Charting the Financial Crisis

CHARTING THE FINANCIAL CRISIS

U.S. Strategy and Outcomes

January 2020

at BROOKINGS Introduction

The global !nancial crisis and great recession of 2007–2009 constituted the worst shocks to the United States economy in generations. Books have been and will be written about the housing bubble and bust, the !nancial panic that followed, the economic devastation that resulted, and the steps that various arms of the U.S. and foreign governments took to prevent the Great Depression 2.0. But the story can also be told graphically, as these charts aim to do.

What comes quickly into focus is that as the crisis intensi!ed, so did the government’s response. Although the seeds of the harrowing events of 2007–2009 were sown over decades, and the U.S. government was initially slow to act, the combined e"orts of the Federal Reserve, Treasury Department, and other agencies were ultimately forceful, #exible, and e"ective. Federal regulators greatly expanded their crisis management tool kit as the damage unfolded, moving from traditional and domestic measures to actions that were innovative and sometimes even international in reach. As panic spread, so too did their e"orts broaden to quell it. In the end, the government was able to stabilize the system, re-start key !nancial markets, and limit the extent of the harm to the economy.

No collection of charts, even as extensive as this, can convey all the complexities and details of the crisis and the government’s interventions. But these !gures capture the essential features of one of the worst episodes in American economic history and the ultimately successful, even if politically unpopular, government response.

1 Antecedents of the Crisis

In the years leading up to the crisis, the underlying performance of the U.S. economy had eroded in important ways.

2 ANTECEDENTS Because the growth of productivity and the labor force had slowed in the decade before the crisis, the potential economic growth rate was falling. Growth in real potential GDP 5% Contribution to real potential GDP from: Productivity growth Labor force growth 4

1970 1975 1980 1985 1990 1995 2000 2005 2008

Sources: Congressional Budget O!ce, “An Update to the Economic Outlook: 2018 to 2028”; authors’ calculations 3 ANTECEDENTS Overall prime-age participation in the labor force had been falling, as the participation of women slowed and men’s continued a decades-long decline. Civilian labor force participation rates for people ages 25–54, indexed to January 1990=100 106

Women, ages 25–54 104

102

100 All people, ages 25–54

Men, ages 25–54 96

’90 ’91 ’92 ’93 ’94 ’95 ’96 ’97 ’98 ’99 ’00 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08

Source: Bureau of Labor Statistics via Haver Analytics 4 ANTECEDENTS Income growth for the top 1 percent had risen sharply, driving income inequality to levels not seen since the 1920s. Cumulative growth in average income since 1979, before transfers and taxes, by income group +300%

Top 1 percent +250 of households

+200

+150

+100 81st to 99th percentiles of households

+ 50

Bottom 20 percent Middle 60 percent – 50 of households of households

1970 1975 1980 1985 1990 1995 2000 2005 2008

Source: Congressional Budget O!ce, “The Distribution of Household Income, 2014” 5 ANTECEDENTS

Meanwhile, the !nancial system was becoming increasingly fragile.

6 ANTECEDENTS A “quiet period” of relatively low bank losses had extended for nearly 70 years and created a false sense of strength. Two-year historical loan-loss rates for commercial banks 10%

1920 1930 1940 1950 1960 1970 1980 1990 2000 2008

Sources: Federal Deposit Insurance Corp.; Federal Reserve Board; International Monetary Fund 7 ANTECEDENTS The “Great Moderation”—two decades of more stable economic outcomes with shorter, shallower recessions and lower in!ation—had added to complacency. Quarterly real GDP growth, percent change from preceding period +20%

The “Great Moderation” +15

+10

+ 5

– 5

–10

–15

1970 1975 1980 1985 1990 1995 2000 2005 2008

Source: Bureau of Economic Analysis via Federal Reserve Economic Data (FRED) 8 ANTECEDENTS Long-term interest rates had been falling for decades, re!ecting decreasing in!ation, an aging workforce, and a rise in global savings. Benchmark interest rates, monthly 20%

30-year !xed mortgage rate

5 10-year Treasury 2-year Treasury

1970 1975 1980 1985 1990 1995 2000 2005 2008

Sources: Federal Reserve Board and Freddie Mac Primary Mortgage Market Survey® via Federal Reserve Economic Data (FRED) 9 ANTECEDENTS Home prices across the country had been rising rapidly for nearly a decade.

Real home price index, percentage change from 1890 +100%

+ 80 Home prices had increased modestly through several boom-and-bust cycles since the 1970s, but started a much more dramatic rise in the late 1990s. + 60

+ 40

+ 20

1970 1975 1980 1985 1990 1995 2000 2005 2008

Source: U.S. Home Price and Related Data, Robert J. Shiller, Irrational Exuberance 10 ANTECEDENTS Household debt as a share of income had risen to alarming heights.

Aggregate household debt as a share of disposable personal income 140%

120

100

40 Mortgage debt

Consumer debt 0

1970 1975 1980 1985 1990 1995 2000 2005 2008

Source: Federal Reserve Board Financial Accounts of the United States, based on Ahn et al. (2018) 11 ANTECEDENTS Credit and risk had migrated outside the regulated banking system.

Credit market debt outstanding, by holder, as a share of nominal GDP 250% Q1 1980 Q1 2008 31% Nonbank Financials 64% Broker-Dealers 200 69% Banks 36%

150 GSEs

ABS 100 MMFs

Insurers

1970 1975 1980 1985 1990 1995 2000 2005 2008

Notes: GSE: government-sponsored enterprise (including Fannie Mae and Freddie Mac); ABS: asset-backed securities issuers; MMFs: money market funds Source: Federal Reserve Board Financial Accounts of the United States 12 ANTECEDENTS The amount of !nancial assets !nanced with short-term liabilities had also risen sharply, increasing the vulnerability of the !nancial system to runs. Net repo funding to banks and broker-dealers $2.00 trillion

1.75

The use of repo funding— 1.50 a form of secured, short-term lending—tripled in the decade prior to 2008. 1.25

1.00

0.75

0.50

0.25

1970 1975 1980 1985 1990 1995 2000 2005 2008

Source: Federal Reserve Board Financial Accounts of the United States 13 The Arc of the Crisis

14 ARC OF THE CRISIS The !nancial crisis unfolded in several phases.

Bank credit default swap spreads and Libor-OIS spread 500 basis points Increasing Stress Early Panic and Resolution Escalation

400 Two widely accepted indicators of !nancial sector stress are credit default swap (CDS) spreads, which measure the cost of insuring a !rm’s debt, and the 300 Libor-OIS spread, which is a common measure of banks’ counterparty credit risk.

200 Bank CDS spreads

100

Libor-OIS spread 0

2007 2008 2009

Notes: Credit default swap spreads are equal-weighted averages of JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs. Libor-OIS spread used throughout is the spread between the 3-month London Interbank O"ered Rate and the 3-month USD overnight indexed swap rate. 15 Sources: Libor-OIS: Bloomberg Finance L.P.; bank CDS spreads: Bloomberg Finance L.P., IHS Markit ARC OF THE CRISIS Home prices peaked nationally in the summer of 2006, then fell rapidly— eight major cities had declines of more than 20 percent by March 2008. Change in S&P CoreLogic Case-Shiller Home Price Indexes for 20 cities and U.S., from U.S. peak in July 2006, not seasonally adjusted +10% U.S. peak: U.S. change by March 2008: –9.0% July 2006

–10

–20 Change, July 2006–March 2008 Detroit –22.5% San Francisco –22.6 –30 Miami –23.1 Tampa –23.4 Los Angeles –24.4 San Diego –25.6 –40 Phoenix –26.6 Las Vegas –27.7

–50

2006 2007 2008

Sources: S&P CoreLogic Case-Shiller Home Price Indexes for 20 individual cities and National Home Price Index via Federal Reserve Economic Data (FRED) 16 ARC OF THE CRISIS Stress in the !nancial system built up gradually over late 2007 and early 2008, as mortgage troubles and recession fears increased. Libor-OIS spread 400 basis points

350

Bank of America announces intent to buy Countrywide Financial, 300 a troubled mortgage lender, Jan. 11, 2008 250 Banks and GSEs start reporting billions in losses in Nov. 2007, and warn of dividend cuts and a need for Stock markets plunge 200 more capital; stocks fall Jan. 21, 2008, amid recession fears

Bank of England provides JPMorgan Chase 150 emergency credit to Northern rescues Bear Stearns Rock, a troubled mortgage with emergency support lender, Sept. 14, 2007 from Federal Reserve, 100 March 14, 2008 BNP Paribas freezes three funds on 50 Aug. 9, 2007, amid Libor-OIS fragile ABS markets spread

2007 2008 2009

Note: GSE: government-sponsored enterprise Source: Bloomberg Finance L.P. 17 ARC OF THE CRISIS Investors were fearful that the mortgage giants Fannie Mae and Freddie Mac might collapse and cause severe damage to the housing market. Stock price of Fannie Mae and Freddie Mac $80 a share

New York attorney general subpoenas 70 Freddie Mac Fannie Mae and Freddie Mac, Nov. 7, 2007, in mortgage fraud investigation Morgan Stanley takes $3.7 billion loss on subprime mortgage exposure; other big banks 60 also warn of huge write-downs

50 Fannie Mae reports $1.4 billion loss on Nov. 9, 2007, amid rising loan Fannie Mae and Freddie Mac Fannie Mae delinquencies collectively owned or 40 guaranteed more than $5 trillion in mortgage-related assets. 30 As the housing market deteriorated, deepening losses at both GSEs sparked investor 20 concerns of insolvency, driving their share prices lower. Freddie Mac reports 10 $2 billion net loss and low capital reserves, Nov. 20, 2007 0

2007 2008 2009

Source: The Center for Research in Security Prices at Chicago Booth via Wharton Research Data Services (WRDS) 18 ARC OF THE CRISIS As panic spread, the nation’s largest banks and investment banks looked increasingly vulnerable to failure. S&P 500 Financials index level, and average of six big banks’ CDS spreads in basis points

600 Lehman Brothers !les for bankruptcy; Bank of America announces plans to acquire Merrill Lynch, Sept. 15, 2008 S&P 500 Financials Reserve Primary Fund “breaks the buck”; 500 Fed rescues AIG with $85 billion credit facility, Sept. 16 Fed authorizes Goldman Sachs and Morgan Stanley to become bank holding companies, Sept. 21 Washington Mutual fails and is acquired in part by 400 JPMorgan Chase, Sept. 25

300

200

100 Average bank CDS spread S&P downgrades credit ratings of 11 major global banks, Dec. 20, 2008 0

2007 2008 2009

Note: Credit default swap spread is an equal-weighted average of JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs. Sources: S&P 500 Financials: Bloomberg Finance L.P., S&P Dow Jones Indices LLC; bank CDS spreads: Bloomberg Finance L.P., IHS Markit 19 ARC OF THE CRISIS The rise in losses, the fear of further losses, and the liquidity pressures on the system pushed the price of !nancial assets down and added to concerns about the solvency of the !nancial system.

