Chapter 7
An Agenda for Political Leaders
September 2008 was a particularly bad month for American political leaders, whether elected politicians or senior government administrators. The financial turbulence that began in 2007 reached a crescendo in September 2008. On September 6, the Treasury Department was obliged to provide a $100 billion bailout for Fannie Mae and Freddie Mac, the federally backed mortgage-guarantee agencies Congress had created in 1938 and 1970, respectively, in order to promote American home ownership. On September 14, Lehman Brothers (of Repo 105 fame) declared bankruptcy due to its heavy exposure to mortgage-backed bonds, having failed to obtain a bailout from the Federal Reserve Bank and the Treasury, which deemed the ...
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