Wall Street Blues

“We’re in the midst of a serious financial crisis; our entire economy is in danger”

- President George W. Bush

The article Wall Street blue talks about the falling economy and what the government plans on doing to save the economy. On September 15, Lehman Brothers file Chapter 11 bankruptcy, the largest bankruptcy filing in U.S. History. That day the U.S. stock market fell 504 points. But this was just the beginning.

The economy fell in jeopardy because people wanted to buy homes that they couldn’t find afford, and banks provided the money for it. Homeowners paid monthly payment but then payments grew and they stop paying. Then quickly banks started losing money. Banks took back the houses but then tried to sell them again.

A guy named Henry Paulson asked the federal government to provide him with $700 billion to save banks. He would use that money to buy bad loans. With those dreadful loans gone, banks would able to provide money more freely, and the nation could get back to business. The national debt was nearly $10 trillion before the bailouts. It’s higher now, and taxpayers will have to pay it off.

“We’ve got to understand that we’re all in this together.”

-New York City Mayor, Michael Bloomberg

TIMELINE

• Sept. 7: U.S. government takes over mortgage giants Fannie Mae and Freddie Mac
• Sept. 14: Investment bank Merrill Lynch, about to fail, is sold to Bank of America
• Sept. 15: Investment bank Lehman Brothers files for bankruptcy
• Sept. 16: U.S. government rescues insurance giant AIG with $85 billion loan, partial federal takeover
• Sept. 20: President Bush proposes $700 billion bailout plan for Wall Street
• Sept. 23: Treasury Secretary Henry Paulson goes before Congress asking it to approve $700 billion bailout plan with no oversight
• Sept. 24: President Bush gives nationally televised speech saying economy is in serious trouble
• Sept. 25: Congressional leaders almost agree on bailout plan but deal falls apart
• Sept. 25: U.S. government arranges sale of failing mortgage lender Washington Mutual bank to JP Morgan Chase bank
• Sept. 26: Presidential candidates’ hold first debate and discuss economy
• Sept. 29: U.S. House rejects bailout plan; U.S. government arranges sale of failing Wachovia bank to Citigroup
• Sept. 30: President Bush gives short televised address to reassure U.S. and world investors that government is working on new rescue plan
• Oct. 1: U.S. Senate approves new version of $700 billion bailout plan
• Oct. 3: U.S. House approves bailout plan; President Bush signs it into law