Build Up to the Crash of 2008

  • FDIC Created

    Glass-Steagle Act created the FDIC which insured the money in banks up to $250,000
  • Credit Default Swaps are created

    Credit Default Swaps (CDS) allowed individuals to take out "life insurance policies" on corporations.
  • Period: to

    Dot-Com Bubble

    A generation of earners rode the Dot-com bubble to incredibly high profits, boosting the economy and morale in the US.
  • Repeal of Glass-Steagle

    Glass-Steagall was passed after the Depression of 1928. It separated Commercial Banks (which give loans to businesses and individuals) and Investment Banks (which is focused on profits using the stock market).
    FDIC left in place.
  • Commodity Futures Modernization Act

    This act developed CDS's as tradable stock for Bear-Stearns, Lehman Bros and others
  • Period: to

    Housing Bubble

    During the housing bubble, housing prices skyrocketed while real estate sales soared. Many people bought homes on mortgages that they couldn't pay thinking of land as "an investment". They intended to "flip it" as opposed to keep it.
  • Bear Stearns Declares Bankrupty

  • TARP

    TARP was passed as a reaction to the 2008 Crash. It bought toxic assets from banks to save the net worth of the banks from crashing to the bottom and causing a virtual restart of the economy.
  • Fed Drops Interest Rates to 0%

    Fed drops interest rates to 0% allowing banks to borrow money for free.
  • Stimulus Package

    Obama's Stimulus Package further cushioned the crash of the stock market.
  • Dodd-Frank

    Dodd-Frank was a reaction to the crash that created new regulations on businesses and banks.
  • Lehman Brothers Declares Bankruptcy/Crash

    Lehman Brothers crashes and burns. Hundreds of thousands of CDS's are called in leaving the issuing banks with trillions of dollars in debt and rapidly dipping net worth.
    This is the day the crash really happened.