2008 Financial Crisis the Large Financial Institution Failed

The U.S. economy experienced a deep recession in years of 2008 through 2009. A huge factor in this was the number of large financial institutions that failed. Also, the stock market declined significantly which can be contributed to the bailout plan that was passed by our government. Third, spreads on many different types of loans over comparable U.S. Treasury securities has expanded significantly (Chari, Christiano, amp; Kehoe, 2008). The financial crisis is the result of the collapse of the housing bubble in the U.S., which can be seen as the starting point of a crisis in the global economy afterward. The sudden financial crisis and the unexpected economic collapse in 2008 came as a shock to many because the speed and severity of the†¦show more content†¦In that situation, the U.S. Securities and Exchange Commission (SEC) banned short sales. The financial crisis in America had spread to Europe. Banks in the UK bear the greatest impact from the credit crisis sub-prime housing loans in the U.S. For example, Northern Rock Bank had a bad debt account of up to 191.6 billion U.S. dollars in July 2008 and the Bank of England had to pump 27 billion pounds to rescue Northern Rock Bank. At the end of September 2008, there were some other big banks in Europe such as Dexia and Hypo Real Estate falling in the crisis and these banks were rescured by the governements throught financial bailout. (Alexander, 2008) The banking system, stock market, and financial markets in Russia were also seriously affected. Russian government had to pump tens of billions of dollars to rescue financial markets and banking system of the country. In the last three months of 2008, under the general decline in the global stock market, numerous Asian stock markets were in free fall. The key stock index such as Nikkei 225 in Japan, Hangseng in Hongkong and Sensex in India suffered significant drops. (Rose amp; Spiegel, 2009) Financial crisis is really a major concern for all economies in the world. Every time a crisis occurs, companies, banks and financial institutions should draw their own lessons, because if the lessons are not recognized, they may still go on the trail of failure ofShow MoreRelatedHelping The United States During The Time Of Financial Crisis1103 Words   |  5 Pagesaround the world assisted in regaining the financial system and bringing the economy back to good terms at the peak of the financial crisis. Together they helped stop the financial system from upturning, and with tremendous effort, helped reestablish financial and economic stability. The United States’ central bank is known as the Federal Reserve, and they are accountable for making sure the country’s financial system functions effortlessly. 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