documentary/meltdown/)" (Season 2009: Episode 8)
- "[Ten Trillion and Counting](https://www.pbs.org/wgbh/frontline/documentary/tentrillion/)" (Season 2009: Episode 9)
- "[Breaking the Bank](https://www.pbs.org/wgbh/frontline/documentary/breakingthebank/)" (Season 2009: Episode 15)
- "[The Warning](https://www.pbs.org/wgbh/frontline/documentary/warning/)" (Season 2009: Episode 2)
- A 2010 documentary film, *Overdose: A Film about the Next Financial Crisis*, describes how the financial crisis came about and how the solutions that have been applied by many governments are setting the stage for the next crisis. The film is based on the book *Financial Fiasco* by [Johan Norberg](https://en.wikipedia.org/wiki/Johan_Norberg "Johan Norberg") and features [Alan Greenspan](https://en.wikipedia.org/wiki/Alan_Greenspan "Alan Greenspan"), with funding from the [libertarian](https://en.wikipedia.org/wiki/Libertarian "Libertarian") think tank [Cato Institute](https://en.wikipedia.org/wiki/Cato_Institute "Cato Institute").[\[445\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-445)
- In October 2010, a documentary film about the crisis, *[Inside Job](https://en.wikipedia.org/wiki/Inside_Job_\(2010_film\) "Inside Job (2010 film)")* directed by [Charles Ferguson](https://en.wikipedia.org/wiki/Charles_Ferguson_\(filmmaker\) "Charles Ferguson (filmmaker)"), was released by [Sony Pictures Classics](https://en.wikipedia.org/wiki/Sony_Pictures_Classics "Sony Pictures Classics"). In 2011, it won the [Academy Award for Best Documentary Feature](https://en.wikipedia.org/wiki/Academy_Award_for_Best_Documentary_Feature "Academy Award for Best Documentary Feature") at the [83rd Academy Awards](https://en.wikipedia.org/wiki/83rd_Academy_Awards "83rd Academy Awards").[\[446\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-446)
- Set on the night before the crisis broke, the 2011 film *[Margin Call](https://en.wikipedia.org/wiki/Margin_Call "Margin Call")* is a movie that follows traders through a sleepless 24 hours as they try to contain the damage after an analyst discovers information that is likely to ruin their firm, and possibly the whole economy.[\[447\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-447)
- The 2011 film *[Too Big to Fail](https://en.wikipedia.org/wiki/Too_Big_to_Fail_\(film\) "Too Big to Fail (film)")* is based on [Andrew Ross Sorkin](https://en.wikipedia.org/wiki/Andrew_Ross_Sorkin "Andrew Ross Sorkin")'s 2009 non-fiction book *[Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System â and Themselves](https://en.wikipedia.org/wiki/Too_Big_to_Fail_\(book\) "Too Big to Fail (book)")*.
- [Michael Lewis](https://en.wikipedia.org/wiki/Michael_Lewis "Michael Lewis") authored a best-selling non-fiction book about the crisis, entitled *[The Big Short](https://en.wikipedia.org/wiki/The_Big_Short "The Big Short")*. In 2015, it was adapted into a [film of the same name](https://en.wikipedia.org/wiki/The_Big_Short_\(film\) "The Big Short (film)"), which won the [Academy Award](https://en.wikipedia.org/wiki/Academy_Award_for_Best_Adapted_Screenplay "Academy Award for Best Adapted Screenplay"), [BAFTA Award](https://en.wikipedia.org/wiki/BAFTA_Award_for_Best_Adapted_Screenplay "BAFTA Award for Best Adapted Screenplay"), [Critics' Choice Movie Award](https://en.wikipedia.org/wiki/Critics%27_Choice_Movie_Award_for_Best_Adapted_Screenplay "Critics' Choice Movie Award for Best Adapted Screenplay"), and [Writers Guild of America Award](https://en.wikipedia.org/wiki/Writers_Guild_of_America_Award_for_Best_Adapted_Screenplay "Writers Guild of America Award for Best Adapted Screenplay"), all for Best Adapted Screenplay. One point raised is to what extent those outside of the markets themselves (i.e., not working for a mainstream investment bank) could forecast the events and be generally less myopic.
- Simon Reid-Henry's 2019 book *[Empire of Democracy](https://en.wikipedia.org/wiki/Empire_of_Democracy "Empire of Democracy")* describes how liberal norms\[*[which?](https://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_words "Wikipedia:Avoid weasel words")*\] in the West were replaced by populism as a consequence of the 2007â08 financial crisis, as well as [neoliberal](https://en.wikipedia.org/wiki/Neoliberal "Neoliberal") policies\[*[which?](https://en.wikipedia.org/wiki/Wikipedia:Avoid_weasel_words "Wikipedia:Avoid weasel words")*\] that had emerged in previous decades which hollowed out government and changed voter expectations.
