# Canonical recap data for The Financial Crisis & Stock Market Collapse (2008)
# Source: https://recap.at/2008/financial-crisis-2008
# Format: YAML 1.2 (UTF-8). Generated at request time.
slug: financial-crisis-2008
canonicalUrl: "https://recap.at/2008/financial-crisis-2008"
title: The Financial Crisis & Stock Market Collapse
subtitle: Lehman Brothers' collapse triggered the worst global recession since 1929, reshaping financial regulation and economic policy worldwide.
recapType: global_event
eventStatus: concluded
startDate: 2008-01-01
datePrecision: year
year: 2008
decade: 2000
summaryShort: 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 defi
summaryLong: 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 mid-2006., 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. The crisis exacerbated the Great Recession, a global recession that began in late-2007, as well as the United States bear market of 2007–2009. It was also a contributor to the 2008–2011 Icelandic financial crisis and the euro area crisis.
lede: In 2008, the U.S. housing market collapsed, taking the global economy with it. Banks had loaded up on risky mortgage bonds; when homeowners stopped paying, the whole system seized up. The crash wiped out trillions in wealth, triggered the Great Recession, and nearly destroyed the financial system.
heroImageUrl: "https://upload.wikimedia.org/wikipedia/commons/thumb/5/53/Lehman_Brothers_Times_Square_by_David_Shankbone.jpg/1280px-Lehman_Brothers_Times_Square_by_David_Shankbone.jpg"
heroImageCredit: Wikipedia · "2008 financial crisis"
importance: 95
sourceConfidence: 75
keyFacts:
- label: US unemployment peak
  value: 10% in October 2009
- label: Global stock market losses
  value: Approximately $16 trillion erased between 2008-2009
- label: US housing starts decline
  value: Dropped 78% from January 2006 peak to April 2009
- label: Bear Stearns acquisition
  value: JPMorgan Chase bought the firm for $2 per share in March 2008
- label: Lehman Brothers collapse
  value: $619 billion in assets; largest bankruptcy filing in US history
- label: TARP authorization
  value: $700 billion Congressional bailout package passed October 3, 2008
- label: US real GDP contraction
  value: "-4.3% in Q4 2008"
- label: Federal Funds Rate cut
  value: Reduced to near-zero by December 2008
timeline:
- date: 2006-06-01
  title: US housing market peaks
  description: Median home prices reach historic highs before the housing bubble begins deflating, fueled by years of subprime lending and speculative investment.
- date: 2007-08-09
  title: BNP Paribas freezes funds
  description: French bank BNP Paribas announces it cannot value assets in three mortgage-backed investment funds, signaling the credit crisis has begun in earnest.
- date: 2008-03-16
  title: Bear Stearns fails
  description: JPMorgan Chase acquires Bear Stearns for $2 per share with Federal Reserve backing, marking the first major investment bank to collapse.
- date: 2008-09-07
  title: Government takes over Fannie and Freddie
  description: US Treasury and Federal Reserve place mortgage giants Fannie Mae and Freddie Mac into conservatorship after massive losses threaten the entire mortgage market.
- date: 2008-09-15
  title: Lehman Brothers bankruptcy
  description: The 158-year-old investment bank files for Chapter 11 protection with $619 billion in assets, the largest bankruptcy filing in US history.
- date: 2008-09-16
  title: AIG bailout begins
  description: Federal Reserve extends initial $85 billion credit facility to prevent the collapse of insurance giant AIG, which had sold massive amounts of mortgage protection.
- date: 2008-10-03
  title: TARP passes Congress
  description: President Bush signs the Troubled Asset Relief Program authorizing $700 billion to stabilize the financial system after initially being rejected by the House.
- date: 2008-12-16
  title: Federal Funds Rate hits zero
  description: The Federal Reserve cuts its benchmark interest rate to near-zero in an unprecedented move to inject liquidity and encourage lending.
- date: 2009-02-17
  title: American Recovery Act signed
  description: President Obama signs $787 billion fiscal stimulus package aimed at reversing job losses and economic contraction.
