Nearly 10 years ago we saw one of the worst financial market crashes, causing a huge recession and a housing meltdown. It was the ‘2008 Financial Crisis’ and our financial system truly unraveled during this time. Albeit, some much needed regulation was put in place.
I am a Millennial and this crash began just a couple of years after I graduated college. I was lucky enough to land a good job just before all of this. I know it impacted me greatly and my savings habits. Luckily I was just getting into the market and beginning to invest, e.g. I was buying stocks on clearance for years. Baby Boomers and my parents generation was not so fortunate. And virtually all generations have been scared of the market ever since. So, how exactly did all of this play out a decade ago?
2008 Financial Crisis Timeline
February 27 – Freddie Mac stops buying subprime mortgages…the first sign of trouble really.
July 31 – Bear Stearns liquidates two hedge funds. There is an early hint that mortgage-backed securities are poisonous.
October 9 – The Dow starts its decline from a high of 14,164.
December – the Great Recession officially sets in, and it will last 18 months.
January – home prices record 6% annual, the biggest on record.
September 15 – Lehman Brothers declares bankruptcy, intensifying the financial crisis.
September 29 – the Dow drops 778 points after the House votes down bailout; over four weeks stocks fell 27%.
September 30 – due to market fears, FDIC chair calls for raising $100K cap on deposit insurance.
October 3 – President Bush signs the Emergency Economic Stabilization Act (a.k.a. the “bailout bill“).
December 16 – the Federal Reserve cuts interest rates to virtually zero.
February 17 – President Obama signs an $830 billion stimulus bill.
March 9 – the Dow bottoms out at 6,547, off 54% and setting the stage for a bull run.
June 1 – General Motors (GM), a 100+ year-old car company, files for bankruptcy. The Great Recession officially comes to a close in June 2009. Unemployment sits at 9.5%.
May 6 – the “flash crash”, where the Dow drops 1,000 points during the day.
July 21 – the Dodd-Frank Act overhauling financial regulations is signed.
Fall – big banks halt foreclosures after news breaks of faulty due diligence.
December – Fidelity reports the average 401(k) balance has recovered to pre-crash levels.