More !nancial institutions look weak Economic or asset price growth slows

A self-reinforcing People run from weak Economic cycle of fear !nancial institutions growth slows

Financial institutions unload assets in !re sale Banks lend less and people spend less Asset prices decline further

20 ARC OF THE CRISIS Yet the economic forecasts suggested a modest and manageable slowdown in economic growth. The forecasters were wrong. Real GDP, percent change from preceding quarter, SAAR, and Philadelphia Fed surveys of professional forecasters +6% Professional Forecasters’ Professional Forecasters’ Professional Forecasters’ GDP forecast, Aug. 2008 GDP forecast, Aug. 2007 GDP forecast, Feb. 2008

–3

–6 Actual GDP

–9 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2008 2009 2010

Sources: Bureau of Economic Analysis via Federal Reserve Economic Data (FRED) (data update of Aug. 29, 2018); Philadelphia Federal Reserve Survey of Professional Forecasters, Q3 2007 and Q1 and Q3 2008 21 The U.S. Strategy

22 U.S. STRATEGY Among the key elements of the U.S. policy response were:

Use of the Fed’s lender-of-last-resort authorities beyond the banking system, for investment banks and funding markets.

An expansive use of guarantees to prevent runs on money market funds and a broad array of !nancial institutions.

An aggressive recapitalization of the !nancial system, in two stages, backed by expanded FDIC guarantees.

A powerful use of monetary and !scal policy to limit the severity of the recession and restore economic growth.

A broad mix of housing policies to prevent the failure of the GSEs, slow the fall of home values, lower mortgage rates, and aid in re!nancings.

An extension of dollar liquidity to the global !nancial system, combined with international cooperation and Keynesian stimulus.

23 U.S. STRATEGY The U.S. government’s initial response to the crisis was gradual, and the tools were limited and antiquated because they were designed for traditional banks.

TOOLS AVAILABLE NO AUTHORITY

FDIC • To intervene to manage the • Resolution authority for banks, failure of or nationalize nonbanks with a systemic risk exception to • To guarantee the broader allow for the provision of broader liabilities of the !nancial system guarantees • Deposit insurance for banks • To inject capital into the !nancial system Federal Reserve • For the Fed to purchase assets • Discount window lending for other than Treasuries, Agencies, banks, and in extremis for other and Agency MBS* institutions • To inject capital or guarantee • Swap lines for foreign central the GSEs banks

*Agencies are debt securities issued or guaranteed by U.S. federal agencies or GSEs; agency MBS are mortgage-backed securities issued or guaranteed by U.S. federal agencies or GSEs. 24 U.S. STRATEGY But the response became more forceful and comprehensive as the crisis intensi!ed and Congress provided new emergency authority.

Libor-OIS spread Increasing Stress Early Panic and Resolution 400 basis points Escalation TAF TAF extension (Fed) TSLF (Fed) 350 Bear Stearns rescue (Fed) PDCF (Fed) AIG stabilization (Fed, Treasury) 300 Systemic MMF guarantees (Treasury) !nancial AMLF (Fed) policies CPFF (Fed) 250 TLGP, deposit insurance (FDIC) CPP (Treasury) TALF (Fed, Treasury) 200 Stress tests (Fed, Treasury) PPIP (Treasury) Fed funds interest rate cuts (Fed) 150 Monetary and !scal policies Quantitative easing (Fed) Stimulus Act (Bush) Recovery Act (Obama) 100 Fannie, Freddie conservatorship (FHFA) Agency MBS Purchase Program (Treasury) Housing and Auto industry support (Treasury) autos 50 HAMP (Treasury) Libor-OIS HARP (FHFA) International Central bank swap lines Swap line extension (Fed) 0

2007 2008 2009

Source: Libor-OIS: Bloomberg Finance L.P. Note: Start dates for programs re!ect the date of their announcement. The Federal Reserve administered the bank stress tests under the SCAP while the Treasury established a capital backstop under the CAP. 25 U.S. STRATEGY The U.S. government deployed a mix of systemic policies to stabilize !nancial institutions and markets:

Liquidity programs to keep !nancial institutions operating and credit "owing to consumers and businesses.

Guarantee programs to support critical funding markets for !nancial institutions.

Capitalization strategies with private and government capital to prevent the failure of systemic institutions and resolve uncertainty about the !nancial system.

26 U.S. STRATEGY As the crisis intensi!ed, the U.S. government’s liquidity programs expanded along several dimensions:

• Domestic International • Traditional Novel • Institutions Markets

27 U.S. STRATEGY The Federal Reserve initially deployed its traditional lender-of-last-resort tools to provide liquidity to the banking system. Federal Reserve discount window usage Term Auction Facility (TAF) usage $600 billion $600 billion

Use of the Term Auction 500 Fed’s discount 500 Facility window . . . so the Fed 400 Banks were reluctant to 400 initiated TAF in borrow from the Fed’s a similar role, discount window over fear and opened it it would signal they were in to both 300 !nancial trouble . . . 300 domestic and foreign banks.

200 Foreign banks 200 U.S. banks

100 100

0 0

2007 2008 2009 2010 2007 2008 2009 2010

Source: Federal Reserve Board, based on English and Mosser (2020). Transaction-level data on discount window lending during the crisis were released under Freedom of Information Act court decisions (see: https://www.federalreserve.gov/foia/servicecenter.htm) 28 U.S. STRATEGY And then the Fed expanded its tools to support dealers and funding markets.

Securities lent to dealers: Term Securities Lending Facility Primary Dealer Credit Facility (PDCF) loans $600 billion $600 billion

Term Securities Primary Dealer 500 Lending Facility 500 Credit Facility

The Fed established the . . . and then created the 400 TSLF to promote liquidity 400 PDCF to provide in U.S. Treasury bonds emergency liquidity to and other important investment banks, which collateral markets . . . did not have access to 300 300 the discount window.

200 200

100 100

0 0

2007 2008 2009 2010 2007 2008 2009 2010

Note: PDCF includes loans extended to select other broker-dealers. Source: Federal Reserve Board via Federal Reserve Economic Data (FRED) 29 U.S. STRATEGY The Fed and Treasury introduced programs to address fragility in the commercial paper market, a key source of funding to !nancial institutions and businesses. Overnight issuance as a share of outstanding commercial paper 15%

After the bankruptcy of AMLF and money market Lehman Brothers, anxious guarantees Sept. 19, 2008 Commercial Paper Funding Facility (CPFF) Fed establishes ABCP Money investors demanded announced by Fed, Oct. 7, 2008 12 Market Mutual Fund Liquidity ultra-short terms for Facility; Treasury announces commercial paper, temporary guarantee program exposing issuers to for money market mutual funds, a major buyer of Asset-backed signi!cant rollover risk commercial paper commercial paper 9 amid the continued retreat of market liquidity. Lehman bankruptcy Commercial paper Sept. 15, 2008

BNP Paribas freezes three Master Liquidity Enhancement Conduit (MLEC) funds on Aug. 9, 2007, On Oct. 15, 2007, Treasury facilitates plan for private banks amid fragile ABS markets to support the ABCP market; it is never implemented 0

2007 2008 2009

Source: Federal Reserve Bank of New York based on data from the Federal Reserve Board of Governors, “Commercial Paper Rates and Outstanding Summary,” derived from data supplied by the Depository Trust & Clearing Corporation 30 U.S. STRATEGY The Fed and Treasury also helped restart the asset-backed securitization market, a vital source of funding for credit cards, auto loans, and mortgage lending. Asset-backed securities issuance (eligible classes) and amount pledged to TALF $70 billion Lehman bankruptcy TALF, which becomes operational in After the "rm’s collapse in March 2009, has an immediate e!ect on September 2008, the ABS restoring market function market is nearly frozen 60 PPIP, introduced in February 2009, also supports the market

50 Early crisis average Total issuance (eligible classes) Amount pledged to TALF

40 Post-TALF and PPIP average

ABS market nearly frozen 0

2007 2008 2009 2010 2011

Sources: Federal Reserve Bank of New York based on data from JP Morgan, Bloomberg Finance L.P., and the Federal Reserve Board of Governors 31 U.S. STRATEGY

The U.S. government put in place a mix of guarantees to backstop critical parts of the !nancial system.

32 U.S. STRATEGY Treasury agreed to guarantee about $3.2 trillion of money market fund assets to stop the run on prime money market funds. Daily U.S. money market fund !ows +$ 90 billion

Prime institutional + 60 money market fund !ows Reserve Primary Fund “breaks the buck” Sept. 16, 2008; the fund held Lehman commercial + 30 paper that was valued at zero after the bankruptcy

– 30

Lehman bankruptcy Treasury opens guarantee program – 60 Sept. 15, 2008 Sept. 29, 2008 before market opened – 90 Treasury announces Temporary Guarantee Program for Money Market Funds – 120 Sept. 19, 2008

– 150

August 2008 September October November December

Sources: iMoneyNet; authors’ calculations based on Schmidt et al. (2016) 33 U.S. STRATEGY The FDIC expanded its deposit insurance coverage limits on consumer and business accounts in an e!ort to prevent bank runs. Share of total deposits FDIC insured 62% 53% 59% FDIC-insured 60 deposits

56 Increased coverage gave consumers and businesses more con!dence that their 54 money was safe.

50 $100,000 Temporary increase to $250,000 $250,000 made permanent FDIC insurance as authorized by the Emergency by Dodd-Frank coverage Economic Stabilization Act 48

2007 2008 2009 2010 2011

Note: Does not include non-interest-bearing transaction account amounts insured by Dodd-Frank through the end of 2012. Source: U.S. Treasury, “Reforming Wall Street, Protecting Main Street” 34 U.S. STRATEGY By agreeing to guarantee new !nancial debt, the FDIC helped institutions obtain more stable funding. Debt outstanding under the TLGP (DGP)* Average-weighted CDS spread for six big banks $400 billion 500 basis points

350 FDIC debt Bank CDS guarantees spreads 400 300

250 Nonbanks 300 TLGP Debt Guarantee Program introduced Oct. 14, 2008 200

200 150 Bank holding companies 100 100 50 Commercial 0 banks 0

2008 2009 2010 2011 2012 2007 2008 2009

*Debt Guarantee Program covered debt issued by both the parent company and its a!liates. Sources: Debt issuance: Federal Deposit Insurance Corp., authors’ calculations; CDS spreads: Bloomberg Finance L.P., IHS Markit 35 U.S. STRATEGY The U.S. government moved to strengthen the capital in the !nancial system as the crisis intensi!ed by:

Encouraging the biggest institutions to raise private capital early in the crisis.

