Global Financial Crisis

Years of loose lending standards had fueled a US housing bubble and a boom in mortgage-backed securities that turned out to be far riskier than their credit ratings suggested. When home prices began falling in 2006-2007, defaults rose sharply, and the crisis reached its most dramatic point on September 15, 2008, when investment bank Lehman Brothers filed for the largest bankruptcy in US history, freezing global credit markets almost overnight. Governments and central banks responded with unprecedented interventions — the US alone committed hundreds of billions of dollars to bank bailouts (TARP) and fiscal stimulus, while the Federal Reserve cut rates to zero and began large-scale asset purchases (quantitative easing). Global GDP contracted in 2009 for the first time since World War II, tens of millions of jobs were lost worldwide, and the resulting bank re-regulation (Dodd-Frank in the US, Basel III internationally) reshaped financial oversight for the following decade.