![]() It went further after WWII, offering veterans cheap home loans through the G.I. government began to back the mortgage market. Federal policy conspicuously supported the American dream of homeownership since at least the 1930s, when the U.S. The 2008 financial crisis had its origins in the housing market, for generations the symbolic cornerstone of American prosperity. filing for Chapter 11 bankruptcy protection. stocks suffered a steep loss after news of the financial firm Lehman Brothers Holdings Inc. In afternoon trading the Dow Jones Industrial Average fell over 500 points as U.S. financial crisis precipitated a worldwide economic collapse. So…what happened? The American Dream was sold on too-easy creditĪ trader works on the floor of the New York Stock Exchange on Septemin New York City. “In the long run, I'm confident that our capital markets are flexible and resilient and can deal with these adjustments." Privately, he sounded less sure, saying to advisors, "Someday you guys are going to need to tell me how we ended up with a system like this.… We're not doing something right if we're stuck with these miserable choices."Īnd because that system had become a globally interdependent one, the U.S. "In the short run, adjustments in the financial markets can be painful-both for the people concerned about their investments and for the employees of the affected firms,” he said, attempting to quell potential panic on Main Street. Lehman, they thought, was not too big to fail. government decided not to engineer the firm's salvation, as it had for Lehman’s competitor Merrill Lynch, the insurance giant American International Group (AIG) or, in the spring of 2008, the investment bank Bear Stearns. The secretary of the treasury, Hank Paulson, had-reporters said-"concluded that the financial system could survive the collapse of Lehman." In other words, the U.S. ![]() The superficially composed assessments that emanated from Washington policymakers added no clarity. Why had their venerable 158-year-old investment banking firm, a bulwark of Wall Street, gone bankrupt? And what did it mean for most of the planet? Financial news became front-page, top-of-the-hour news, as hundreds of dazed-looking Lehman Brothers employees poured onto the sidewalks of Seventh Avenue in Manhattan, clutching office furnishings while struggling to explain to the swarming reporters the shocking turn of events. In mid-September catastrophe erupted, dramatically and in full public view.
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