Injecting substantial government capital into the banking system when the crisis worsened and Congress provided emergency authority.

Stabilizing the most troubled banks with additional capital and ring-fence guarantees.

Conducting stress tests to complete the recapitalization of the !nancial system.

36 U.S. STRATEGY As losses worsened early in the crisis, U.S. policymakers urged !nancial institutions to raise private capital. Private capital raised between Jan. 1, 2007, and Oct. 13, 2008, for the nine banks receiving initial government investments Private capital raised, in billions Common equity Preferred equity Other Tier 1 BANKS Citigroup $43.2

Bank of America 33.5

JPMorgan Chase 25.9

Wells Fargo 8.5

INVESTMENT BANKS Private capital raised Goldman Sachs $13.0 before government investments Morgan Stanley 15.4 Jan. 1, 2007, to Oct. 13, 2008 Merrill Lynch 28.7

TRUST AND PROCESSING BANKS BNY Mellon $0

State Street 4.1

Source: Goldman Sachs 37 U.S. STRATEGY Then, as panic followed the collapse of Lehman Brothers, Treasury made large capital investments in the biggest banks using new authority from Congress . . . Government and other capital raised between Oct. 14, 2008, and May 6, 2009, the day before stress test results were released Capital raised, Government Government Targeted Other Other in billions preferred equity* Investment Program capital preferred equity Tier 1 BANKS Citigroup** $59.1

Bank of America 35.0

JPMorgan Chase 25.0 Private common equity Wells Fargo 37.7

INVESTMENT BANKS Government Goldman Sachs $15.8 and other capital raised Morgan Stanley 10.0 Oct. 14, 2008, to $10 billion goes to Bank of America May 6, 2009 Merrill Lynch 10.0 after acquisition of Merrill Lynch

TRUST AND PROCESSING BANKS BNY Mellon $3.0

State Street 2.0

*Includes capital injections made under the Capital Purchase Program (CPP). **Citigroup later converted approximately $58 billion of preferred stock and other securities into common equity. Source: Goldman Sachs 38 U.S. STRATEGY . . . and used additional funds to make direct government investments in hundreds of smaller banks. Principal outstanding for government bank capital investments Distribution of banks participating in the Capital Purchase Program $300 billion Banks receiving funds: by asset size Less than $1 to $10 Over $10 $1 billion billion billion Government capital investments 250 in banks 473 banks 177 57

By the end of 2008, more 200 than 200 banks had received funds under the Banks receiving funds: by state Capital Purchase Program. 0 1 to 10 11 to 20 21 to 30 31 to 71 Overall, $205 billion would 150 be distributed to 707 banks. An additional $40 billion was split between Citigroup 100 and Bank of America under the Targeted Investment Program.

2008 2009 2010 2011 2012 2013 2014

Sources: Timeline of funds outstanding: TARP Tracker; banks receiving funds, by asset size: U.S. Treasury, “Troubled Asset Relief Program: Two Year Retrospective,” SNL Financial; banks receiving funds, by state: authors’ calculations based on TARP Investment Program transaction reports, Aug. 8, 2018 39 U.S. STRATEGY In addition to capital injections, the government expanded its tools with asset guarantees for the most troubled banks, Citigroup and Bank of America. Asset Guarantee Program (AGP), Citigroup assets, and “ring-fence” loss responsibility structure (Asset guarantees for Bank of America were drawn up but never implemented.) 700 basis points 1st Loss 2nd Loss 3rd Loss Tail Loss Pool of Citigroup Citigroup Citigroup Citigroup Citigroup Citigroup assets: $39.5 bil. $0.6 bil. $1.1 bil. $24.5 bil. 600 CDS $301 billion Treasury FDIC FRBNY* spreads $5.0 bil. $10.0 bil. $220.4 bil. 500 Citigroup AGP announced Nov. 23, 2008 Other Citigroup 400 exits AGP Home and repays MBS, mortgage TARP funds commercial loans Dec. 23, real estate $175.1 300 2009 $76.3 billion billion 200

100 Citigroup AGP asset pool !nalized Nov. 17, 2009 0

2007 2008 2009 2010

*The Federal Reserve Bank of New York’s loss position was structured in the form of a nonrecourse loan. Sources: Asset Guarantee Program terms: Special Inspector General for TARP, “Extraordinary Financial Assistance Provided to Citigroup, Inc.”; CDS spreads: Bloomberg Finance L.P., IHS Markit 40 U.S. STRATEGY The government provided emergency loans, capital, and guarantees to AIG to prevent a disorderly failure that would have disrupted the !nancial system. Outstanding commitment to AIG In fall of 2010, AIG spins o! AIA subsidiary $200 billion in a $20.5 billion IPO and MetLife acquires ALICO for $16.2 billion Recapitalization closes, Jan. 14, 2011: Fed loans are paid o! and remaining interests transferred to Treasury which receives 92% of AIG common stock; Treasury commits $30 billion more; (Maiden Lane II and III remain with Fed) Fed restructures its commitment, including a $25 billion credit facility cut in exchange for $150 preferred stakes in AIG’s foreign life insurance subsidiaries AIA and ALICO Government makes $40 billion TARP investment from Treasury; Treasury cuts its $23 billion pro"t Fed authorizes Maiden Lane II and III to purchase stake to 77% by after Treasury sells "nal AIG’s mortgage-related assets, Nov. 10, 2008 selling $5.8 billion in shares in AIG, Dec. 2012 stock, May 2011 $100 Fed commits additional $37.8 billion Oct. 8, 2008 Final securities sold from Maiden Lane II Feb. 28, 2012 Fed establishes $85 billion credit Final securities facility Sept. 16, 2008, taking a sold from 79.9 percent equity stake in AIG Maiden Lane III $50 Aug. 2012

In a series of stock sales, Government Treasury cuts its AIG stake to 22% commitments to AIG March–Sept. 2012 0

2009 2010 2011 2012

Note: Repayments occurred over the lifetime of the commitment. Any reduction in the commitment, however, is not re!ected until the January 2011 recapitalization transaction. Source: U.S. Treasury 41 U.S. STRATEGY As con!dence in banks further eroded, government “stress tests” increased transparency, helping regulators and investors make credible loss projections . . . Two-year historical loan-loss rates for commercial banks SCAP capital shortfall, May 7, 2009

10% CAPITAL RAISES NEEDED, IN BILLIONS 9.1% Of 19 institutions participating in the Supervisory Capital Assessment At 9.1% of outstanding loans, Program (SCAP), ten were required 8 the Fed’s loss estimates for the to raise $74.6 billion in capital; nine others did not need additional capital. stress test were higher than peak losses during the Great Depression. Bank of $33.9 America 6 $13.7 Wells Fargo

$11.5 GMAC

$5.5 Citigroup 4 Two-year historical loan-loss rates for commercial banks $2.5 Regions Financial

$2.2 SunTrust Banks 2 $1.8 Morgan Stanley

$1.8 KeyCorp

0 $1.1 Fifth Third Bank

’20 ’30 ’40 ’50 ’60 ’70 ’80 ’90 ’00 ’10 $0.6 PNC Financial

Note: The $74.6 billion in required capital is after earnings and capital measures in the !rst quarter of 2009. Citigroup’s requirement, for example, fell from $92.6 billion to $5.5 billion after adjusting for capital actions and earnings in the !rst quarter of 2009 and its plan to convert approximately $58 billion of preferred stock into common equity. 42 Sources: Federal Deposit Insurance Corp.; Federal Reserve Board; International Monetary Fund U.S. STRATEGY . . . and accelerated the return of private capital.

Private capital raised, May 7, 2009, through Dec. 31, 2010 Private capital raised, in billions Common equity Other Tier 1 Preferred equity BANKS Citigroup $22.7

Bank of America 32.8

JPMorgan Chase 9.8

Wells Fargo 20.9

INVESTMENT BANKS Private capital raised Goldman Sachs $0 after stress test results released Morgan Stanley 6.9 May 7, 2009, through Merrill Lynch — Acquired by Bank of America Dec. 31, 2010

TRUST AND PROCESSING BANKS BNY Mellon $2.8

State Street 2.3

Note: In April 2009, before the release of stress test results, Goldman Sachs raised $5.8 billion in capital for the repayment of TARP funds. Source: Goldman Sachs 43 U.S. STRATEGY Indeed, the U.S. recapitalized its banking system more quickly and aggressively than Europe. Capital raised each year $120 billion U.S. banks ~90% of 2008–2016 capital was raised 2008–2010

100

60 European banks ~50% of 2008–2016 capital was raised 2008–2010

2008 2009 2010 2011 2012 2013 2014 2015 2016

Note: Authors’ estimates based on !gures from Goldman Sachs. Source: Goldman Sachs 44 U.S. STRATEGY

Alongside programs designed to address the systemic problems in the !nancial system, the Fed and Treasury put in place a forceful mix of monetary policy and !scal stimulus.

