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Subprime Mortgages
From 2002-2007 banks were giving out mortgages that people could not afford. Most of these were adjustable tare mortgages and interest rose. -
Bear Sterns
Bear Sterns began to fail and were hours away from declaring bankruptcy. Their stock price dropped from $171 to $57. -
Federal Reserve
The Federal Reserve used $30 billion to cover the bad mortgages that Bear Sterns gave out. This was an attempt to contain the spread of fear. -
Fannie Mae and Freddie Mac
More companies, like insurance companies Fannie Mae and Freddie Mac, begin to collapse. The public saw this and it shook their confidence. -
Stock Market Falls
The public realizes that no company is too big to fail. Since they no longer had any trust in the market, it begins to fall. -
Bernanke
Federal Reserve Chairmen proposes a $700 billion bailout plan for the failing companies. This is intended to get the economy back in order. -
Bailout
Congress passes the plan to bail the companies out. -
Treasury
The United States Treasury is authorized to spend $700 billion to resue the economy. -
Dodd Frank
This is passed in order to allow the government to better surpervise loans, Wall Street, and credit agencies. This is to ensure that nothing like this ever happens again. -
Recovery
The economy has still not fully recovered from this crisis. Unemployment reamains at a high 7.5%.
