We could not separate what was happening in the corridors of our financial institutions from what was happening on factory floors and around kitchen tables," said US President Barack Obama while addressing a gathering in Washington DC's Federal Hall.
Excerpts from Obama's speech on financial rescue and reform, that, he delivered on the eve of the 1st anniversary of the collapse of the Lehman Brothers.
Obama on the financial crisis that gripped the US
As investors and pension-holders watched with dread and dismay, and after a series of emergency meetings often conducted in the dead of the night, several of the world's largest and oldest financial institutions had fallen, either bankrupt, bought, or bailed out: Lehman Brothers, Merrill Lynch, AIG, Washington Mutual, Wachovia.
A week before this began, Fannie Mae and Freddie Mac had been taken over by the government. Other large firms teetered on the brink of insolvency. Credit markets froze as banks refused to lend not only to families and businesses but to one another. Five trillion dollars of Americans' household wealth evaporated in the span of just three months.
The markets had fallen sharply; credit was not flowing. It was feared that the largest banks - those that remained standing - had too little capital and far too much exposure to risky loans. And the consequences had spread far beyond the streets of lower Manhattan.
This was no longer just a financial crisis; it had become a full-blown economic crisis, with home prices sinking, businesses struggling to access affordable credit, and the economy shedding an average of 700,000 jobs each month.
We could not separate what was happening in the corridors of our financial institutions from what was happening on factory floors and around kitchen tables. Home foreclosures linked those who took out home loans and those who repackaged those loans as securities.
A lack of access to affordable credit threatened the health of large firms and small businesses, as well as all those whose jobs depended on them. And a weakened financial system weakened the broader economy, which in turn further weakened the financial system.
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