THE CREDIT CRISIS: 10 YEARS AND COUNTING RICK TOBIN
*September 2007: A bank run
America for $50 billion.
begins at one of the largest
banks in Great Britain named *September 29th, 2008: The Dow Jones index plummets a still
Northern Panicking record negative 777 points. A few days later, Washington Mutual
bank customers demand their (WAMU) collapses and is taken over by the federal government
cash the before later being spun off to JP Morgan Chase. Per WAMU’s own
weakening bank that reminded 2007 SEC (Securities and Exchange Commission) filings, they
people of bank runs last seen had assets on record once valued at $328 billion. The collapse of
during the Great Depression in Washington Mutual is still the largest banking collapse in U.S.
the early 1930’s. After a few history.
months of bad news and huge
cash *October
Rock.
funds
out
of
withdrawals
from
2008: The
FDIC
(Federal
Deposit
Insurance
Northern Rock customers, the Corporation) runs out of cash after attempting to save Washington
British places Mutual. The FDIC is the main insurance fund that protects
Northern Rock under state or banking customers from losing some or all of their cash deposits
public ownership in order to in the event that their personal bank goes out of business.
keep their doors open on Tragically, the FDIC only had about $40 billion in cash reserves at
February 22nd, 2008. the time as compared with WAMU’s $328 billion in assets. The
government
federal government then secretly and silently rushes in to bailout
* March 2008: Bear Stearns is
taken
Chase
over
by
to
JPMorgan
avoid
bankruptcy at
a
discounted bargain
basement price of just
$236 million.
*September 15th, 2008:
Lehman Brothers files
for
Chapter
11
bankruptcy protection.
Merrill
Lynch
(the
world’s largest stock
brokerage firm at the
time) is bailed out and
acquired by Bank of
the FDIC so that there would not be bank runs around the country.