Remember Five Years Ago?
by DifferentView2
 Remember Five Years Ago?
Sep 15, 2013 | 2499 views | 0 0 comments | 51 51 recommendations | email to a friend | print | permalink

Financial services firm Lehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008. The filing remains the largest bankruptcy filing in U.S. history, with Lehman holding over $600 billion in assets.  The failure of this financial firm sent shock waves through the financial community.  While the federal government allowed Lehman Brothers to go into bankruptcy, it triggered other events such as the near collapse of insurance giant American International Group (AIG) and the beginning of the Troubled Asset Relief Program (TARP).  TARP was a program of the United States government to purchase assets and equity from financial institutions to strengthen its financial sector that was signed into law by U.S. President George W. Bush on October 3, 2008 as a component of the government's measures in 2008 to address the subprime mortgage crisis.  This financial crisis provided impetus for the election of Barack Obama to the presidency as his rival Senator John McCain of Arizona struggled for a consistent economic message in the face of the Wall Street meltdown, saying first that the "fundamentals of our economy are strong" and then abruptly shifting to say the fundamentals are "at great risk."

While some people, primarily those from the political right, decried TARP as socialism it was apparent that government intervention in the financial crisis was necessary as the Dow Jones Industrial Average plunged from its record high up to that point of 14,164.43 on October 9, 2007 to 6,594.44 on March 5, 2009, a drop of more than 53%.  By year end, the gross national product shrank at a rate of 6.2%.

It has been a long, slow recovery since that time and there were many bumps along the road during that time.  While the people that run our financial systems indicate that the likelihood of those events repeating within our lifetimes have diminished significantly due to measures such as requiring increase liquidity in capital.  However, many of the reforms that were suggested were never adopted and fewer of those measures were implemented after they were adopted.  The same financial wizards that gambled with our money prior to 2008 continue with their reckless stewardship of our economy.  Hopefully five years from now we will have additional perspective of both the failures and successes that occurred during this turmoil.  Meanwhile, the old saying of “caveat emptor” is still as true today as it was in 2008.  Good luck to all.

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