45 U.S. STRATEGY As the Fed funds rate neared zero, the Fed made large-scale asset purchases to drive down long-term interest rates—a policy known as quantitative easing. Fed funds target rate or range and 10-year Treasury rate Gross asset purchases, monthly 6% $200 billion Treasuries Agency debt MBS 5 Fed funds target rate Fed asset Upper bound purchases 150 QE 1 QE 2 QE 3

4 10-year Treasury rate

3 100

1 QE 1 QE 2 QE 3

0 Target range 0 ’07 ’08 ’09 ’10 ’11 ’12 ’07 ’08 ’09 ’10 ’11 ’12

Sources: Target rate: Federal Reserve Board; 10-year Treasury: Federal Reserve Board via Federal Reserve Economic Data (FRED); monthly asset purchases: Federal Reserve Bank of New York, Haver Analytics 46 U.S. STRATEGY The U.S. passed the !rst !scal stimulus very early in the crisis. But at $168 billion, it was relatively small and needed time to take e"ect. Quarterly e"ect of #scal stimulus measures on GDP +4.0% Estimated impact on GDP from !scal legislation +3.5 Pre–Recovery Act Recovery Act Post–Recovery Act +3.0

+2.5 Unemployment Compensation Extension Act Nov. 21, 2008 +2.0 Housing and Economic Recovery Act (HERA) +1.5 July 31, 2008 Supplemental Appropriations Act +1.0 June 30, 2008

Economic Stimulus +0.5 Act of 2008 Feb. 13, 2008

2007 2008 2009 2010 2011 2012

Note: $168 billion represents the combined stimulus from pre–Recovery Act measures through 2012. Sources: Council of Economic Advisers; Congressional Budget O!ce; Bureau of Economic Analysis; calculations by Jason Furman 47 U.S. STRATEGY The Recovery Act of 2009 provided a larger mix—$712 billion—of temporary tax cuts and spending increases, o!setting some but not all of the fall in GDP. Quarterly e"ect of #scal stimulus measures on GDP +4.0% Estimated impact on GDP from "scal legislation +3.5 Pre–Recovery Act Recovery Act Post–Recovery Act +3.0

+2.5

+2.0 American Recovery and Reinvestment Act of 2009 +1.5 Feb. 17, 2009

+1.0

+0.5

2007 2008 2009 2010 2011 2012

Note: $712 billion represents the stimulus from the Recovery Act through 2012. Sources: Council of Economic Advisers; Congressional Budget O!ce; Bureau of Economic Analysis; calculations by Jason Furman 48 U.S. STRATEGY A further $657 billion from a series of smaller post–Recovery Act measures added to the level of economic support . . . Quarterly e"ect of #scal stimulus measures on GDP +4.0% Estimated impact on GDP Continuing Unemployment Compensation Extension Act; Extension Act FAA Air Transportation Act; Small Business Jobs Act from !scal legislation April 2010 July–Sept. 2010 +3.5 Pre–Recovery Act Tax Relief Act Dec. 2010 Temporary Extension Act; Recovery Act Hiring Incentives to Restore VOW Act; Temporary Post–Recovery Act Employment Act March 2010 Payroll Tax Cut +3.0 Continuation Act Worker, Homeowner and Nov.–Dec. 2011 Business Assistance Act; Middle-Class Tax +2.5 Defense Appropriations Act Relief and Job Nov.–Dec. 2009 Creation Act Feb. 2012 +2.0

Supplemental +1.5 Appropriations Act June 2009

+1.0

+0.5

2007 2008 2009 2010 2011 2012

Note: $657 billion represents the combined stimulus from post–Recovery Act measures through 2012. Sources: Council of Economic Advisers; Congressional Budget O!ce; Bureau of Economic Analysis; calculations by Jason Furman 49 U.S. STRATEGY . . . but even as the federal government ramped up stimulus, state and local cutbacks worked against the e!ort. Real state and local government purchases during recoveries, 1960–2015, indexed to quarterly level at end of recession 130

In past recessions, Average across state and local recessionary periods 120 governments from 1960–2007 increased spending during recoveries. 1991 110

2001 100

90 2009

During the recovery from the !nancial crisis, 80 however, state and local governments cut spending sharply, working against federal e"orts.

70 Years from end of recession (NBER business cycle trough)

–6 –5 –4 –3 –2 –1 0 +1 +2 +3 +4 +5 +6 +7 +8

Note: Average does not include the 1980 recession owing to overlap with the 1981–82 recession. Sources: Bureau of Economic Analysis via Haver Analytics; authors’ calculations 50 U.S. STRATEGY The government put in place a series of housing programs to:

• Lower mortgage rates and ensure the availability of credit • Reduce mortgage foreclosures • Help struggling borrowers re"nance mortgages to take advantage of lower rates

51 U.S. STRATEGY The government’s housing programs brought down mortgage rates and reduced foreclosures but were not powerful enough to contain the damage. 30-year !xed mortgage rate Foreclosure completions, annual rate distributed evenly across four quarters 7% Home prices peak Quantitative easing Fed announces it will buy GSE 700,000 July 2006 debt and GSE-backed MBS, Nov. 25, 2008

HAMP and HARP Treasury releases details on 6 Home A"ordable Modi!cation Program and Home 600 A"ordable Re!nance Program, March 4, 2009

5 Hope Now 30-year !xed 500 Oct. 10, 2007 Treasury and HUD mortgage rate facilitate creation Left scale of private loan Fannie Mae, Freddie Mac 4 modi!cation conservatorship Sept. 7, 2008 400 program FHFA takes control of GSEs Agency MBS Purchase Program Treasury announces plan to purchase 3 FDIC-IndyMac securities, also on Sept. 7 300 modi!cations Program implemented Aug. 20, 2008, for 2 failed IndyMac Bank 200

1 100 Foreclosure completions Right scale 0 0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Sources: Mortgage rates: Freddie Mac Primary Mortgage Market Survey® via Federal Reserve Economic Data (FRED); foreclosure completions: CoreLogic 52 U.S. STRATEGY Government support of Fannie Mae and Freddie Mac kept mortgage credit !owing and stabilized the housing market after private issuers pulled back. Mortgage-backed securities issuance Agency MBS-to-Treasury spread

$300 billion Fannie Mae, Freddie Mac Fed QE 1 Fed announces it will buy 300 basis points conservatorship Sept. 7, 2008 GSE debt and GSE-backed MBS, Nov. 25, 2008 Senior Preferred Stock Purchase Agreements (SPSPAs) First SPSPA Amendment increases commitment GSEs receive capital backstop of up to $100 billion, Sept. 26 to $200 billion per GSE, May 6, 2009 250 250 Agency MBS Left scale Private-market MBS Left scale Agency MBS spread Right scale 200 200 Second SPSPA Amendment increases commitment again, Dec. 24, 2009 150 150

100 100

50 50

0 0

2006 2007 2008 2009 2010 2011

Sources: MBS issuance: Securities Industry and Financial Markets Association; agency MBS spread: Bloomberg Finance L.P., authors’ calculations 53 U.S. STRATEGY Loan modi!cation programs, including HAMP, helped millions of struggling home owners with their mortgages. Mortgages modi!ed or receiving loss mitigation aid, April 1, 2009, through Nov. 30, 2016 700,000 Streamlined Revised HAMP rules, March 2010, to encourage some principal administrative write-downs to combat negative equity and to o"er some unemployed processes, borrowers principal forbearance for up to three months 600 Aug. and Oct. 2009

500 HAMP Tier 2 becomes e!ective, June 2012, facilitating modi!cations for non-GSE borrowers

400 Streamline HAMP announced, July 2015, allowing modi!cations Private sector for seriously delinquent borrowers with documentation limitations 300 modi!cations

200 Foreclosure completions

100 FHA loss mitigation HAMP permanent 0 modi!cations

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Note: Modi!cations through Nov. 2016; other program results through 2016. Foreclosure completions are plotted using an annual rate distributed evenly across four quarters. Sources: FHA loss mitigation: Dept. of Housing and Urban Development; HAMP modi!cations: U.S. Treasury; private sector modi!cations: HOPE NOW; 54 foreclosure completions: CoreLogic U.S. STRATEGY The Home A"ordable Re!nance Program lowered mortgage rates, encouraged re!nancings, and helped “underwater” home owners avoid foreclosure. Loans re!nanced through the Home A"ordable Re!nance Program 700,000

600 HARP 2.0, Oct. 2011, eased representation and warranty requirements to increase pool of eligible borrowers and increase 500 Raised loan-to-value ceiling, servicer participation July 2009, to allow somewhat deeper underwater borrowers to re!nance 400 Streamlined administrative processes, Aug. and Oct. 2009 HARP re!nances 300

200 Foreclosure completions

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Note: Foreclosure completions are plotted using an annual rate distributed evenly across four quarters. Sources: Re!nances: Federal Housing Finance Agency; foreclosure completions: CoreLogic 55 U.S. STRATEGY The government’s programs helped millions of home owners, but were slow to take e"ect and reached a limited number of people threatened by foreclosure. Home owners assisted through crisis-era loan modi!cation programs and other foreclosure prevention actions 12 million Special re!nancings Loan modi!cations Other borrower assistance 9.5 million 8.2 million 5.3 million 10 PROGRAMS PROGRAMS PROGRAMS Through HARP Completed HAMP All trial and FHFA HomeSaver 2017 8 re!nances permanent loan advance; repayment modi!cations Through plans; forbearance FHFA Streamline 2017 plans; and re!nances HOPE NOW foreclosure Proprietary alternatives 6 FHA Streamline modi!cations re!nances Through 2012 Through FHA Loss mitigation GSE Standard and 2012 interventions streamlined Through modi!cations STATE AND LOCAL 2017 4 HOUSING FINANCE FHA AGENCY INITIATIVES MODIFICATIONS Mortgages and Additional loss !nanced units 2 mitigation Through HARDEST HIT FUND 2012 Local foreclosure prevention 0

Source: Barr et al. (2020)

56 U.S. STRATEGY Even though the crisis started in the United States, its impact reverberated around the world—and the response required U.S. policymakers to work closely with their global counterparts to:

Establish central bank swap lines to address dollar funding shortages

Coordinate monetary policy to send a powerful message to the markets

Arrange for IMF support for emerging markets countries a!ected by the crisis

57 U.S. STRATEGY The Federal Reserve established swap lines with more than a dozen foreign central banks to ease funding pressures arising from a shortage of dollars. Central bank liquidity swaps $600 billion Swap line amounts outstanding Swap line limits By Oct. 14, 2008, the Fed had ECB expanded currency swap lines to Brazil, Mexico, essentially unlimited amounts with 500 New Zealand, Japan four central banks: ECB, Switzerland, South Korea, Other and the Banks of England and Japan. Singapore added Oct. 28–29, 2008 countries Limited swap lines were arranged 400 with 10 other central banks: billions Canada $30 Australia, Denmark, Australia $30 300 Norway, Sweden added Sept. 24, 2008 Sweden $30 Japan, Bank of Brazil $30 200 England, Canada added Sept. 18, 2008 Mexico $30 South Korea $30 Fed establishes swap 100 lines with the ECB Singapore $30 and Switzerland Dec. 12, 2007 Denmark $15 Norway $15 0 New Zealand $15 2008 2009 2010

