Great Recession Of 2008 Essay

There were several causes of the Great Recession of 2008 and major problems that resulted from it such as businesses failing or needing to be bailed out by the Government. The Great Recession of 2008 also cause many other problems. The start of the financial crisis started in 2007 when sub-prime mortgages began to increase. The Federal Reserve flooded the markets with money trying to reduce interest rates, but that failed along with the value of the dollar. They also providing assistance in form of bail out to financial institutions.
Later in 2007, many CEOs of financial institutions lost their jobs if they were not successful in obtaining capital from hedge funds, private equity funds or other means. In 2008, the real estate market continued to fail which caused collateralized debt obligation (CDOs) to be marked down by billions of dollars. The summer of 2008 Fannie Mae and other mortgage companies collapsed. The government was afraid that this would bring down the remaining financial system. Shortly after Fannie Mae and Freddie Mac collapsed AIG, Merrill Lynch, and Lehman Brothers also collapsed. The government chose to save AIG and received senior preferred …show more content…
The Federal Reserve rescued AIG, but Lehman Brothers which caused them to fail. The Treasury Department wanted relief and created what was known as Troubled Asset Relief Program (TARP), however, it had not been passed by Congress. Washington Mutual a very large thrift in the United States failed and was sold to JP Morgan, and Wachovia was rescued by Citigroup and then Wells Fargo. The House rejected TARP in September 2008, which caused the Dow Jones Industrial Average to drop significantly in one day. The Senate quickly passed a bill during the first week of October, the House reconsidered its action, and President Bush signed the bill into law on the same day the House approved