Global Financial Crisis 2008

What you'll learn

• ✓Describe MBS and CDOs
• ✓Explain contagion

Lessons

1. 💥
   The Weekend It Broke

   September 15, 2008 and the day after
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2. The Setup

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3. The Unraveling

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4. The Lehman Weekend

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5. The Response

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6. The Fallout

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7. Final Boss: Lessons That Aren't Done

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Sources

All content is drawn from the sources below. We deliberately avoid unverified material.

• The Financial Crisis Inquiry Report (January 2011)
  Financial Crisis Inquiry Commission, US Government Printing Office · institutional
  The official US government investigation into the causes of the GFC. Backs the subprime, securitization, ratings, Lehman, and AIG narratives across lessons 1, 2, 3, and 4.
  https://www.govinfo.gov/app/details/GPO-FCIC
• The Big Short: Inside the Doomsday Machine (2010)
  Michael Lewis, W. W. Norton · book
  Source for the human story of the few investors who shorted subprime CDOs (Burry, Eisman, Lippmann), used in lessons 2 and 7.
• Too Big to Fail (2009)
  Andrew Ross Sorkin, Viking Press · book
  Standard minute-by-minute account of the Lehman weekend and the Bear sale, used in lessons 3 and 4.
• The Courage to Act: A Memoir of a Crisis and Its Aftermath (2015)
  Ben S. Bernanke, W. W. Norton · book
  Bernanke's own account of the 2007 to 2009 Fed response, including the Lehman decision, AIG rescue, and QE1, used in lessons 4, 5, and 7.
• Stress Test: Reflections on Financial Crises (2014)
  Timothy F. Geithner, Crown · book
  Geithner's account from the New York Fed and Treasury, including the legal-authority arguments around Lehman and the SCAP design, used in lessons 4 and 5.
• Has Financial Development Made the World Riskier? (Jackson Hole, August 2005)
  Raghuram G. Rajan, Federal Reserve Bank of Kansas City · academic
  The pre-crisis warning paper that Larry Summers called 'misguided' at the time, used in lesson 7.
  https://www.kansascityfed.org/Jackson%20Hole/documents/3326/PDF-2005-rajan.pdf
• Deciphering the Liquidity and Credit Crunch 2007-2008 (NBER WP 14631, 2009)
  Markus K. Brunnermeier, NBER · academic
  Academic synthesis of the funding-liquidity dynamics that drove the panic, used as background for lessons 1, 3, and 5.
  https://www.nber.org/papers/w14631
• FOMC Statements, 2007 to 2009
  Board of Governors of the Federal Reserve System · institutional
  Primary source for rate decisions including the December 16, 2008 cut to 0 to 0.25 percent and the March 18, 2009 QE1 expansion, used in lesson 5.
  https://www.federalreserve.gov/monetarypolicy/fomc_historical_year.htm
• Troubled Asset Relief Program (TARP) Final Cost Reports
  US Department of the Treasury · institutional
  Authoritative source for the 700 billion dollar authorization and the realized cost figures, used in lesson 5.
  https://home.treasury.gov/data/troubled-assets-relief-program
• Survey of Consumer Finances (2007 and 2010 waves)
  Board of Governors of the Federal Reserve System · data
  Source for the roughly 39 percent decline in median US household net worth between 2007 and 2010, used in lesson 6.
  https://www.federalreserve.gov/econres/scfindex.htm
• Bureau of Labor Statistics, US Unemployment Rate
  US Bureau of Labor Statistics · data
  Source for the October 2009 unemployment peak of 10.0 percent, used in lesson 6.
  https://www.bls.gov/cps/
• RealtyTrac Year-End Foreclosure Market Report (2010)
  RealtyTrac / Attom Data · data
  Source for the roughly 3.8 million US foreclosure filings in 2010, used in lesson 6.
• Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203, July 21, 2010)
  US Congress · institutional
  Primary text of the Dodd-Frank reforms (Volcker Rule, CFPB, OLA, SIFI designations), used in lesson 6.
  https://www.congress.gov/bill/111th-congress/house-bill/4173
• On Milton Friedman's Ninetieth Birthday (speech, November 8, 2002)
  Ben S. Bernanke, Federal Reserve Board · institutional
  Source for the 'we did it. We're sorry. But we won't do it again' line referenced in lesson 7.
  https://www.federalreserve.gov/boarddocs/speeches/2002/20021108/