- [VirĂĄg Blazsek](https://en.wikipedia.org/wiki/Vir%C3%A1g_Blazsek "VirĂĄg Blazsek")'s book, *Banking Bailout Law: A Comparative Study of the United States, United Kingdom and the European Union* (Routledge, 2020) examines the 2008 Global Financial Crisis-related bank bailout and resolution techniques through case studies from the United States, the EU, the United Kingdom, Spain and Hungary. The book identifies the advantages and disadvantages of different legal and regulatory approaches and proposes a regulatory framework intended to better address future financial crises.[\[448\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-448)
- [Banking (Special Provisions) Act 2008](https://en.wikipedia.org/wiki/Banking_\(Special_Provisions\)_Act_2008 "Banking (Special Provisions) Act 2008") (United Kingdom)
- [2008â2009 Keynesian resurgence](https://en.wikipedia.org/wiki/2008%E2%80%932009_Keynesian_resurgence "2008â2009 Keynesian resurgence")
- [2010 United States foreclosure crisis](https://en.wikipedia.org/wiki/2010_United_States_foreclosure_crisis "2010 United States foreclosure crisis")
- [2012 May Day protests](https://en.wikipedia.org/wiki/2012_May_Day_protests "2012 May Day protests")
- [2000s commodities boom](https://en.wikipedia.org/wiki/2000s_commodities_boom "2000s commodities boom")
- [Crisis theory](https://en.wikipedia.org/wiki/Crisis_theory "Crisis theory")
- [Kondratiev wave](https://en.wikipedia.org/wiki/Kondratiev_wave "Kondratiev wave")
- [List of acronyms associated with the eurozone crisis](https://en.wikipedia.org/wiki/List_of_acronyms_associated_with_the_eurozone_crisis "List of acronyms associated with the eurozone crisis")
- [List of bank failures in the United States (2008âpresent)](https://en.wikipedia.org/wiki/List_of_bank_failures_in_the_United_States_\(2008%E2%80%93present\) "List of bank failures in the United States (2008âpresent)")
- [List of banks acquired or bankrupted during the Great Recession](https://en.wikipedia.org/wiki/List_of_banks_acquired_or_bankrupted_during_the_Great_Recession "List of banks acquired or bankrupted during the Great Recession")
- [List of banks acquired or bankrupted in the United States during the 2008 financial crisis](https://en.wikipedia.org/wiki/List_of_banks_acquired_or_bankrupted_in_the_United_States_during_the_2008_financial_crisis "List of banks acquired or bankrupted in the United States during the 2008 financial crisis")
- [List of economic crises](https://en.wikipedia.org/wiki/List_of_economic_crises "List of economic crises")
- [List of entities involved in 2007â2008 financial crises](https://en.wikipedia.org/wiki/List_of_entities_involved_in_2007%E2%80%932008_financial_crises "List of entities involved in 2007â2008 financial crises")
- [List of largest bank failures in the United States](https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States "List of largest bank failures in the United States")
- [Stock market crashes in India](https://en.wikipedia.org/wiki/Stock_market_crashes_in_India "Stock market crashes in India")
- [Low-Income Countries Under Stress](https://en.wikipedia.org/wiki/Low-Income_Countries_Under_Stress "Low-Income Countries Under Stress")
- [Mark-to-market accounting](https://en.wikipedia.org/wiki/Mark-to-market_accounting "Mark-to-market accounting")
- [Neoliberalism](https://en.wikipedia.org/wiki/Neoliberalism "Neoliberalism")
- [Occupy movement](https://en.wikipedia.org/wiki/Occupy_movement "Occupy movement")
- [Pessimism porn](https://en.wikipedia.org/wiki/Pessimism_porn "Pessimism porn")
- [PIGS (economics)](https://en.wikipedia.org/wiki/PIGS_\(economics\) "PIGS (economics)")
- [Private equity in the 2000s](https://en.wikipedia.org/wiki/Private_equity_in_the_2000s "Private equity in the 2000s")
- [Subprime crisis impact timeline](https://en.wikipedia.org/wiki/Subprime_crisis_impact_timeline "Subprime crisis impact timeline")
- *[Chicago plan](https://en.wikipedia.org/wiki/Chicago_plan "Chicago plan")*
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"Predatory Lending Practices Prior to the Global Financial Crisis". *Predatory Lending and the Destruction of the African-American Dream*. 2020. pp. 23â68\. [doi](https://en.wikipedia.org/wiki/Doi_\(identifier\) "Doi (identifier)"):[10\.1017/9781108865715.004](https://doi.org/10.1017%2F9781108865715.004). [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
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[Dodd-Frank Wall Street Reform and Consumer Protection Act](https://www.govinfo.gov/content/pkg/PLAW-111publ203/html/PLAW-111publ203.htm) (Act of Congress 111â203). The United States Congress. July 21, 2010.
