The Financial Crisis Five Years Later: Response, Reform, and Progress In Charts, U.S. Department of the Treasury, September 2013

“In the fall of 2008, our economy faced challenges on a scale not seen since the Great Depression. The crisis was caused by many factors. Among them were an unsustainable housing boom fueled in part by the easy availability of mortgages, financial institutions taking on too much risk, and the rapid growth of the nation’s financial system with regulations that were designed for a different era. Forces built up over many years until the crisis reached its apex in September of 2008. In the span of a few weeks, many of our nation’s largest financial institutions failed or were forced to merge to avoid insolvency. Capital markets — essential for helping families and businesses meet their everyday financing needs — were freezing up, dramatically reducing the availability of credit, such as student, auto, and small business loans. Market participants, consumers, and investors were rapidly losing trust in the stability of America’s financial system. Faced with this reality, the federal government moved with overwhelming speed and force to stem the panic. The first series of actions, including broad-based guarantees of bank accounts, money market funds and liquidity by the Federal Reserve, were not enough. Realizing that additional tools were needed to address a rapidly deteriorating situation, the Bush Administration proposed the law creating the Troubled Asset Relief Program (TARP). That measure, which was passed by Congress with bipartisan support, was signed into law by President Bush on October 3, 2008. Some of the programs under TARP were implemented by the Bush Administration. The Obama Administration continued these and added others, utilizing its authority under TARP to keep credit flowing to consumers and businesses, help struggling homeowners avoid foreclosure, and prevent the collapse of the American automotive industry, which alone is estimated to have saved one million jobs.”