- date: 2009-10-01
  title: Unemployment peaks above 10%
  description: US jobless rate reaches 10% in October, the highest level since 1983, with 15 million Americans officially unemployed.
sources:
- url: "https://en.wikipedia.org/wiki/2008_financial_crisis"
  title: The Financial Crisis of 2007-2009
  provider: Wikipedia
related: []
categories:
- disaster
metaDescription: How the 2008 housing collapse triggered a global financial crisis and nearly broke the world economy.
wikidataQid: Q896666
taxonomy:
domain: economic
eventTypes:
- financial_crisis
canonicalClasses:
- collapse
- transformation
impactRadius: global
velocity: cascading
predictability: emergent
intentionality: accidental
domainCoupling: systemic
archiveSnapshots:
- url: "https://web.archive.org/web/20081007174633/http://en.wikipedia.org:80/wiki/2008_financial_crisis"
  capturedAt: 2008-10-07
  label: The Financial Crisis of 2007-2009
  originalUrl: "https://en.wikipedia.org/wiki/2008_financial_crisis"
aliases:
- Financial Crisis of 2008
- Great Recession
- Subprime Mortgage Crisis
- Global Financial Crisis
impactStatement: The 2008 financial crisis wiped roughly $16 trillion in global market value and pushed unemployment in the US above 10%, triggering the deepest recession since the Great Depression. The collapse exposed how mortgage-backed securities and credit derivatives had contaminated balance sheets across the world's largest banks, forcing governments to inject hundreds of billions in emergency capital to prevent systemic failure.
mediaCoverage:
- publisher: The New York Times
  publisherSlug: new-york-times
  headline: Lehman Brothers Files for Bankruptcy; Merrill Is Sold
  publishedAt: 2008-09-16
  url: Synthesized from period reporting - archive.nytimes.com
  excerpt: Lehman Brothers, a 164-year-old institution that was one of the nation's most prestigious investment banks, filed for bankruptcy protection Monday in what is by far the largest failure in American corporate history. The collapse sent shockwaves through global financial markets.
  significance: 90
  type: newspaper
  region: United States
- publisher: BBC News
  publisherSlug: bbc-news
  headline: Global Credit Crisis Deepens as US Housing Market Implodes
  publishedAt: 2008-09-29
  url: Synthesized from period reporting - bbc.co.uk/news
  excerpt: Synthesized from period reporting - The collapse of major US financial institutions triggered a worldwide credit freeze, with banks refusing to lend to each other and stock markets plummeting across Europe, Asia, and North America.
  significance: 88
  type: tv
  region: United Kingdom
- publisher: Der Spiegel
  publisherSlug: der-spiegel
  headline: Die Bankenkrise erreicht Europa - Regierungen greifen ein
  publishedAt: 2008-10-03
  url: Synthesized from period reporting - spiegel.de
  excerpt: "DE: 'Die Bankenkrise erreicht Europa - Regierungen greifen ein' / EN: 'Banking Crisis Reaches Europe - Governments Step In' - German and European authorities announced emergency rescue packages as the American subprime mortgage crisis threatened to topple major continental financial institutions."
  significance: 85
  type: magazine
  region: Germany
- publisher: The Financial Times
  publisherSlug: financial-times
  headline: Credit Markets Seize Up as Bank Confidence Evaporates
  publishedAt: 2008-09-18
  url: Synthesized from period reporting - ft.com
  excerpt: The interbank lending market froze as financial institutions lost confidence in each other's solvency, forcing central banks worldwide to inject unprecedented liquidity to prevent a complete collapse of the global financial system.
  significance: 87
  type: newspaper
  region: United Kingdom
- publisher: Reuters
  publisherSlug: reuters
  headline: US Stocks Plunge 9% in Worst Week Since 1930s Great Depression
  publishedAt: 2008-10-10
  url: Synthesized from period reporting - reuters.com
  excerpt: Stock markets across North America, Europe and Asia suffered their worst week in decades as investors fled risky assets and governments scrambled to prevent a systemic collapse of the financial system triggered by toxic subprime mortgage securities.
  significance: 89
  type: newspaper
  region: United States
comparisonThenNow:
- metric: US Unemployment Rate
  thenValue: 10%
  thenYear: 2009
  nowValue: 3.9%
  nowYear: 2024
  note: Peak unemployment occurred in October 2009
- metric: S&P 500 Index
  thenValue: "676.53"
  thenYear: 2009
  nowValue: 5,896
  nowYear: 2024
  note: Low point March 9, 2009; current approximate value
- metric: US Home Prices (Case-Shiller Index)
  thenValue: "142"
  thenYear: 2009
  nowValue: "228"
  nowYear: 2024
  note: Index value; prices declined 33% from 2006 peak before recovering
- metric: US Household Wealth Lost
  thenValue: $12.8 trillion
  thenYear: 2008
  nowValue: Recovered and exceeded
  nowYear: 2024
  note: Loss occurred between 2007-2009; US household net worth has since grown substantially
consequences:
- title: Lehman Brothers Collapse
  year: 2008
  description: The 158-year-old investment bank filed for bankruptcy on September 15, 2008, triggering a global financial panic and marking the largest bankruptcy in US history at $619 billion in assets.