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James, Margaret. ["Basel III"](https://web.archive.org/web/20250205005634/https://www.investopedia.com/terms/b/basell-iii.asp). *Investopedia*. Archived from [the original](https://www.investopedia.com/terms/b/basell-iii.asp) on February 5, 2025. Retrieved April 27, 2021.
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Gopinath, Gita (April 14, 2020). ["The Great Lockdown: Worst Economic Downturn Since the Great Depression"](https://web.archive.org/web/20250213023027/https://www.imf.org/en/Blogs/Articles/2020/04/14/blog-weo-the-great-lockdown-worst-economic-downturn-since-the-great-depression). *[International Monetary Fund](https://en.wikipedia.org/wiki/International_Monetary_Fund "International Monetary Fund")*. Archived from [the original](https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-economic-downturn-since-the-great-depression/) on February 13, 2025.
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[Sorkin, Andrew Ross](https://en.wikipedia.org/wiki/Andrew_Ross_Sorkin "Andrew Ross Sorkin") (September 14, 2008). ["Lehman Files for Bankruptcy; Merrill Is Sold"](https://archive.nytimes.com/www.nytimes.com/2008/09/15/business/15lehman.html). *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")*. Retrieved February 15, 2025.
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Werdigier, Julia (September 17, 2008). ["Lloyds Bank Is Discussing Purchase of British Lender"](https://web.archive.org/web/20250126183726/https://www.nytimes.com/2008/09/18/business/worldbusiness/18lloyds.html). *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")*. Archived from [the original](https://www.nytimes.com/2008/09/18/business/worldbusiness/18lloyds.html) on January 26, 2025.
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28. ^ [***a***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-gofromhere_29-0) [***b***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-gofromhere_29-1) [***c***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-gofromhere_29-2) [***d***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-gofromhere_29-3)
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Williams, Carol J. (May 22, 2012). ["Euro crisis imperils recovering global economy, OECD warns"](https://web.archive.org/web/20241224191234/https://www.latimes.com/archives/blogs/world-now/story/2012-05-22/euro-crisis-imperils-recovering-global-economy-oecd-warns). *[Los Angeles Times](https://en.wikipedia.org/wiki/Los_Angeles_Times "Los Angeles Times")*. Archived from [the original](https://latimesblogs.latimes.com/world_now/2012/05/eurozone-crisis-global-economy.html) on December 24, 2024.
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Luhby, Tami (June 11, 2009). ["Americans' wealth drops \$1.3 trillion: Fed report shows a decline of home values and the stock market cut the nation's wealth to \$50.4 trillion"](https://web.archive.org/web/20250207103327/https://money.cnn.com/2009/06/11/news/economy/Americans_wealth_drops/?postversion=2009061113). [CNN](https://en.wikipedia.org/wiki/CNN "CNN"). Archived from [the original](https://money.cnn.com/2009/06/11/news/economy/Americans_wealth_drops/?postversion=2009061113) on February 7, 2025.
31. ^ [***a***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-greatcrash_32-0) [***b***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-greatcrash_32-1) [***c***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-greatcrash_32-2) [***d***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-greatcrash_32-3)
[Altman, Roger C.](https://en.wikipedia.org/wiki/Roger_Altman "Roger Altman") (January 2009). ["The Great Crash of 2008"](https://web.archive.org/web/20250214112812/https://www.foreignaffairs.com/articles/united-states/2009-01-01/great-crash-2008). *[Foreign Affairs](https://en.wikipedia.org/wiki/Foreign_Affairs "Foreign Affairs")*. Archived from [the original](https://www.foreignaffairs.com/articles/united-states/2009-01-01/great-crash-2008) on February 14, 2025.
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33. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-34)**
["Labor Force Statistics from the Current Population Survey"](https://web.archive.org/web/20250214065916/https://data.bls.gov/timeseries/LNS14000000). [Bureau of Labor Statistics](https://en.wikipedia.org/wiki/Bureau_of_Labor_Statistics "Bureau of Labor Statistics"). Archived from [the original](https://data.bls.gov/timeseries/LNS14000000) on February 14, 2025.
34. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-35)**
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35. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-36)**
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36. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-37)**
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37. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-38)**
An example of a developing country which suffered decreases in these fields is Armenia. According to World Bank data, the [foreign direct investment](https://en.wikipedia.org/wiki/Foreign_direct_investment "Foreign direct investment") decreased from 2008 until 2021 (see
["Foreign direct investment, net inflows (% of GDP) â Armenia"](https://data.worldbank.org/indicator/BX.KLT.DINV.WD.GD.ZS?end=2019&locations=AM&start=2000). *data.worldbank.org*. Retrieved May 12, 2021.
). Moreover, the remittances also decreased after 2007/08, then fluctuated (see
["Personal remittances, received (% of GDP) â Armenia"](https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS?end=2019&locations=AM&start=2000). *data.worldbank.org*. Retrieved May 12, 2021.
). This led to a dramatic rise in the number of households living below the poverty line (see
["The global financial crisis and developing countries: taking stock, taking action"](https://web.archive.org/web/20200712194416/https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/3705.pdf) (PDF). *Overseas Development Institute*. September 2009. Archived from [the original](https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/3705.pdf) (PDF) on July 12, 2020. Retrieved June 17, 2022.
). The poverty headcount ratio at \$1.90 (~\$3.00 in 2025) a day increased after 2007/08, from 0.9% to 1.2% (see
["Poverty headcount ratio at \$1.90 a day (2011 PPP) (% of population) â Armenia"](https://data.worldbank.org/indicator/SI.POV.DDAY?locations=AM). *data.worldbank.org*. Retrieved May 12, 2021.
).
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[Pub. L.](https://en.wikipedia.org/wiki/Act_of_Congress#Public_law,_private_law,_designation "Act of Congress")
[111â203 (text)](https://www.govinfo.gov/link/plaw/111/public/203?link-type=html) [(PDF)](https://www.govinfo.gov/link/plaw/111/public/203?link-type=pdf&.pdf)
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419. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-420)**
Brockes, Emma (January 24, 2009). ["He Told Us So"](https://www.theguardian.com/business/2009/jan/24/nouriel-roubini-credit-crunch). *[The Guardian](https://en.wikipedia.org/wiki/The_Guardian "The Guardian")*. London.
420. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-421)**
Rose, Andrew K.; Spiegel, Mark M. (January 2012). "Cross-country causes and consequences of the 2008 crisis: Early warning". *Japan and the World Economy*. **24** (1): 1â16\. [doi](https://en.wikipedia.org/wiki/Doi_\(identifier\) "Doi (identifier)"):[10\.1016/j.japwor.2011.11.001](https://doi.org/10.1016%2Fj.japwor.2011.11.001).
421. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-422)**
["IndyMac Bancorp Announces Earnings Webcast & Teleconference Call for First Quarter 2008 Financial Results"](https://www.businesswire.com/news/home/20080408005471/en/IndyMac-Bancorp-Announces-Earnings-Webcast-Teleconference-Call) (Press release). [Business Wire](https://en.wikipedia.org/wiki/Business_Wire "Business Wire"). August 8, 2008.
422. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-423)**
Shalal-Esa, Andrea (September 25, 2008). ["FACTBOX: Top ten U.S. bank failures"](https://www.reuters.com/article/us-washingtonmutual-jpmorgan-failures-fa/factbox-top-ten-u-s-bank-failures-idUSTRE48P0YC20080926). Reuters.
423. ^ [***a***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-shutsdown_424-0) [***b***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-shutsdown_424-1)
Veiga, Alex (July 12, 2008). ["Government shuts down mortgage lender IndyMac"](https://www.foxnews.com/printer_friendly_wires/2008Jul11/0,4675,IndyMac,00.html). [Fox News](https://en.wikipedia.org/wiki/Fox_News "Fox News"). [Associated Press](https://en.wikipedia.org/wiki/Associated_Press "Associated Press").
424. ^ [***a***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-Liquidate_425-0) [***b***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-Liquidate_425-1) [***c***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-Liquidate_425-2)
LaCapra, Lauren Tara (August 1, 2008). ["IndyMac Bancorp to Liquidate"](https://www.thestreet.com/investing/stocks/indymac-bancorp-to-liquidate-10431578). *[TheStreet.com](https://en.wikipedia.org/wiki/TheStreet.com "TheStreet.com")*.
425. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-426)**
["David S. Loeb, Former Chairman of IndyMac Bancorp, Inc., Passes Away"](https://www.businesswire.com/news/home/20030702005243/en/David-S.-Loeb-Chairman-IndyMac-Bancorp-Passes) (Press release). [Business Wire](https://en.wikipedia.org/wiki/Business_Wire "Business Wire"). July 2, 2003.
426. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-427)**
Vincent, Roger (July 3, 2003). ["David Loeb, 79; Founded Mortgage Banking Firms"](https://www.latimes.com/archives/la-xpm-2003-jul-03-me-loeb3-story.html). *[Los Angeles Times](https://en.wikipedia.org/wiki/Los_Angeles_Times "Los Angeles Times")*.
427. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-Paletta_428-0)**
Paletta, Damian; Enrich, David (July 12, 2008). ["Crisis Deepens as Big Bank Fails: IndyMac Seized In Largest Bust In Two Decades"](https://www.wsj.com/articles/SB121581435073947103). *[The Wall Street Journal](https://en.wikipedia.org/wiki/The_Wall_Street_Journal "The Wall Street Journal")*.
428. ^ [***a***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-lossreview_429-0) [***b***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-lossreview_429-1)
["Audit Report â SAFETY AND SOUNDNESS: Material Loss Review of IndyMac Bank, FSB"](https://www.treasury.gov/about/organizational-structure/ig/Documents/oig09032.pdf) (PDF). [United States Department of the Treasury](https://en.wikipedia.org/wiki/United_States_Department_of_the_Treasury "United States Department of the Treasury"). February 26, 2009.
429. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-430)**
["FDIC Board Approves Letter of Intent to Sell IndyMac Federal"](https://www.fdic.gov/news/news/press/2009/pr09001.html) (Press release). [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation"). January 2, 2009.
430. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-431)**
["Letter from IndyMac"](https://web.archive.org/web/20120216201626/http://files.ots.treas.gov/comments/20478116-56b7-4810-938b-60b7688f9652.pdf) (PDF). Archived from [the original](http://files.ots.treas.gov/comments/20478116-56b7-4810-938b-60b7688f9652.pdf) (PDF) on February 16, 2012. Retrieved February 24, 2014.
431. ^ [***a***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-indymac10Q_432-0) [***b***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-indymac10Q_432-1) [***c***](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-indymac10Q_432-2)
["Indymac Bancorp Inc â '10-Q' for 3/31/08"](http://www.secinfo.com/dVut2.t668.htm#msef). [U.S. Securities and Exchange Commission](https://en.wikipedia.org/wiki/U.S._Securities_and_Exchange_Commission "U.S. Securities and Exchange Commission").
432. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-433)**
[Andrews, Edmund L.](https://en.wikipedia.org/wiki/Edmund_L._Andrews "Edmund L. Andrews") (December 22, 2008). ["Irregularity Is Uncovered at IndyMac Bank"](https://www.nytimes.com/2008/12/23/business/23thrift.html). *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")*.
433. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-434)**
VAN DOORN, PHILIP (May 13, 2008). ["Indymac Seeks to Preserve Capital"](https://www.thestreet.com/markets/rates-and-bonds/indymac-seeks-to-preserve-capital-10416473). *[TheStreet.com](https://en.wikipedia.org/wiki/TheStreet.com "TheStreet.com")*.
434. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-435)**
["Robert C. Daniels, et al. v. IndyMac Bancorp, Inc., et al"](http://securities.stanford.edu/filings-documents/1040/IMB_01/201099_r01c_08CV03812.pdf) (PDF).
435. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-436)**
["Schumer: Don't blame me for IndyMac failure"](https://money.cnn.com/2008/07/13/news/companies/schumer_indymac/index.htm). CNN. July 13, 2008.
436. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-437)**
["The \$4 Billion Senator"](https://www.wsj.com/articles/SB121607771017452513). *[The Wall Street Journal](https://en.wikipedia.org/wiki/The_Wall_Street_Journal "The Wall Street Journal")*. July 15, 2008.
437. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-438)**
Veiga, Alex (July 7, 2008). ["IndyMac stops new mortgage loans, to cut workforce by half"](https://www.mercurynews.com/2008/07/07/indymac-stops-new-mortgage-loans-to-cut-workforce-by-half/). Mercury News. [Associated Press](https://en.wikipedia.org/wiki/Associated_Press "Associated Press").
438. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-439)**
Wagner, Evan (July 11, 2008). ["FDIC Notification to All Employees"](https://ml-implode.com/info/indy-fdic.pdf) (PDF). IndyMac Bank.
439. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-fn1_440-0)**
["Federal Regulators Close California Mortgage Lender"](https://www.foxnews.com/story/federal-regulators-close-california-mortgage-lender). [Fox News](https://en.wikipedia.org/wiki/Fox_News "Fox News"). [Associated Press](https://en.wikipedia.org/wiki/Associated_Press "Associated Press"). July 11, 2008.
440. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-441)**
Heisel, William (February 28, 2009). ["IndyMac's shuffle ran over depositors"](https://www.latimes.com/archives/la-xpm-2009-feb-28-fi-indymac28-story.html). *[Los Angeles Times](https://en.wikipedia.org/wiki/Los_Angeles_Times "Los Angeles Times")*.
441. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-442)**
["FDIC: Failed Bank Information â Bank Closing Information for IndyMac Bank, F.S.B., Pasadena, CA"](https://www.fdic.gov/bank/individual/failed/IndyMac.html). [Federal Deposit Insurance Corporation](https://en.wikipedia.org/wiki/Federal_Deposit_Insurance_Corporation "Federal Deposit Insurance Corporation").
442. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-443)**
Story, Louise (July 13, 2008). ["IndyMac one of the largest bank failures in U.S. history"](https://www.nytimes.com/2008/07/13/business/worldbusiness/13iht-indy.4.14456887.html). *[The New York Times](https://en.wikipedia.org/wiki/The_New_York_Times "The New York Times")*.
443. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-444)**
Sterngold, James (April 29, 2010). ["How Much Did Lehman CEO Dick Fuld Really Make?"](https://www.bloomberg.com/news/articles/2010-04-29/how-much-did-lehman-ceo-dick-fuld-really-make). *[Bloomberg Businessweek](https://en.wikipedia.org/wiki/Bloomberg_Businessweek "Bloomberg Businessweek")*.
444. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-445)**
["Overdose: A Film about the Next Financial Crisis"](https://www.cato.org/events/overdose-film-about-next-financial-crisis). [Cato Institute](https://en.wikipedia.org/wiki/Cato_Institute "Cato Institute"). May 17, 2010.
445. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-446)**
["Oscars 2011: Inside Job banks best documentary award"](https://www.theguardian.com/film/2011/feb/28/inside-job-best-documentary-oscar). *The Guardian*. February 28, 2011.
446. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-447)**
Wilkinson, Alissa (September 15, 2018). ["5 movies that explain what caused the financial crisis, and what happened after"](https://www.vox.com/culture/2018/9/14/17856048/movies-financial-crisis-streaming-lehman-brothers-versailles-big-short-inside-job). *[Vox Media](https://en.wikipedia.org/wiki/Vox_Media "Vox Media")*.
447. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-448)**
Blazsek, VirĂĄg (October 27, 2020). *Banking Bailout Law: A Comparative Study of the United States, United Kingdom and the European Union* (1st ed.). New York (US) & London (UK): Routledge. [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[9780367410339](https://en.wikipedia.org/wiki/Special:BookSources/9780367410339 "Special:BookSources/9780367410339")
.
The initial articles and some subsequent material were adapted from the [Wikinfo](https://en.wikipedia.org/wiki/Wikinfo "Wikinfo") article [Financial crisis of 2007â2008](https://web.archive.org/web/20120111145026/http://www.wikinfo.org/index.php?title=Financial_crisis_of_2007-2008) released under the [GNU Free Documentation License Version 1.2](https://en.wikipedia.org/wiki/Wikipedia:Text_of_the_GNU_Free_Documentation_License "Wikipedia:Text of the GNU Free Documentation License")
- Kotz, David M. (2015). *The Rise and Fall of Neoliberal Capitalism*. Harvard University Press. [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[978-0-674-72565-2](https://en.wikipedia.org/wiki/Special:BookSources/978-0-674-72565-2 "Special:BookSources/978-0-674-72565-2")
. [JSTOR](https://en.wikipedia.org/wiki/JSTOR_\(identifier\) "JSTOR (identifier)") [j.ctt21pxkf9](https://www.jstor.org/stable/j.ctt21pxkf9).
- [John Lanchester](https://en.wikipedia.org/wiki/John_Lanchester "John Lanchester"), *The Invention of Money: How the heresies of two bankers became the basis of our modern economy*, [The New Yorker](https://en.wikipedia.org/wiki/The_New_Yorker "The New Yorker"), August 5 & 12, 2019, pp. 28â31
- Julien Mercille & Enda Murphy, 2015, *Deepening neoliberalism, austerity, and crisis: Europe's treasure Ireland,* [Palgrave Macmillan](https://en.wikipedia.org/wiki/Palgrave_Macmillan "Palgrave Macmillan"), [Basingstoke](https://en.wikipedia.org/wiki/Basingstoke "Basingstoke").
- [Nomi Prins](https://en.wikipedia.org/wiki/Nomi_Prins "Nomi Prins"): *Collusion: How Central Bankers Rigged the World*, [Nation Books](https://en.wikipedia.org/wiki/Nation_Books "Nation Books") 2018, [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[978-1568585628](https://en.wikipedia.org/wiki/Special:BookSources/978-1568585628 "Special:BookSources/978-1568585628")
.
