The Global Financial Crisis

Examining the U.S. Government's Interventions

Logos: Yale SOM & Brookings

Former Federal Reserve Chairman Ben Bernanke, Former Treasury Secretary Hank Paulson Former Treasury Secretary Timothy Geithner
Former Treasury Secretary Hank Paulson, former Fed Chair Ben Bernanke,  and former Treasury Secretary Tim Geithner.

Ten years after the bankruptcy of Lehman Brothers, a seminal event in what would come to be known as the Global Financial Crisis (GFC), the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institute partnered with the Yale Program on Financial Stability to reexamine the most severe financial crisis since the Great Depression. Beginning in fall 2017, former Federal Reserve Chairman Ben Bernanke and Former Treasury secretaries Hank Paulson and Timothy Geithner convened a group of the policymakers and senior staff who designed the U.S. response to the GFC within the George W. Bush and Barack Obama administrations and at the Federal Reserve. The group aimed to identify, document, and evaluate the decisions made by U.S. authorities as they responded to the GFC and to provide valuable information for those who might have to respond to a financial crisis in the future. YPFS provided research assistance throughout the project.

The project culminated with a presentation of papers at a conference at Brookings in Washington, D.C., on September 11 and 12, 2018, the 10th anniversary of the worst moments of the crisis, and a future book publication is being planned.    On the afternoon of September 12, Bernanke, Geithner, and Paulson shared their perspectives at a public event moderated by financial columnist and television host Andrew Ross Sorkin.

Related


10th Anniversary Event

Responding to the Global Financial Crisis
What We Did and Why We Did It

View the WebcastBrookings Institution, September 11-12, 2018

About The Event

Dozens of consequential decisions were made by the U.S. Treasury, the Federal Reserve, the Federal Deposit Insurance Corporation, and other government agencies during and after the financial crisis of 2007-2009, but little detail is available publicly as to how and why the elements of the rescue were designed the way they were. In an initiative led by former Federal Reserve Chairman Ben Bernanke and former Treasury Secretaries Tim Geithner and Hank Paulson, the Hutchins Center on Fiscal and Monetary Policy at Brookings and the Program on Financial Stability at the Yale School of Management are filling that gap by commissioning a series of papers by individuals who were actively involved in designing the elements of the rescue. The papers identify, document, and evaluate the decisions that U.S. authorities made during the crisis. The primary objective of the project is to answer to the inevitable question that those who fight future financial crises will ask: Why and how did they do it the way they did in 2007-2009?

On September 11, 10 years after some of the worst moments of the crisis, some of the authors of the papers presented highlights of their findings in a full-day conference at Brookings. And on September 12, Bernanke, Geithner and Paulson were interviewed by Andrew Ross Sorkin of The New York Times and CNBC. 

The Financial Crisis in Pictures

Arc
Download: PDF

The global financial crisis of 2007-2009 and subsequent Great Recession constituted the worst shocks to the United States economy in generations. Books have been and will be written about the housing bubble and bust, the financial panic that followed, the economic devastation that resulted, and the steps that various arms of the U.S. and foreign governments took to prevent the Great Depression 2.0.  But the story can also be told graphically, as these charts aim to do.

What comes quickly into focus is that as the crisis intensified, so did the government’s response. Although the seeds of the harrowing events of 2007-2009 were sown over decades, and the U.S. government was initially slow to act, the combined efforts of the Federal Reserve, Treasury Department, and other agencies were ultimately forceful,  flexible, and effective. Federal regulators greatly expanded their crisis management toolkit as the damage unfolded, moving from traditional and domestic measures to actions that were innovative and sometimes even international in reach. As panic spread, so too did their efforts broaden to quell it. In the end, the government was able to stabilize the system, re-start key financial markets, and limit the extent of the harm to the economy.

No collection of charts, even as extensive as this, can convey all the complexities and details of the crisis and the government’s interventions. But these figures capture the essential features of one of the worst episodes in American economic history and the ultimately successful, even if politically unpopular, government response.

Antecedents

Arc of the Crisis

U.S. Strategy

Outcomes

Preliminary Discussion Drafts

About the Discussion Drafts

The architects of the myriad government interventions that were implemented between 2007 and 2010 to stem the crisis discuss the thinking behind their decisions, the paths not taken, and the lessons learned.

Introduction

Ben S. Bernanke, Timothy F. Geithner, Henry M. Paulson Jr.

Classic Lender of Last Resort

William English, Patricia Mosser

Novel Lender of Last Resort

Lorie Logan, William Nelson, Patrick Parkinson

Money Market Fund Guarantees

Steven Shafran

Banks, Phase 1

Dan Jester, David Nason, Jeremiah Norton

Debt
Guarantees

Michael Krimminger

Banks, Phase II

Timothy Clark, Matthew Kabaker, Lee Sachs

Triage and Resolution

James Wigand

Nonbank Financial Institutions

Scott Alvarez, William Dudley 

Ten Years after the Financial Crisis: A Conversation with Timothy Geithner

Government-
Sponsored Enterprises
(GSEs)

Dan Jester, Matthew Kabaker, Jeremiah Norton, Lee Sachs

Housing

Michael Barr, Andreas Lehnert, Neel Kashkari, Phillip Swagel

Automobile Industry

Brian Deese, Dan Jester, Steven Shafran

Fiscal Policy

Jason Furman

Monetary
Policy

Donald Kohn, Brian Sack

International – Cooperation & Coordination

Clay Lowery, Nathan Sheets, Edwin (Ted) Truman

International - Swaps

Clay Lowery, Nathan Sheets, Edwin (Ted) Truman

Evidence on Outcomes

Nellie Liang, Meg McConnell, Phillip Swagel

The Administrative Architecture of TARP

Neel Kashkari, Tim Massad

Legal
Authorities

Scott Alvarez, Thomas Baxter, Robert Hoyt