Sources: Amounts outstanding: Federal Reserve Board, authors’ calculations; maximum commitments: Goldberg et al. (2010) 58 U.S. STRATEGY The Federal Reserve and the world’s major central banks orchestrated a coordinated interest rate cut. Central bank target interest rates for each country (month-end) 6% target rate United Kingdom On Oct. 8, 2008, the Fed joins the European Central United States Bank, the Bank of England, 5 and the central banks of Canada, Sweden, and Switzerland in cutting interest rates. 4 Canada

3 European Central Bank 2

Switzerland 1

Japan 0

2005 2006 2007 2008 2009 2010 2011 2012

Source: Bloomberg Finance L.P. 59 U.S. STRATEGY The IMF provided substantial aid to countries a"ected by the crisis, outpacing its response to the Asian !nancial crisis in 1997. Increase in IMF lending commitments from start of Asian and global !nancial crises $175 billion

Global !nancial crisis (2008–2009) 150 Flexible credit lines Standby and extended arrangements 125 Asian !nancial crisis (1997–1998) Standby and extended 100 arrangements

Proposal to expand New Arrangements to Borrow 75 resources of the IMF by up to $500 billion, April 2009

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Months after the start of new IMF lending Note: Start date for new IMF lending for the Asian !nancial crisis (AFC) is July 1997 and for the global !nancial crisis (GFC) is Sept. 2008. SDR data were converted to U.S. dollars at $1.355820 per SDR (the rate on July 31, 1997) for the AFC and $1.557220 per SDR (the rate on Sept. 30, 2008) for the GFC. Sources: International Monetary Fund; authors’ calculations based on Lowery et al. (2020) 60 Outcomes

61 OUTCOMES The severity of the stress of the 2008 !nancial crisis was, in some respects, worse than in the Great Depression. Stock market prices from peak Nominal house prices from peak Decline in household wealth 0% 0% 0%

Stock market House prices Household –10 wealth – 5 – 5 –20 Great Great –10 Depression Depression –30 –6.2% –6.0% –10 –40 Great –15 Financial Depression Crisis –50 –44.9% –18.3% –15 Financial Crisis –20 Financial –14.1% –60 Crisis –57.8% –70 –25 –20

Peak 1 2 Peak 1 2 3 Peak 1 Year later Year later Year later

Notes: Stock declines shown to !nancial crisis trough; house prices 3 years after peak; household wealth !gures are based on the change between the nominal annual average of 1929 and of 1930, and the change in the nominal level from Q1 2008 to Q1 2009. Sources: Stock prices: The Center for Research in Security Prices at Chicago Booth via Wharton Research Data Services (WRDS); housing prices: U.S. home price and related data, Robert J. Shiller, Irrational Exuberance; GD household wealth: Mishkin (1978); GR household wealth: Federal Reserve Board Financial Accounts of the United States 62 OUTCOMES The U.S. government response ultimately stopped the panic and stabilized the !nancial system . . . Bank CDS spreads and Libor-OIS spread 500 basis points Increasing Early Panic and Stress Escalation Resolution

400

300 Bank CDS spreads

200

100

Libor-OIS spread 0

2007 2008 2009 2010

Note: Credit default swap spreads are equal-weighted averages of JPMorgan Chase, Citigroup, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs. Sources: Libor-OIS: Bloomberg Finance L.P.; CDS spreads: Bloomberg Finance L.P., IHS Markit 63 OUTCOMES . . . and allowed the economy to slowly begin digging out of a deep recession. Treasury, Federal Reserve, and FDIC exposures Real GDP and employment growth, year-over-year percent change (monthly) $7 trillion +6%

Real GDP 6 Year-over-year change Right scale +4

5 +2

4 0 3 Government Employment commitments Year-over-year –2 2 Left scale change Right scale Guarantees Other programs –4 1 TARP Fed liquidity

0 –6

2008 2009 2010

Sources: Liang et al. (2020), based on U.S. government exposures: Congressional Oversight Panel, “Guarantees and Contingent Payments in TARP and Related Programs” via Federal Reserve Bank of St. Louis, Federal Deposit Insurance Corp., Federal Reserve Board, Federal Housing Finance Agency, U.S. Treasury; employment: Bureau of Labor Statistics; real GDP: Macroeconomic Advisers via Haver Analytics 64 OUTCOMES The response helped restart the credit markets and bank lending so that !nancing was once again cheaper and easier to obtain. Consumer asset-backed security (ABS) spreads Net percentage of banks tightening loan standards 700 basis points –20%

600 Triple-A-rated 0 auto ABS spread 500 Triple-A-rated credit card ABS spread +20 400 Prime mortgage credit more available 300 +40

200

+60 100 Credit less available 0 +80

2007 2008 2009 2010 2007 2008 2009 2010

Sources: ABS spreads: Federal Reserve Bank of New York based on data from JP Morgan and Bloomberg Finance L.P.; lending standards: Federal Reserve Board 65 OUTCOMES The surge in housing foreclosures stabilized and began to decline, and home prices eventually began to recover. Foreclosures as a percent of total loans S&P CoreLogic Case-Shiller U.S. National Home Price Index 5% 200

4 180 Foreclosure Home prices inventory

3 160

2 140

1 120

0 100 Jan. 2000 = 100

2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013

Sources: Foreclosure inventory: Mortgage Bankers Association’s National Delinquency Survey, Bloomberg Finance L.P.; home price index: S&P CoreLogic Case-Shiller U.S. National Home Price Index, not seasonally adjusted, via Federal Reserve Economic Data (FRED) 66 OUTCOMES The pace of the recovery in the U.S. was slow, as is typical following a severe !nancial crisis . . . Percentage change in real GDP from peak +50%

+40

1981–1982 +30

20 1990

2001 +10

Q4 2007 0

– 10 0 1 2 3 4 5 6 7 8 9 10 Years after GDP peak

Source: Bureau of Economic Analysis via Federal Reserve Economic Data (FRED) 67 OUTCOMES . . . although growth has been stronger than in many European countries. Real GDP, percentage change from 4th quarter 2007

+ 6% United States + 4 Germany

+ 2 France 0

– 2 United Kingdom – 4

– 6 Italy

– 8 Spain

–10

2008 2009 2010 2011 2012 2013

Source: Organisation for Economic Co-operation and Development 68 OUTCOMES Financial crises are typically costly to economic output, but the U.S. strategy was able to limit the damage compared to other crises.

How bad was the drop in GDP? How long was the recession? How fast was the recovery? Decline in output peak to trough Duration of recession Recovery of output to (real GDP per capita) previous peak –9.6% –5.25% 2.9 1.5 7.3 5.5 years years years years

63 !nancial crises in advanced economies, 1857 to 2013 U.S. !nancial crisis

Sources: Reinhart and Rogo! (2009); Bureau of Economic Analysis via Federal Reserve Economic Data (FRED); based on comparisons from Liang et al. (2020) 69 OUTCOMES U.S. taxpayers made a pro!t on the !nancial rescue. Income or cost of !nancial stability programs Capital Liquidity/ Investments In billions Credit Markets In billions GSEs +$88.2 GSE Debt Purchases +$17.6 AIG 22.7 CPFF 6.1 CPP 21.9 TAF 4.1 Citigroup 6.6 PPIP 3.9 Bank of America 3.1 TALF 2.3 GMAC/Ally 2.4 TSLF 0.8 CDCI 0.0 Maiden Lane 0.8 Chrysler Financial 0.0 PDCF 0.6 Chrysler –1.2 AMLF 0.5 General Motors –10.5 SBA 7(a) 0.0

FDIC Guarantee Resolution In billions Programs In billions Cumulative Income, +$45.4 DGP +$10.2 2008–10 MMF Guarantee 1.2 TAGP –0.3 DIF Losses, 2008–10 –60.0

Sources: Federal Deposit Insurance Corp.; Federal Housing Finance Agency; Federal Reserve Board; Webel and Labonte (2018); U.S. Treasury 70 OUTCOMES Today the !nancial system has signi!cantly more capital and would be better able to withstand losses in the event of a severe economic downturn. CET1 and Tier 1 common equity as percent of risk-weighted assets 14%

12 Bank capital levels

10 All institutions 8

6 Bank holding companies with more than $500 billion in assets Long after the !nancial 4 crisis, banks have continued to increase their capital, pushed in large part by more stringent regulatory 2 requirements.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Note: Capital ratio is based on tier 1 common equity pre-2014 and common equity tier 1 (CET1) as of 2015, and is a combination of the two during 2014. Source: Federal Reserve Bank of New York’s Research and Statistics Group 71 OUTCOMES Stronger regulations on capital are applied to a much broader share of the U.S. !nancial system.

Q4 2007 Q4 2017 of the !nancial system of the !nancial system 41% faced leverage restrictions 92% faced leverage restrictions GSEs remain under No leverage restrictions government conservatorship

$13.0 trillion $7.6 trillion $18.8 trillion $8.9 trillion Depository Government-Sponsored Depository Government- Institutions Enterprises Institutions Sponsored Enterprises

$4.6 trillion Asset-Backed Securities $3.2 trillion $4.7 trillion $2.1 tn Broker-Dealers Broker- Finance Dealers Cos. $1.5 tn $1.2 tn Fin. Cos. ABS $32.1 trillion total !nancial assets $33.6 trillion total !nancial assets

Source: Federal Reserve Board Financial Accounts of the United States 72 OUTCOMES Nonetheless, the emergency authorities available in the U.S. are still too limited to allow an e!ective response to a severe crisis.

PRE"CRISIS LIMITATIONS POST-CRISIS TOOLS • Limited reach of prudential limits on • Stronger capital requirements leverage • Stronger liquidity and funding • Limited deposit insurance coverage requirements • No resolution authority for largest bank • Living wills, bankruptcy, and resolution holding companies and nonbanks authority • No ability to inject capital into !nancial !rms • No authority to stabilize GSEs POST-CRISIS LIMITATIONS • Limitations on Fed lender of last resort ESSENTIAL CRISIS AUTHORITIES • No money market fund guarantees or FDIC debt guarantees without • Fed expanded lender of last resort congressional action • Broader FDIC debt and money market • No authority to inject capital fund guarantees • GSE conservatorship • Capital injections into !nancial !rms

73 OUTCOMES This was a terribly damaging crisis. It did not need to be so bad.

The damage illustrates the costs of running a !nancial system with weak oversight, and of going into a crisis without the essential tools for aggressive early action to prevent disaster.

The recovery was slow and fragile, made slower by the premature shift to tighter !scal policy.