- Patterson, Laura A.; Koller, Cynthia A. (2011). "Diffusion of Fraud Through Subprime Lending: The Perfect Storm". *Economic Crisis and Crime*. Sociology of Crime, Law and Deviance. pp. 25â45\. [doi](https://en.wikipedia.org/wiki/Doi_\(identifier\) "Doi (identifier)"):[10\.1108/S1521-6136(2011)0000016005](https://doi.org/10.1108%2FS1521-6136%282011%290000016005). [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[978-0-85724-801-5](https://en.wikipedia.org/wiki/Special:BookSources/978-0-85724-801-5 "Special:BookSources/978-0-85724-801-5")
.
- [Charles Read](https://en.wikipedia.org/wiki/Charles_Read_\(historian\) "Charles Read (historian)") (2022). *Calming the storms : the carry trade, the banking school and British financial crises since 1825*. Cham, Switzerland, pp. 295â305.
- [Tooze, Adam](https://en.wikipedia.org/wiki/Adam_Tooze "Adam Tooze") (2018). [*Crashed: How a Decade of Financial Crises Changed the World*](https://books.google.com/books?id=om2mDwAAQBAJ). New York: [Viking Press](https://en.wikipedia.org/wiki/Viking_Press "Viking Press"). [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[9780670024933](https://en.wikipedia.org/wiki/Special:BookSources/9780670024933 "Special:BookSources/9780670024933")
.
- [Peter Wallison](https://en.wikipedia.org/wiki/Peter_J._Wallison "Peter J. Wallison"), *Bad History, Worse Policy* ([Washington, D.C.](https://en.wikipedia.org/wiki/Washington,_D.C. "Washington, D.C."): [American Enterprise Institute](https://en.wikipedia.org/wiki/American_Enterprise_Institute "American Enterprise Institute"), 2013) [ISBN](https://en.wikipedia.org/wiki/ISBN_\(identifier\) "ISBN (identifier)")
[978-0-8447-7238-7](https://en.wikipedia.org/wiki/Special:BookSources/978-0-8447-7238-7 "Special:BookSources/978-0-8447-7238-7")
.
- Palais-Royal Initiative[\[1\]](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_note-449) (8 February 2011): [*Reform of the International Monetary System: A Cooperative Approach for the 21st Century*](https://www.emergingmarketsforum.org/wp-content/uploads/2020/01/Palais-Royal-report.pdf) (pdf, 20 p)
**Reports on causes**
- [Final Report](https://www.govinfo.gov/content/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf) of the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission")
- [Archived website](http://fcic.law.stanford.edu/) of the [Financial Crisis Inquiry Commission](https://en.wikipedia.org/wiki/Financial_Crisis_Inquiry_Commission "Financial Crisis Inquiry Commission") (maintained by the [Stanford University](https://en.wikipedia.org/wiki/Stanford_University "Stanford University") and the [Stanford Law School](https://en.wikipedia.org/wiki/Stanford_Law_School "Stanford Law School"))
- [Wall Street and the Financial Crisis: Anatomy of a Financial Collapse](http://hsgac.senate.gov/public/_files/Financial_Crisis/FinancialCrisisReport.pdf) [Archived](https://web.archive.org/web/20110418203336/http://hsgac.senate.gov/public/_files/Financial_Crisis/FinancialCrisisReport.pdf) April 18, 2011, at the [Wayback Machine](https://en.wikipedia.org/wiki/Wayback_Machine "Wayback Machine"), Majority and Minority Staff Report, [United States Senate Homeland Security Permanent Subcommittee on Investigations](https://en.wikipedia.org/wiki/United_States_Senate_Homeland_Security_Permanent_Subcommittee_on_Investigations "United States Senate Homeland Security Permanent Subcommittee on Investigations"), April 13, 2011
- [What Caused the Crisis](https://www.stlouisfed.org/financial-crisis/articles-and-papers/what-caused-the-crisis): A collection of papers at the [Federal Reserve Bank of St. Louis](https://en.wikipedia.org/wiki/Federal_Reserve_Bank_of_St._Louis "Federal Reserve Bank of St. Louis")
**Journalism and interviews**
- [Inside the Meltdown](https://www.pbs.org/wgbh/pages/frontline/meltdown/) â PBS *Frontline* documentation including additional background article and in-depth interviews
- ["Money, Power & Wall Street"](https://www.pbs.org/wgbh/frontline/documentary/money-power-wall-street/) â PBS *Frontline* documentation including additional background article and in-depth interviews
