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  • Print publication year: 2019
  • Online publication date: August 2019

9 - Shadow Banks are Banks

from Part III - Lessons

Summary

The financial crisis of 2007–2009 worsened dramatically on September 15, 2008, when Lehman Brothers, the fourth largest investment bank in the United States, collapsed into bankruptcy and triggered the most intense period of financial chaos. The next day, the Federal Reserve provided an $85 billion loan to the insurance giant and financial conglomerate, American International Group (AIG). The Bush Administration immediately went to Congress and asked for $700 billion to buy up bad debt held by banks and other financial institutions. By March of 2009, the stock market had fallen 38 percent, GDP was still shrinking, and people around the world watched in shock as the United States and Western Europe spiraled down into financial chaos.