Six years ago today, Wall Street was rocked by a financial crisis that culminated in the bankruptcy filing of Lehman Brothers, the largest in U.S. history. The financial crisis resulted in the longest and deepest recession the American economy had experienced in 60 years. While more work remains to continue digging out of the deep hole that was left by the crisis, this week offers a chance to reflect on the significant progress that has been made since then in strengthening the economy and reforming the financial sector.
To understand how far we have come, it is important to remember the dark days that marked the beginning of the financial crisis. In the span of a few weeks in 2008, many of our nation's largest financial institutions failed or were acquired to avoid insolvency. Capital markets froze, and the availability of credit for mortgages, student, auto, and small business loans was drastically reduced. The recession ultimately eliminated nearly 9 million jobs, threatened the American auto industry, and shrank the economy by hundreds of billions of dollars. The crisis was the result of many factors, including an overvalued housing market, predatory lending practices, thinly capitalized financial institutions that took big risks, and a regulatory system that was outdated and unequipped to meet modern challenges.
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