Even after repairing the immediate damage, the U.S. economy still faces a number of longer-term challenges, with causes that predated the crisis.

74 Acronyms

ABCP asset-backed commercial paper MBS mortgage-backed securities ABS asset-backed securities MLEC Master Liquidity Enhancement Conduit AMLF Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility MMFs money market funds CAP Capital Assistance Program NBER National Bureau of Economic Research CDCI Community Development Capital Initiative PDCF Primary Dealer Credit Facility CDS credit default swaps PPIP Public-Private Investment Program CET1 Common Equity Tier 1 QE Quantitative Easing CPFF Commercial Paper Funding Facility SAAR seasonally adjusted annual rate CPP Capital Purchase Program SBA 7(a) Small Business Association Section 7(a) Securities Purchase Program DGP Debt Guarantee Program SCAP Supervisory Capital Assessment Program DIF Deposit Insurance Fund SDR special drawing right EESA Emergency Economic Stabilization Act of 2008 SPSPAs Senior Preferred Stock Purchase Agreements FDIC Federal Deposit Insurance Corporation TAF Term Auction Facility FHA Federal Housing Administration TAGP Transaction Account Guarantee Program FHFA Federal Housing Finance Agency TALF Term Asset-Backed Securities Loan Facility GDP gross domestic product TARP Troubled Assets Relief Program GSEs government-sponsored enterprises TLGP Temporary Liquidity Guarantee Program HAMP Home A!ordable Modi"cation Program TSLF Term Securities Lending Facility HARP Home A!ordable Re"nance Program HUD U.S. Department of Housing and Urban Development Libor-OIS London Interbank O!ered Rate–Overnight Indexed Swap rate

75 Acronyms

76 Acknowledgments

This chart book was produced as part of an e!ort led by Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., to examine the U.S. government’s interventions in the 2007–2009 "nancial crisis, a joint project of the Yale School of Management, Program on Financial Stability, and the Brookings Institution, Hutchins Center on Fiscal and Monetary Policy.

Chart Book Project Advisers: Timothy F. Geithner and J. Nellie Liang

Editorial Director: Deborah McClellan

Chart Book Project Director: Eric Dash

Data Visualization: Seth W. Feaster

Lead Data Analyst: Ben Henken Data Analyst: Aidan Lawson

77 Acknowledgments

We wish to thank the following individuals and organizations:

Brookings/Hutchins: David Wessel, Director; Sage Belz, Je!rey Cheng, Vivien Lee, Michael Ng

Yale Program on Financial Stability: Andrew Metrick, Program Director; Alec Buchholtz, Anshu Chen, Greg Feldberg, Christian McNamara, Chase Ross, David Tam, Daniel Thompson, Rosalind Z. Wiggins

Golden Triangle Strategies: Monica Boyer, Emily Cincebeaux, Bill Marsh, Melissa Wohlgemuth

Others: Charlie Anderson, Matthew Anderson, Christie Baer, Michael S. Barr, James Egelhof, Jason Furman, Robert Jackson, Annabel Jouard, Katherine Korsak, Lorie Logan, Francis Mahoney, Vivek Manjunath, Drew McKinley, Patrick Parkinson, Wilson Powell III, Ernie Tedeschi

Data sources: Bloomberg Finance L.P.; the Center for Research in Security Prices at Chicago Booth; CoreLogic®, a property data and analytics company; Freddie Mac; Goldman Sachs; Haver Analytics; IHS Markit; iMoneyNet; Mortgage Bankers Association; Securities Industry and Financial Markets Association; SNL Financial; S&P Dow Jones Indices LLC; Standard & Poor’s; S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC, and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. © 2017 S&P Dow Jones Indices LLC, its a#liates and/or its licensors. All rights reserved; U.S. Dept. of Housing and Urban Development; Wharton Research Data Services (WRDS).

78 Acknowledgments

Additional data sources: Bureau of Economic Analysis; Bureau of Labor Statistics; Congressional Budget O#ce; Congressional Oversight Panel; Council of Economic Advisers; Federal Deposit Insurance Corp.; Federal Housing Finance Agency; Federal Reserve Bank of New York Financial Crisis Policy Response Timeline; Federal Reserve Bank of New York’s Research and Statistics Group; Federal Reserve Bank of Philadelphia; Federal Reserve Bank of St. Louis; Federal Reserve Bank of St. Louis Financial Crisis Policy Response Timeline; Federal Reserve Board; Federal Reserve Economic Data (FRED); International Monetary Fund; Macroeconomic Advisers®; Mishkin (1978); Organisation for Economic Co-operation and Development; U.S. Dept. of Treasury.

79 Notes

PAGE 5 Re-created with data underlying Figure 10, “The Distribution of Household Income, 2014,” PAGE 30 Based on Figure 3.7, Lorie Logan, William Nelson, and Patrick Parkinson, “The Fed’s Novel Lender of PAGE 53 Monthly mortgage-related securities issuance "gures may not match annual "gures reported by the Estimates of real household net worth (wealth) during the Great Depression were taken from Table 1, Frederic November Oversight Report,” Congressional Oversight Panel (November 2009), Congressional Budget O!ce (2018), www.cbo.gov/publication/53597. See link for de"nitions of income and Last Resort Programs,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, Securities Industry and Financial Markets Association on its website owing to a methodological di#erence in S. Mishkin, “The Household Balance Sheet and the Great Depression,” The Journal of Economic History 38(4) https://fraser.stlouisfed.org/title/5018. income groups. eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale the reporting of each series. (December 1978): 918–37, www.jstor.org/stable/2118664. Based on Figure 18.5, J. Nellie Liang, Margaret M. McConnell, and Phillip Swagel, “Evidence on Outcomes,” in University Press, 2020). PAGE 54 Based on the "gure “Mortgage Aid Extended More than 9.9 Million Times, Outpacing Foreclosures,” PAGE 64 Guarantees: Re$ects the U.S. Treasury’s maximum commitments under the Temporary Guarantee Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: PAGE 10 Based on Figure 3.1, U.S. home price and related data, Robert J. Shiller, Irrational Exuberance, 3rd ed. December 2016 Housing Scorecard, www.hud.gov/sites/documents/SCORECARD_2016_12_508C.PDF. Program for Money Market Funds and the FDIC’s maximum commitments under the two components of the Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, (Princeton, NJ: Princeton University Press, 2015), as updated by the author, PAGE 31 Based on Chart 5, Adam Ashcraft, Allan Malz, and Zoltan Pozsar, “The Federal Reserve’s Term Asset-Backed Securities Loan Facility,” Federal Reserve Bank of New York Economic Policy Review 18(3) Temporary Liquidity Guarantee Program, the Debt Guarantee Program, and the Transaction Account 2020). www.econ.yale.edu/~shiller/data.htm. PAGE 56 Some home owners may have participated in more than one program; the sum of home owners (November 2012): 29-66, https://www.newyorkfed.org/medialibrary/media/research/epr/2012/ Guarantee Program. helped across all categories does not necessarily re$ect the number of unique borrowers helped. PAGE 69 Data for 63 "nancial crises in advanced economies, 1857 to 2013, were taken from Carmen Reinhart EPRvol18n3.pdf. PAGE 11 Based on Figure 1, Panel 1, Michael Ahn, Michael Batty, and Ralf Meisenzahl, “Household Troubled Assets Relief Program (TARP): Re$ects principal outstanding for TARP programs including bank and Kenneth Rogo#, “Recovery from Financial Crises: Evidence from 100 Episodes,” American Economic Review: Based on Table 12.3, Michael Barr, Neel Kashkari, Andreas Lehnert, Phillip Swagel, “Crisis-Era Housing Programs,” Debt-to-Income Ratios in the Enhanced Financial Accounts,” FEDS Notes (Washington, DC: Board of Governors PAGE 33 Based on Panel A, Lawrence Schmidt, Allan Timmermann, and Russ Wermers, “Runs on Money Market support programs, credit market programs, auto industry support, assistance to American International Papers & Proceedings 104(5) (2014): 50–55, https://scholar.harvard.edu/"les/rogo#/"les/aer_104-5_50-55.pdf. in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: of the Reserve System, January 11, 2018), https://doi.org/10.17016/2380-7172.2138. Mutual Funds,” American Economic Review 106(9) (2016): 2625–57, Group, and housing programs. Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, 2020). Based on Figure 18.3, J. Nellie Liang, Margaret M. McConnell, and Phillip Swagel, “Evidence on Outcomes,” in www.aeaweb.org/articles?id=10.1257/aer.20140678. Federal Reserve Liquidity Programs: Re$ects loan amounts outstanding under credit and liquidity programs Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: PAGE 12 Based on Figure 4.1, Scott G. Alvarez, William Dudley, and J. Nellie Liang, “Nonbank Financial PAGE 58 Maximum commitments were taken from Table 2, Linda S. Goldberg, Craig Kennedy, and Jason Miu, PAGE 34 Based on Slide 4, “Reforming Wall Street, Protecting Main Street,” U.S. Treasury, July 2012, established the Federal Reserve Board. These include discount window lending (primary credit, secondary Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, Institutions: New Vulnerabilities and Old Tools,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, “Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs,” Federal Reserve Bank of New York Economic www.treasury.gov/connect/blog/Documents/20120719_DFA_FINAL5.pdf. credit, and seasonal credit), term auction credit, the Primary Dealer Credit Facility, the Asset-Backed 2020). Jr., with J. Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Policy Review 17(1) (May 2011): 3–20, Crisis (New Haven: Yale University Press, 2020). Commercial Paper Money Market Mutual Fund Liquidity Facility, the Term Asset-Backed Securities Loan www.newyorkfed.org/medialibrary/media/research/epr/11v17n1/1105gold.pdf. PAGE 70 Based on Table 2 in Baird Webel and Marc Labonte, “Costs of Government Interventions in Response PAGE 35 Commercial banks include depository institutions. Bank holding companies include bank holding Facility, the Commercial Paper Funding Facility, and central bank liquidity swaps. Also re$ects the value of companies, savings and loan holding companies, "nancial holding companies, and their funding a!liates. to the Financial Crisis: A Retrospective,” Congressional Research Service (updated September 2018), PAGE 13 Based on Exhibit 1, Gary Gorton and Andrew Metrick, “Who Ran on Repo?” (2012), PAGE 60 Based on Figure 17.9, Clay Lowery, Nathan Sheets, and Edwin (Ted) Truman, “International Coordination outstanding securities lent through the Term Securities Lending Facility. Nonbanks include nonbank entities and their a!liates, as well as bank holding companies with nonbank https://fas.org/sgp/crs/misc/R43413.pdf. http://faculty.som.yale.edu/garygorton/documents/whorancompleteoctober4.pdf. of Financial and Economic Policies,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. assets of nonbank subsidiaries comprising more than half of their total assets. Other Programs: Re$ects the Federal Reserve, FDIC, and Treasury’s commitments under the Asset Guarantee Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New All "gures except otherwise noted are reported on a cash basis and as of Aug. 1, 2018. GSE debt purchases, Banks’ portion includes net liabilities from federal funds agreements. Program; Federal Reserve Board assistance to Maiden Lane companies and support to American International Haven: Yale University Press, 2020). DIF losses and cumulative income, and TAGP are as of Dec. 31, 2017; Maiden Lane is as of Jan. 31, 2018; and PAGE 41 Based on U.S. Treasury data and AIG infographic and timeline, Group; Treasury support for Fannie Mae and Freddie Mac through the senior preferred stock purchase www.treasury.gov/initiatives/"nancial-stability/TARP-Programs/aig/Pages/default.aspx. GSEs are as of Q2 2018. PAGE 28 Based on Figures 2.5 and 2.6, William English and Patricia Mosser, “The Use and E#ectiveness of PAGE 62 The stock market (NYSE/AMEX/NASDAQ/ARCA) is measured by total market value as reported by the agreements, as well as the face value of Treasury’s total mortgage-backed securities (MBS) portfolio at the Conventional Liquidity Tools Early in the Financial Crisis,” in Ben S. Bernanke, Timothy F. Geithner, and Henry PAGES 47, 48, 49 Based on Figure 16.3, Jason Furman, “The Fiscal Response to the Great Recession: Steps Center for Research in Security Prices and is shown to "nancial crisis trough. House prices are shown to three end of each month, from October 2008-March 2012. PAGE 72 Depository institutions include U.S.-chartered depository institutions, foreign banking o!ces in the M. Paulson, Jr., with J. Nellie Liang, eds. First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 years after peak. Household wealth is a comparison between the change in the annual average (in nominal U.S., and credit unions. Taken, Paths Rejected, and Lessons for Next Time,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Exposures via Treasury’s Temporary Guarantee Program for Money Market Funds were taken from Global Financial Crisis (New Haven: Yale University Press, 2020). terms) of household wealth from 1929 to 1930, and the change in the nominal level of household wealth from Paulson, Jr., with J. Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global “Guarantees and Contingent Payments in TARP and Related Programs: Congressional Oversight Panel Financial Crisis (New Haven: Yale University Press, 2020). Q1 2008 to Q1 2009.

