Chris Haroun walks through the 2008 financial crisis: Bear Stearns collapsed, Lehman Brothers failed, and AIG faced insolvency. The Treasury and Federal Reserve stepped in with massive bailouts, setting precedents for government intervention in banking that still shape regulation today.
I just assume I'm gonna bail out Dick, fold like I'm the guy behind the elephant with the shovel.
They're all drawing a line from Bear and Fannie and Freddie, right to Lehman.
There's no way the taxpayers are gonna go for another bailout.
Main street, understandably, does not want to rescue Wall Street. But just when you think things can't get any worse, this happens to AIG, which is terrifying.
Mr. Flowers, my people tell me you're the man to talk to. We've got a real problem here.
Yeah?
What kind of problem? It looks very much like we are about to run out of cash. Aig?
AIG was like a huge insurance company that promised to cover losses if banks lost money on risky loans. So if AIG failed, all those banks could have lost so much money all at the same time that the entire financial system could have collapsed. Hank Paulson then got the CEOs of the top investment banks into a meeting, and he asked them to strategize on what to do if Lehman goes under.
