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Housing Crisis

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Submitted By melissa02660
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Housing Crisis

Frontline producer Michael Kirk tries to explain how the economy went so bad so fast. Why emergency measures by Federal Reserve Chairman Ben Bernake and Secretary of Treasury Henry Paulson couldn't manage to prevent the worst economic crisis in a generation. It was 2007 when the housing bubble began to burst and Wall Street started to panic. By spring of the following year, rumors began to swirl that prominent investment bank Bear Stearns was about to go bankrupt due to billions of dollars in bad mortgages. In the world of finance rumors can be the difference between success and failure. It was the beginning of a bad chain reaction, someone quoted in the clip “it was like a disease spreading quickly”
Over the course of 24 hours, the stock market crashed and credit markets across the globe froze, effectively sending the economy into a downward spiral. It sent this huge confidence shock wave through the entire economy because all of a sudden, people were saying, "If two of the largest companies on earth can fail, that means anyone can fail." At that point, there is no company too large to not fail from the housing bubble Charles Duhigg. After exhausting all other options, Paulson personally called the CEOs of the nation's nine largest banks and told them to come to his office the next day at the Treasury building. Paulson gave each man a single piece of paper spelling out the conditions that said they agreed to sell shares to the government. Before they had to leave town that night, they were told, "Return this document with your signature on it." And all nine of them did so.
The question is did the Bailout work? Some say it had to be done in order to prevent a great depression. It seems to me and I do not know anything about banks stocks or finances, that the banks had to be bailed out because they had made terrible decisions.…...

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