Join Frontline producer Michael Kirk as he ventures behind closed doors in Washington and Wall Street on a mission to discover how the economy went so bad so fast, and learn 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 ...
Join Frontline producer Michael Kirk as he ventures behind closed doors in Washington and Wall Street on a mission to discover how the economy went so bad so fast, and learn 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, and Bear Stearns was only hours away from declaring bankruptcy when former Princeton economics professor Bernake orchestrated a shotgun marriage between the high-profile investment bank and commercial bank JP Morgan. But there was a catch; in order to make this happen, the federal government would pledge $30 billion to account for Bear Stearns' questionable assets tied to festering mortgages. A student of the Great Depression, Bernake knew what was at stake should Wall Street fail to act fast. But this was only the beginning of a bad chain reaction, and when Wall Street's Lehman Brothers, too, began teetering on the brink of collapse, Bernake and Paulson were called upon to bail them out as well. By this time, conservative Republicans in Washington were exerting pressure to invoke moral hazard and let Lehman Brothers fail, prompting CEO Dick Fuld to seek out a buyer for the failing investment bank. But his efforts were all for naught, and Lehman Brothers quickly declared bankruptcy. Over the course of the next 24 hours, the stock market crashed and credit markets across the globe froze, effectively sending the economy into a downward spiral. Would the $700 billion bailout plan subsequently proposed by Paulson and Bernanke -- and ultimately passed by Congress -- be enough to steer the economy clear of disaster, or is the United States headed towards a depression the likes of which haven't been felt since the early 20th century? This question, and many more, are at the heart of Inside the Meltdown, a Frontline special produced to provide the average American a better understanding of the economic crisis, and the problems it may pose for the country's future. Jason Buchanan, Rovi
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