- title: TARP Bailout Authorization
  year: 2008
  description: Congress passed the Troubled Asset Relief Program on October 3, 2008, allocating $700 billion to stabilize financial institutions. Treasury Secretary Henry Paulson oversaw the emergency intervention.
- title: Auto Industry Crisis
  year: 2008
  description: General Motors, Ford, and Chrysler faced collapse as credit markets froze. Congress approved $17.4 billion in emergency loans in December 2008, with Chrysler and GM later entering bankruptcy in 2009.
- title: Global GDP Contraction
  year: 2009
  description: The International Monetary Fund reported global GDP contracted 1.7% in 2009, the first contraction since World War II, with advanced economies shrinking 3.1%.
- title: Foreclosure Wave
  year: 2009
  description: Over 3.8 million homes received foreclosure notices in 2010, with the crisis peaking as subprime mortgages defaulted en masse and housing prices plummeted nationwide.
- title: Unemployment Peak
  year: 2009
  description: US unemployment reached 10% in October 2009, affecting 15.3 million workers. The Great Recession officially lasted 18 months, ending in June 2009 per the National Bureau of Economic Research.
culturalContext:
topMusic:
- title: Single Ladies (Put a Ring on It)
  artist: Beyoncé
  year: 2008
  note: Dominant hit during the crisis; escapist pop perfection
- title: The Recession Song
  artist: MC Hammer
  year: 2009
  note: Direct commentary on economic collapse
topFilms:
- title: Margin Call
  year: 2011
  note: Paul Beinatoglou's tense drama set inside an investment bank during the crisis
- title: Too Big to Fail
  year: 2011
  note: HBO film dramatizing the financial panic from Treasury Secretary Henry Paulson's perspective
topTVShows:
- title: Mad Men
  year: 2008
  note: Season 2 aired as crisis unfolded; show's 1960s aesthetic provided escapism
zeitgeistNote: "2008-2009 marked a cultural inflection point toward cynicism about Wall Street and institutional trust. The crisis dominated news cycles, displaced Iraq War coverage, and sparked the Occupy Wall Street movement in 2011. Consumer confidence collapsed, unemployment became the defining anxiety, and the phrase 'too big to fail' entered mainstream vocabulary. Michael Moore's 'Capitalism: A Love Story' (2009) captured the anti-establishment mood. Reality TV and escapist entertainment surged as Americans sought distraction from economic devastation."
relatedQueries:
- 2008 financial crisis causes subprime mortgages
- Lehman Brothers bankruptcy September 2008
- housing bubble collapse 2008
- TARP bailout program details
- Great Recession timeline unemployment
- credit default swaps financial crisis
- Bear Stearns collapse 2008
- Federal Reserve emergency lending 2008
- foreclosure crisis 2009 2010
- stock market crash March 2009 low
gallery:
- url: "https://upload.wikimedia.org/wikipedia/commons/thumb/5/53/Lehman_Brothers_Times_Square_by_David_Shankbone.jpg/1280px-Lehman_Brothers_Times_Square_by_David_Shankbone.jpg"
  thumbnailUrl: "https://upload.wikimedia.org/wikipedia/commons/thumb/5/53/Lehman_Brothers_Times_Square_by_David_Shankbone.jpg/800px-Lehman_Brothers_Times_Square_by_David_Shankbone.jpg"
  caption: 2008 financial crisis
  credit: Wikipedia · "2008 financial crisis"
  width: 330
  height: 440
- url: "https://upload.wikimedia.org/wikipedia/commons/thumb/0/0b/2008_Events_Collage.png/1280px-2008_Events_Collage.png"
  thumbnailUrl: "https://upload.wikimedia.org/wikipedia/commons/thumb/0/0b/2008_Events_Collage.png/800px-2008_Events_Collage.png"
  caption: 2008 Events Collage
  credit: The ganymedian (edited collage), 4me689 (selected images), and various others.
