Could the financial crisis happen again?

It's been 10 years ...

Stock traders.
(Image credit: AP Photo/Jin Lee)

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"Everything solid in the American economy turned out to be built on sand," said George Packer at The New Yorker. The collapse of the investment bank Lehman Brothers 10 years ago presaged a crisis that had "a lasting impact on American political life." Following Lehman's failure, the Federal Reserve stepped in as banks such as Citigroup seemed on the edge of collapse, and corporate giants like General Motors and Chrysler teetered. "The speed and scale of destruction were so breathtaking that only the direst analogies seemed adequate." A combination of reckless lending, Wall Street gluttony, blatant fraud, lax government oversight, and deregulation led to the catastrophe. Millions lost their jobs and retirement accounts as the financial crisis gradually became a foreclosure crisis, said Joe Nocera at Bloomberg. As home values slipped, owners with subprime mortgages often discovered they owed more to their lender than their home was worth; foreclosures hit 3.2 million in three years at the peak of the crisis. Wall Street arrogantly derided those who subsequently lost their homes as having themselves to blame. But many were simply economically vulnerable, "one financial setback away from trouble."

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