80 Notes

PAGE 5 Re-created with data underlying Figure 10, “The Distribution of Household Income, 2014,” PAGE 30 Based on Figure 3.7, Lorie Logan, William Nelson, and Patrick Parkinson, “The Fed’s Novel Lender of PAGE 53 Monthly mortgage-related securities issuance "gures may not match annual "gures reported by the Estimates of real household net worth (wealth) during the Great Depression were taken from Table 1, Frederic November Oversight Report,” Congressional Oversight Panel (November 2009), Congressional Budget O!ce (2018), www.cbo.gov/publication/53597. See link for de"nitions of income and Last Resort Programs,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, Securities Industry and Financial Markets Association on its website owing to a methodological di#erence in S. Mishkin, “The Household Balance Sheet and the Great Depression,” The Journal of Economic History 38(4) https://fraser.stlouisfed.org/title/5018. income groups. eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale the reporting of each series. (December 1978): 918–37, www.jstor.org/stable/2118664. Based on Figure 18.5, J. Nellie Liang, Margaret M. McConnell, and Phillip Swagel, “Evidence on Outcomes,” in University Press, 2020). PAGE 64 Guarantees: Re$ects the U.S. Treasury’s maximum commitments under the Temporary Guarantee Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: PAGE 10 Based on Figure 3.1, U.S. home price and related data, Robert J. Shiller, Irrational Exuberance, 3rd ed. PAGE 54 Based on the "gure “Mortgage Aid Extended More than 9.9 Million Times, Outpacing Foreclosures,” Program for Money Market Funds and the FDIC’s maximum commitments under the two components of the Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, (Princeton, NJ: Princeton University Press, 2015), as updated by the author, PAGE 31 Based on Chart 5, Adam Ashcraft, Allan Malz, and Zoltan Pozsar, “The Federal Reserve’s Term December 2016 Housing Scorecard, www.hud.gov/sites/documents/SCORECARD_2016_12_508C.PDF. Temporary Liquidity Guarantee Program, the Debt Guarantee Program, and the Transaction Account 2020). www.econ.yale.edu/~shiller/data.htm. Asset-Backed Securities Loan Facility,” Federal Reserve Bank of New York Economic Policy Review 18(3) (November 2012): 29-66, https://www.newyorkfed.org/medialibrary/media/research/epr/2012/ PAGE 56 Some home owners may have participated in more than one program; the sum of home owners Guarantee Program. PAGE 69 Data for 63 "nancial crises in advanced economies, 1857 to 2013, were taken from Carmen Reinhart EPRvol18n3.pdf. helped across all categories does not necessarily re$ect the number of unique borrowers helped. PAGE 11 Based on Figure 1, Panel 1, Michael Ahn, Michael Batty, and Ralf Meisenzahl, “Household Troubled Assets Relief Program (TARP): Re$ects principal outstanding for TARP programs including bank and Kenneth Rogo#, “Recovery from Financial Crises: Evidence from 100 Episodes,” American Economic Review: Based on Table 12.3, Michael Barr, Neel Kashkari, Andreas Lehnert, Phillip Swagel, “Crisis-Era Housing Programs,” Debt-to-Income Ratios in the Enhanced Financial Accounts,” FEDS Notes (Washington, DC: Board of Governors PAGE 33 Based on Panel A, Lawrence Schmidt, Allan Timmermann, and Russ Wermers, “Runs on Money Market support programs, credit market programs, auto industry support, assistance to American International Papers & Proceedings 104(5) (2014): 50–55, https://scholar.harvard.edu/"les/rogo#/"les/aer_104-5_50-55.pdf. in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: of the Reserve System, January 11, 2018), https://doi.org/10.17016/2380-7172.2138. Mutual Funds,” American Economic Review 106(9) (2016): 2625–57, Group, and housing programs. Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, 2020). Based on Figure 18.3, J. Nellie Liang, Margaret M. McConnell, and Phillip Swagel, “Evidence on Outcomes,” in www.aeaweb.org/articles?id=10.1257/aer.20140678. PAGE 12 Based on Figure 4.1, Scott G. Alvarez, William Dudley, and J. Nellie Liang, “Nonbank Financial Federal Reserve Liquidity Programs: Re$ects loan amounts outstanding under credit and liquidity programs Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: PAGE 58 Maximum commitments were taken from Table 2, Linda S. Goldberg, Craig Kennedy, and Jason Miu, Institutions: New Vulnerabilities and Old Tools,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, PAGE 34 Based on Slide 4, “Reforming Wall Street, Protecting Main Street,” U.S. Treasury, July 2012, established the Federal Reserve Board. These include discount window lending (primary credit, secondary Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, “Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs,” Federal Reserve Bank of New York Economic Jr., with J. Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial www.treasury.gov/connect/blog/Documents/20120719_DFA_FINAL5.pdf. credit, and seasonal credit), term auction credit, the Primary Dealer Credit Facility, the Asset-Backed 2020). Policy Review 17(1) (May 2011): 3–20, Crisis (New Haven: Yale University Press, 2020). Commercial Paper Money Market Mutual Fund Liquidity Facility, the Term Asset-Backed Securities Loan www.newyorkfed.org/medialibrary/media/research/epr/11v17n1/1105gold.pdf. PAGE 70 Based on Table 2 in Baird Webel and Marc Labonte, “Costs of Government Interventions in Response PAGE 35 Commercial banks include depository institutions. Bank holding companies include bank holding Facility, the Commercial Paper Funding Facility, and central bank liquidity swaps. Also re$ects the value of companies, savings and loan holding companies, "nancial holding companies, and their funding a!liates. to the Financial Crisis: A Retrospective,” Congressional Research Service (updated September 2018), PAGE 13 Based on Exhibit 1, Gary Gorton and Andrew Metrick, “Who Ran on Repo?” (2012), PAGE 60 Based on Figure 17.9, Clay Lowery, Nathan Sheets, and Edwin (Ted) Truman, “International Coordination outstanding securities lent through the Term Securities Lending Facility. Nonbanks include nonbank entities and their a!liates, as well as bank holding companies with nonbank https://fas.org/sgp/crs/misc/R43413.pdf. http://faculty.som.yale.edu/garygorton/documents/whorancompleteoctober4.pdf. of Financial and Economic Policies,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. assets of nonbank subsidiaries comprising more than half of their total assets. Other Programs: Re$ects the Federal Reserve, FDIC, and Treasury’s commitments under the Asset Guarantee Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New All "gures except otherwise noted are reported on a cash basis and as of Aug. 1, 2018. GSE debt purchases, Banks’ portion includes net liabilities from federal funds agreements. Program; Federal Reserve Board assistance to Maiden Lane companies and support to American International Haven: Yale University Press, 2020). DIF losses and cumulative income, and TAGP are as of Dec. 31, 2017; Maiden Lane is as of Jan. 31, 2018; and PAGE 41 Based on U.S. Treasury data and AIG infographic and timeline, Group; Treasury support for Fannie Mae and Freddie Mac through the senior preferred stock purchase www.treasury.gov/initiatives/"nancial-stability/TARP-Programs/aig/Pages/default.aspx. GSEs are as of Q2 2018. PAGE 28 Based on Figures 2.5 and 2.6, William English and Patricia Mosser, “The Use and E#ectiveness of PAGE 62 The stock market (NYSE/AMEX/NASDAQ/ARCA) is measured by total market value as reported by the agreements, as well as the face value of Treasury’s total mortgage-backed securities (MBS) portfolio at the Conventional Liquidity Tools Early in the Financial Crisis,” in Ben S. Bernanke, Timothy F. Geithner, and Henry PAGES 47, 48, 49 Based on Figure 16.3, Jason Furman, “The Fiscal Response to the Great Recession: Steps Center for Research in Security Prices and is shown to "nancial crisis trough. House prices are shown to three end of each month, from October 2008-March 2012. PAGE 72 Depository institutions include U.S.-chartered depository institutions, foreign banking o!ces in the M. Paulson, Jr., with J. Nellie Liang, eds. First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 years after peak. Household wealth is a comparison between the change in the annual average (in nominal U.S., and credit unions. Taken, Paths Rejected, and Lessons for Next Time,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Exposures via Treasury’s Temporary Guarantee Program for Money Market Funds were taken from Global Financial Crisis (New Haven: Yale University Press, 2020). terms) of household wealth from 1929 to 1930, and the change in the nominal level of household wealth from Paulson, Jr., with J. Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global “Guarantees and Contingent Payments in TARP and Related Programs: Congressional Oversight Panel Financial Crisis (New Haven: Yale University Press, 2020). Q1 2008 to Q1 2009.

