The Great Recession

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Before the Great Recession there was an economic boom that the US was experiencing, it later became known as the housing bubble. The housing bubble was created by over lending to consumers and especially to those who couldn’t pay them back and over spending from consumers who had virtually no income to buy houses. The consumers who received the loans latter could not pay them back and banks panicked and decided not to give loans to anyone. That is coincidentally how banks operate, they constantly lend money to each other and when a banks don’t want to lend to each other there is no money circulation and no lending to consumers. That means companies can’t get money who can’t pay their workers and corporations have to cut workers to downsize in order to make a profit. Insurance companies like AIG insured the loans and the promised banks that if the people couldn’t pay back the loans they would instead. When insurance claims start piling they couldn’t pay them so they also failed.



During the crash the man in charge was President George Bush. His administration his administration decided to quickly pass the TARP bailout. This gave financial institutions $800 billion to fix all the bad investments banks and insurance companies made during the housing bubble. The bill was 3 pages long and it gave the banks the power not to disclose where the money was going and the government couldn't investigate where it was going.