POL 3 Lecture Notes - Lecture 12: Bear Stearns, Timothy Geithner, Alan Schwartz
18 Mar 2017
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Terms/concepts to watch for in frontline video on the financial crisis: video: The economic meltdown: how america"s fiscal fallout triggered a global crisis part 1: inside the meltdown . 2 of the biggest mortgage companies were failing. Fuld thought the govt would never let lehman fail. Credit markets were frozen (no one was lending money) Needed a full scale bailout by the govt (congress) Plan: billion bailout to buy out toxic assets. As close as a blank check as you can get. Congress did not pass the bill the market started falling. But the panic had already spread around the globe. Millions of people weren"t able to pay off this mortgage and defaulted. Bear stearns was giving subprime mortgages to people. Investment banks were buying larger and larger bundles of subprime mortgage. Owning a home is a prestige thing in the us. Their stocks start to go down on wall street.
