Monday marks the one-year anniversary of a frightful day that changed economic history. On Sept. 7, 2008, the federal government stunned financial markets by announcing its takeover of two mortgage giants, Fannie Mae and Freddie Mac.
That was just the beginning. In ensuing days, Bank of America took over Merrill Lynch; Lehman Brothers collapsed; credit markets froze up, and insurance giant AIG grabbed at an $85 billion federal rescue.
In a new series, "Financial Crisis: One Year and Counting," NPR examines the wild events and the efforts of the Federal Reserve, Treasury and Congress to avert an economic catastrophe. The series will count up the costs of both the crisis and the cure. Preview stories in the series:
Day Of Dread Panic and dread spread around the globe one year ago as what seemed like a pretty isolated U.S. problem — the subprime mortgage meltdown — morphed into a full-fledged global crisis. Sept. 7 was the day the federal government took over mortgage giants Fannie Mae and Freddie Mac. And by a quirk of fate, it was the day that NPR's Planet Money produced its first podcast. NPR's Adam Davidson talks with Morning Edition.
Fannie And Freddie The first momentous event in the crisis was the stunning takeover of Fannie Mae and Freddie Mac by the federal government. The two mortgage giants hold or guarantee most of the mortgage debt in the country. And now it's backed up by hundreds of billions of dollars in federal guarantees. Will that federal intervention come back to haunt American taxpayers? And how, if ever, will the government move Fannie and Freddie back into private hands? NPR's Jim Zarroli examines the mortgage giants' tumultuous year.
Tick Tock A year ago, the nation's financial system was in grave peril. Over the course of 10 days, credit markets were paralyzed, storied investment banks went bust and it seemed the world might be on the verge of a catastrophic depression. Zarroli looks back on those scary weeks, how it all unraveled and the key decisions made when it mattered most.
Wreckage The economic wreckage from the financial crisis has been enormous. What's been the impact in the real economy — jobs lost, foreclosures, personal bankruptcies and investment portfolios? NPR's Frank Langfitt reports.
The Fed Throughout the crisis, Federal Reserve Chairman Ben Bernanke has taken extraordinary actions. NPR's John Ydstie assesses the role the Fed played in saving the country and world from Great Depression 2.0. He asks whether Bernanke was uniquely qualified to play this creative role and whether it leaves the Fed with a new, even more powerful position in the nation's economy. If so, is that good, bad or benign?
Politics Just a year ago, the financial crisis offered voters a glimpse of the two candidates in action. It was a moment that solidified Barack Obama's narrow lead over John McCain. Once the crisis helped elect him, it then defined his early presidency. NPR's Don Gonyea explains.
Foreclosures Endure The global financial crisis began in America's backyards. Too many homeowners borrowed far more than they could afford. At the foreclosure prevention headquarters for the nation's largest mortgage servicer — Bank of America — workers try to fix at least a few of the bad mortgages, but defaults continue to rise. The country remains on track to see 2 million people lose their homes this year. NPR's Chris Arnold reports.
Losers And, Yes, Winners The financial crisis has left a trail of victims in its wake. Entire industries, such as construction and banking, have suffered terrible blows. The already troubled auto industry went into critical condition. But the crisis and the subsequent bailouts also helped some industries and companies become stronger. NPR's Wendy Kaufman counts up winners and losers.
National Security After the director of national intelligence warned last winter that the global financial crisis represented the No. 1 near-term security threat to the United States, the CIA began preparing a daily "economic intelligence brief" for the president. The brief is classified, but NPR's Tom Gjelten reports on the issues it covers each day and the significance of its elevation on the U.S. security agenda.
The Fix When the financial crisis erupted, last September, politicians, regulators and scholars from the left and right said it was so severe, so potentially catastrophic, that something drastic needed to be done to prevent another meltdown. But now as another Great Depression has been averted, the consensus is slipping away into the muck of politics. Can it be revived? Davidson and Planet Money's Alex Blumberg report.
Obstacles To Change One thing that just about everyone agrees on is that rules need to be tightened to prevents complex financial instruments like derivatives from posing a systemic threat to the entire financial system. And one way to do that would be combining the forces of key regulators. But that's not happening. And therein, Davidson and Blumberg find a tale of politics overcoming good sense.
Debt The government took extraordinary steps to save the U.S economy, including passing huge stimulus and bailout packages. The Fed has cut interest rates to zero and provided massive amounts of liquidity to banks. Is inflation the next big fear? How do we unwind all the government intervention into the economy? Ydstie adds up the debts.
Congress Last September, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke came knocking time and again on Capitol Hill. They warned lawmakers that the country was facing a financial crisis that could be worse than the Great Depression. NPR's David Welna looks back on those frightful days, and the congressional reactions to the dire warnings.
Lessons Learned The crisis brought the international economic system to the verge of meltdown. We escaped the very worst scenarios, but some economists say that unless we learned the proper lessons, the international economy will remain vulnerable to another crisis. And that one would be likely be genuinely catastrophic. Gjelten asks whether lessons have been learned and applied.