- [Stewart, James B.](https://en.wikipedia.org/wiki/James_B._Stewart "James B. Stewart"), [Eight Days: the battle to save the American financial system](https://www.newyorker.com/reporting/2009/09/21/090921fa_fact_stewart), *[The New Yorker](https://en.wikipedia.org/wiki/The_New_Yorker "The New Yorker")* magazine, September 21, 2009. pp. 58â81. Summarizing September 15â23, 2008, with interviews of Paulson, Bernanke, and Geithner by James Stewart
- [Panic, Fear, and Regret](https://features.marketplace.org/bernanke-paulson-geithner/) â audio interviews with Timothy Geithner, Ben Bernanke and Henry Paulson from *[Marketplace](https://en.wikipedia.org/wiki/Marketplace_\(radio_program\) "Marketplace (radio program)")*
1. **[^](https://en.wikipedia.org/wiki/2008_financial_crisis#cite_ref-449)** 18 high-ranking former ministers, Central Bank governors and/or officials in national or international institutions:
[Sergey\_Aleksashenko](https://en.wikipedia.org/wiki/Sergey_Aleksashenko "Sergey Aleksashenko") Former Deputy Governor, Central Bank of Russia. [Hamad\_Al\_Sayari](https://en.wikipedia.org/w/index.php?title=Hamad_Al_Sayari&action=edit&redlink=1 "Hamad Al Sayari (page does not exist)") Former Governor, Saudi Arabian Monetary Agency. [Jack\_T.\_Boorman](https://en.wikipedia.org/w/index.php?title=Jack_T._Boorman&action=edit&redlink=1 "Jack T. Boorman (page does not exist)") Former Department Director and Special Advisor to the Managing Director, IMF. [Michel\_Camdessus](https://en.wikipedia.org/wiki/Michel_Camdessus "Michel Camdessus") Former Managing Director, IMF. [Andrew Crockett](https://en.wikipedia.org/wiki/Andrew_Crockett_\(banker\) "Andrew Crockett (banker)") Former General Manager, BIS. [Guillermo\_De\_la\_Dehesa](https://en.wikipedia.org/w/index.php?title=Guillermo_De_la_Dehesa&action=edit&redlink=1 "Guillermo De la Dehesa (page does not exist)") Former State Secretary of Economy and Finance, Spain. [Arminio\_Fraga](https://en.wikipedia.org/wiki/Arminio_Fraga "Arminio Fraga") Former Governor, Central Bank of Brazil. [Toyoo\_Gyohten](https://en.wikipedia.org/w/index.php?title=Toyoo_Gyohten&action=edit&redlink=1 "Toyoo Gyohten (page does not exist)") Former Vice Minister of Finance, Japan. [Xiaolian\_Hu](https://en.wikipedia.org/w/index.php?title=Xiaolian_Hu&action=edit&redlink=1 "Xiaolian Hu (page does not exist)") Vice President of China Society of Finance and Banking. [AndrĂŠ\_Icard](https://en.wikipedia.org/w/index.php?title=Andr%C3%A9_Icard&action=edit&redlink=1 "AndrĂŠ Icard (page does not exist)") Former Deputy General Manager, BIS. [Horst\_Koehler](https://en.wikipedia.org/wiki/Horst_Koehler "Horst Koehler") Former Managing Director, IMF. [Alexandre\_Lamfalussy](https://en.wikipedia.org/wiki/Alexandre_Lamfalussy "Alexandre Lamfalussy") Former General Manager, BIS. [Guillermo Ortiz](https://en.wikipedia.org/wiki/Guillermo_Ortiz_Mart%C3%ADnez "Guillermo Ortiz MartĂnez") Former Governor, Banco de MĂŠxico. [Tommaso\_Padoa-Schioppa](https://en.wikipedia.org/wiki/Tommaso_Padoa-Schioppa "Tommaso Padoa-Schioppa") (â ) Former Minister of Finance, Italy. [Maria Ramos](https://en.wikipedia.org/wiki/Maria_Ramos_\(businesswoman\) "Maria Ramos (businesswoman)") Former Director General, National Treasury, South Africa. [Y. Venugopal Reddy](https://en.wikipedia.org/wiki/Y._V._Reddy "Y. V. Reddy") Former Governor, Reserve Bank of India. [Edwin\_M.\_Truman](https://en.wikipedia.org/wiki/Edwin_M._Truman "Edwin M. Truman") Former Assistant Secretary for International Affairs of the U.S. Treasury. [Paul\_A.\_Volcker](https://en.wikipedia.org/wiki/Paul_A._Volcker "Paul A. Volcker") Former Chairman, Federal Reserve Board. Joined by Isabelle Mateos y Lago Advisor, IMF. Pietro Catte Director, International Research Department, Banca dâItalia. Corrinne Ho Senior Economist, BIS. Irena Asmundson Economist, IMF. |
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| Unparsed URL | org,wikipedia!en,/wiki/2008_financial_crisis s443 |