Remembering The 2008 Financial Nightmare A series of stunning events last September paralyzed America's financial system and profoundly rattled the global economy. Stocks tumbled, and the credit markets short-circuited. Pale, frightened regulators, bankers and politicians tried haltingly to explain how they might avert an economic catastrophe.
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Remembering The 2008 Financial Nightmare

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Remembering The 2008 Financial Nightmare

Remembering The 2008 Financial Nightmare

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This is WEEKEND EDITION from NPR News. I'm Liane Hansen.

Tomorrow marks the anniversary of a day that will live in economic infamy. On September 7th, 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 of a wild series of events.

In the weeks that followed, Bank of America took over Merrill Lynch. Lehman Brothers collapsed. Credit markets froze up. Insurance giant AIG got an $85 billion federal rescue and financial markets all over the world went haywire.

The Federal Reserve, Treasury and Congress threw everything they could at the crisis: slashing interest rates and shoveling out hundreds of billions of dollars for rescue plans.

In the coming days, NPR will revisit the events of last September to assess where we are today. NPR's senior business editor Marilyn Geewax joins us to preview our series of reports called Financial Crisis: One Year and Counting. Welcome back, Marilyn.


HANSEN: Looking back to last September, was it really as bad as it seemed?

GEEWAX: That was not media hype. When I look back on the events, the pace was just terrifying. You know, in the summer of 2008, we knew the economy was slipping into a recession. You could see that jobs were shrinking, home foreclosures were rising, but nobody was saying that by mid September financial giants like Lehman Brothers and Washington Mutual would be in complete ruins.

You had the government racing from one crisis to a next trying to save some of the best known companies on Wall Street. I mean, Merrill Lynch is not some obscure hedge fund. These companies that were waking up dead were really the household names.

And the other thing that was really strange was the remedies that the government was coming up with were equally jaw-dropping. Just take one example. You know how Congress is always so slow to actually get any legislation passed? But last September, the lawmakers just became so terrified about what was happening that they approved the Troubled Assets Relief Program - you remember TARP? That was a $700 billion rescue plan for banks, and they passed it in just a matter of days. By October 3rd, President Bush had already signed it into law.

HANSEN: Did all or any of those frantic efforts work?

GEEWAX: I think you could fairly say that economists believed that the worst is definitely behind us. When you look at the stock market, it's been rising for about six months now. And the number of job cuts is down dramatically. Back in January, we were talking about three-quarters of a million jobs being lost in one month. Well, on Friday we just got new numbers about August and it was only 216,000 jobs lost.

Yes, okay, that's terrible. But the direction is going the right way. So economists say that the worst of it is wrapping up, really, and credit markets are stabilizing now.

HANSEN: Well, if that's what's behind us, what's in front of us?

GEEWAX: Unfortunately, no matter how you look at this, you've got to admit that we've got tough times ahead of us. Even though companies aren't slashing their payrolls the way they were doing last winter, they aren't hiring yet. Economists think that the 9.7 percent unemployment rate is just going to keep rising for months, probably into next summer, maybe getting to about 10.3 percent.

And those home foreclosure numbers are still horrifying. We're talking about millions of people who are going to lose their homes before this crisis really settles out. So, commercial real estate is in the dumps, consumers aren't spending, the travel industry is still taking a beating. We just got into such a deep hole last year that even the optimists say it's going to take us years to climb out of this and get back to normal.

So, we really wanted to take a closer look at such a big event, that we have reporters for National Public Radio, are going to go back and look at what happened, talk to experts and try to figure out where do we go from here. And one of the things we're trying to do with this is just assess the cost. What did it cost us in jobs lost, bankruptcies, foreclosures? And we want to add up some of the costs for taxpayers. What happened with all those bailouts?

So our Web site,, they've put together charts and timelines, things that can help people understand what's happened over the past year.

HANSEN: NPR's series of reports, Financial Crisis: One Year and Counting, begins this week. Marilyn Geewax is NPR's senior business editor. Thank you, Marilyn.

GEEWAX: You're welcome.

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