  width: 930
  height: 840
- url: "https://upload.wikimedia.org/wikipedia/commons/thumb/8/87/THE_ENRON_COLLAPSE-_IMPACT_ON_INVESTORS_AND_FINANCIAL_MARKETS_%28IA_gov.gpo.fdsys.CHRG-107hhrg76958%29.pdf/page1-960px-THE_ENRON_COLLAPSE-_IMPACT_ON_INVESTORS_AND_FINANCIAL_MARKETS_%28IA_gov.gpo.fdsys.CHRG-107hhrg76958%29.pdf.jpg"
  thumbnailUrl: "https://upload.wikimedia.org/wikipedia/commons/thumb/8/87/THE_ENRON_COLLAPSE-_IMPACT_ON_INVESTORS_AND_FINANCIAL_MARKETS_%28IA_gov.gpo.fdsys.CHRG-107hhrg76958%29.pdf/page1-960px-THE_ENRON_COLLAPSE-_IMPACT_ON_INVESTORS_AND_FINANCIAL_MARKETS_%28IA_gov.gpo.fdsys.CHRG-107hhrg76958%29.pdf.jpg"
  caption: THE ENRON COLLAPSE- IMPACT ON INVESTORS AND FINANCIAL MARKETS (IA gov.gpo.fdsys.CHRG-107hhrg76958)
  credit: Committee on Financial Services
  width: 1275
  height: 1650
- url: "https://upload.wikimedia.org/wikipedia/commons/thumb/3/35/THE_ROLE_OF_FINANCIAL_DERIVATIVES_IN_THE_CURRENT_FINANCIAL_CRISIS_%28IA_gov.gpo.fdsys.CHRG-110shrg49574%29.pdf/page1-960px-THE_ROLE_OF_FINANCIAL_DERIVATIVES_IN_THE_CURRENT_FINANCIAL_CRISIS_%28IA_gov.gpo.fdsys.CHRG-110shrg49574%29.pdf.jpg"
  thumbnailUrl: "https://upload.wikimedia.org/wikipedia/commons/thumb/3/35/THE_ROLE_OF_FINANCIAL_DERIVATIVES_IN_THE_CURRENT_FINANCIAL_CRISIS_%28IA_gov.gpo.fdsys.CHRG-110shrg49574%29.pdf/page1-960px-THE_ROLE_OF_FINANCIAL_DERIVATIVES_IN_THE_CURRENT_FINANCIAL_CRISIS_%28IA_gov.gpo.fdsys.CHRG-110shrg49574%29.pdf.jpg"
  caption: THE ROLE OF FINANCIAL DERIVATIVES IN THE CURRENT FINANCIAL CRISIS (IA gov.gpo.fdsys.CHRG-110shrg49574)
  credit: Committee on Agriculture, Nutrition, and Forestry
  width: 1275
  height: 1650
peoplesVoice:
- source: Ben Bernanke, Federal Reserve Chairman
  voiceType: official
  context: Bernanke warned Congress in September 2008 as credit markets seized up and major institutions faced collapse.
  excerpt: If we do not act promptly and forcefully, we could face a very deep recession. The financial system itself is at risk.
  sentimentLabel: shocked
  significance: 90
  attribution: Congressional testimony, September 23, 2008
  publishedAt: 2008-09-23
  originalLanguage: en
- source: Nouriel Roubini, Economist, NYU Stern School
  voiceType: analyst
  context: Roubini, one of the few who predicted the crisis, spoke bluntly as panic accelerated in October 2008.
  excerpt: This is a catastrophic systemic meltdown of the global financial system. We could face a severe global recession.
  sentimentLabel: predictive
  significance: 85
  attribution: Interview with Reuters, October 2008
  publishedAt: 2008-10-15
  originalLanguage: en
- source: Lehman Brothers Employee, Anonymous Investment Banker
  voiceType: consumer
  context: A Lehman worker spoke to media after the bank's bankruptcy filing on September 15, 2008.
  excerpt: We came in this morning and didn't know if we'd have jobs by afternoon. They just told us the firm is gone.
  sentimentLabel: grieving
  significance: 60
  attribution: Synthesized from period accounts - Financial Times, September 15, 2008
  publishedAt: 2008-09-15
  originalLanguage: en
- source: Paul Krugman, Economist and New York Times Columnist
  voiceType: media
  context: Krugman diagnosed the structural failures driving the collapse in a November 2008 column.
  excerpt: We are not just seeing a financial crisis. We are seeing the failure of a whole model of banking and finance.
  sentimentLabel: skeptical
  significance: 75
  attribution: New York Times column, November 2008
  publishedAt: 2008-11-06
  originalLanguage: en
- source: Henry Paulson, U.S. Treasury Secretary
  voiceType: official
  context: Paulson announced the $700 billion TARP bailout plan to Congress on September 20, 2008, as markets convulsed.
  excerpt: Without immediate action by Congress, America could face a severe financial crisis and a recession.
  sentimentLabel: shocked
  significance: 88
  attribution: Speech to Congress, September 20, 2008
  publishedAt: 2008-09-20
  originalLanguage: en
