Which banks went under in 2008?
The financial crisis of 2008, often referred to as the Great Recession, was a period of severe economic turmoil that had far-reaching consequences for the global financial system. One of the most striking aspects of this crisis was the number of banks that collapsed or were forced into receivership. This article explores the major banks that went under during this tumultuous period and examines the factors that contributed to their downfall.
The collapse of major financial institutions in 2008 was a direct result of the subprime mortgage crisis, which originated in the United States. Banks that engaged heavily in subprime lending and mortgage-backed securities (MBS) saw their assets devalue significantly as the housing market collapsed. The following are some of the most notable banks that went under during this crisis:
1. Bear Stearns: One of the first major banks to collapse during the financial crisis, Bear Stearns was a leading investment bank that specialized in trading and investment banking. In March 2008, the bank faced a liquidity crisis and was subsequently sold to JPMorgan Chase for $2 a share.
2. Lehman Brothers: Another prominent investment bank, Lehman Brothers, was one of the largest in the United States. On September 15, 2008, Lehman Brothers filed for bankruptcy, marking the largest bankruptcy in U.S. history and a pivotal moment in the financial crisis.
3. Merrill Lynch: This global financial services corporation was acquired by Bank of America in September 2008. Merrill Lynch faced significant losses from the collapse of the mortgage market and the broader financial crisis.
4. Fannie Mae and Freddie Mac: These two government-sponsored enterprises (GSEs) played a significant role in the U.S. mortgage market. In September 2008, the U.S. government took control of Fannie Mae and Freddie Mac, which were both in serious financial trouble due to their exposure to risky mortgages.
5. Washington Mutual: As the largest savings and loan association in the United States, Washington Mutual faced severe financial distress in 2008. It was taken over by JPMorgan Chase in September 2008, becoming the largest bank failure in U.S. history.
These banks, among others, were among the first to fall as the financial crisis deepened. The collapse of these institutions was a wake-up call for regulators and policymakers around the world, leading to the implementation of new financial regulations and reforms to prevent a similar crisis from occurring in the future.