81 Notes

PAGE 5 Re-created with data underlying Figure 10, “The Distribution of Household Income, 2014,” PAGE 30 Based on Figure 3.7, Lorie Logan, William Nelson, and Patrick Parkinson, “The Fed’s Novel Lender of PAGE 53 Monthly mortgage-related securities issuance "gures may not match annual "gures reported by the Estimates of real household net worth (wealth) during the Great Depression were taken from Table 1, Frederic November Oversight Report,” Congressional Oversight Panel (November 2009), Congressional Budget O!ce (2018), www.cbo.gov/publication/53597. See link for de"nitions of income and Last Resort Programs,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, Securities Industry and Financial Markets Association on its website owing to a methodological di#erence in S. Mishkin, “The Household Balance Sheet and the Great Depression,” The Journal of Economic History 38(4) https://fraser.stlouisfed.org/title/5018. income groups. eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale the reporting of each series. (December 1978): 918–37, www.jstor.org/stable/2118664. University Press, 2020). Based on Figure 18.5, J. Nellie Liang, Margaret M. McConnell, and Phillip Swagel, “Evidence on Outcomes,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: PAGE 10 Based on Figure 3.1, U.S. home price and related data, Robert J. Shiller, Irrational Exuberance, 3rd ed. PAGE 54 Based on the "gure “Mortgage Aid Extended More than 9.9 Million Times, Outpacing Foreclosures,” PAGE 64 Guarantees: Re$ects the U.S. Treasury’s maximum commitments under the Temporary Guarantee PAGE 31 Based on Chart 5, Adam Ashcraft, Allan Malz, and Zoltan Pozsar, “The Federal Reserve’s Term Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, (Princeton, NJ: Princeton University Press, 2015), as updated by the author, December 2016 Housing Scorecard, www.hud.gov/sites/documents/SCORECARD_2016_12_508C.PDF. Program for Money Market Funds and the FDIC’s maximum commitments under the two components of the Asset-Backed Securities Loan Facility,” Federal Reserve Bank of New York Economic Policy Review 18(3) 2020). www.econ.yale.edu/~shiller/data.htm. Temporary Liquidity Guarantee Program, the Debt Guarantee Program, and the Transaction Account (November 2012): 29-66, https://www.newyorkfed.org/medialibrary/media/research/epr/2012/ PAGE 56 Some home owners may have participated in more than one program; the sum of home owners Guarantee Program. EPRvol18n3.pdf. helped across all categories does not necessarily re$ect the number of unique borrowers helped. PAGE 69 Data for 63 "nancial crises in advanced economies, 1857 to 2013, were taken from Carmen Reinhart PAGE 11 Based on Figure 1, Panel 1, Michael Ahn, Michael Batty, and Ralf Meisenzahl, “Household Troubled Assets Relief Program (TARP): Re$ects principal outstanding for TARP programs including bank and Kenneth Rogo#, “Recovery from Financial Crises: Evidence from 100 Episodes,” American Economic Review: Based on Table 12.3, Michael Barr, Neel Kashkari, Andreas Lehnert, Phillip Swagel, “Crisis-Era Housing Programs,” Debt-to-Income Ratios in the Enhanced Financial Accounts,” FEDS Notes (Washington, DC: Board of Governors PAGE 33 Based on Panel A, Lawrence Schmidt, Allan Timmermann, and Russ Wermers, “Runs on Money Market support programs, credit market programs, auto industry support, assistance to American International Papers & Proceedings 104(5) (2014): 50–55, https://scholar.harvard.edu/"les/rogo#/"les/aer_104-5_50-55.pdf. in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: of the Reserve System, January 11, 2018), https://doi.org/10.17016/2380-7172.2138. Mutual Funds,” American Economic Review 106(9) (2016): 2625–57, Group, and housing programs. Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, 2020). www.aeaweb.org/articles?id=10.1257/aer.20140678. Based on Figure 18.3, J. Nellie Liang, Margaret M. McConnell, and Phillip Swagel, “Evidence on Outcomes,” in PAGE 12 Based on Figure 4.1, Scott G. Alvarez, William Dudley, and J. Nellie Liang, “Nonbank Financial Federal Reserve Liquidity Programs: Re$ects loan amounts outstanding under credit and liquidity programs Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: PAGE 58 Maximum commitments were taken from Table 2, Linda S. Goldberg, Craig Kennedy, and Jason Miu, Institutions: New Vulnerabilities and Old Tools,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, PAGE 34 Based on Slide 4, “Reforming Wall Street, Protecting Main Street,” U.S. Treasury, July 2012, established the Federal Reserve Board. These include discount window lending (primary credit, secondary Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, “Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs,” Federal Reserve Bank of New York Economic Jr., with J. Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial www.treasury.gov/connect/blog/Documents/20120719_DFA_FINAL5.pdf. credit, and seasonal credit), term auction credit, the Primary Dealer Credit Facility, the Asset-Backed 2020). Policy Review 17(1) (May 2011): 3–20, Crisis (New Haven: Yale University Press, 2020). Commercial Paper Money Market Mutual Fund Liquidity Facility, the Term Asset-Backed Securities Loan PAGE 35 Commercial banks include depository institutions. Bank holding companies include bank holding www.newyorkfed.org/medialibrary/media/research/epr/11v17n1/1105gold.pdf. PAGE 70 Based on Table 2 in Baird Webel and Marc Labonte, “Costs of Government Interventions in Response Facility, the Commercial Paper Funding Facility, and central bank liquidity swaps. Also re$ects the value of companies, savings and loan holding companies, "nancial holding companies, and their funding a!liates. to the Financial Crisis: A Retrospective,” Congressional Research Service (updated September 2018), PAGE 13 Based on Exhibit 1, Gary Gorton and Andrew Metrick, “Who Ran on Repo?” (2012), PAGE 60 Based on Figure 17.9, Clay Lowery, Nathan Sheets, and Edwin (Ted) Truman, “International Coordination outstanding securities lent through the Term Securities Lending Facility. Nonbanks include nonbank entities and their a!liates, as well as bank holding companies with nonbank https://fas.org/sgp/crs/misc/R43413.pdf. http://faculty.som.yale.edu/garygorton/documents/whorancompleteoctober4.pdf. of Financial and Economic Policies,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. assets of nonbank subsidiaries comprising more than half of their total assets. Other Programs: Re$ects the Federal Reserve, FDIC, and Treasury’s commitments under the Asset Guarantee Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New All "gures except otherwise noted are reported on a cash basis and as of Aug. 1, 2018. GSE debt purchases, Banks’ portion includes net liabilities from federal funds agreements. Program; Federal Reserve Board assistance to Maiden Lane companies and support to American International PAGE 41 Based on U.S. Treasury data and AIG infographic and timeline, Haven: Yale University Press, 2020). DIF losses and cumulative income, and TAGP are as of Dec. 31, 2017; Maiden Lane is as of Jan. 31, 2018; and Group; Treasury support for Fannie Mae and Freddie Mac through the senior preferred stock purchase www.treasury.gov/initiatives/"nancial-stability/TARP-Programs/aig/Pages/default.aspx. GSEs are as of Q2 2018. PAGE 28 Based on Figures 2.5 and 2.6, William English and Patricia Mosser, “The Use and E#ectiveness of PAGE 62 The stock market (NYSE/AMEX/NASDAQ/ARCA) is measured by total market value as reported by the agreements, as well as the face value of Treasury’s total mortgage-backed securities (MBS) portfolio at the Conventional Liquidity Tools Early in the Financial Crisis,” in Ben S. Bernanke, Timothy F. Geithner, and Henry PAGES 47, 48, 49 Based on Figure 16.3, Jason Furman, “The Fiscal Response to the Great Recession: Steps Center for Research in Security Prices and is shown to "nancial crisis trough. House prices are shown to three end of each month, from October 2008-March 2012. PAGE 72 Depository institutions include U.S.-chartered depository institutions, foreign banking o!ces in the M. Paulson, Jr., with J. Nellie Liang, eds. First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Taken, Paths Rejected, and Lessons for Next Time,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. years after peak. Household wealth is a comparison between the change in the annual average (in nominal U.S., and credit unions. Exposures via Treasury’s Temporary Guarantee Program for Money Market Funds were taken from Global Financial Crisis (New Haven: Yale University Press, 2020). Paulson, Jr., with J. Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global terms) of household wealth from 1929 to 1930, and the change in the nominal level of household wealth from “Guarantees and Contingent Payments in TARP and Related Programs: Congressional Oversight Panel Financial Crisis (New Haven: Yale University Press, 2020). Q1 2008 to Q1 2009.

82 Notes

PAGE 5 Re-created with data underlying Figure 10, “The Distribution of Household Income, 2014,” PAGE 30 Based on Figure 3.7, Lorie Logan, William Nelson, and Patrick Parkinson, “The Fed’s Novel Lender of PAGE 53 Monthly mortgage-related securities issuance "gures may not match annual "gures reported by the Estimates of real household net worth (wealth) during the Great Depression were taken from Table 1, Frederic November Oversight Report,” Congressional Oversight Panel (November 2009), Congressional Budget O!ce (2018), www.cbo.gov/publication/53597. See link for de"nitions of income and Last Resort Programs,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, Securities Industry and Financial Markets Association on its website owing to a methodological di#erence in S. Mishkin, “The Household Balance Sheet and the Great Depression,” The Journal of Economic History 38(4) https://fraser.stlouisfed.org/title/5018. income groups. eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale the reporting of each series. (December 1978): 918–37, www.jstor.org/stable/2118664. University Press, 2020). Based on Figure 18.5, J. Nellie Liang, Margaret M. McConnell, and Phillip Swagel, “Evidence on Outcomes,” in PAGE 54 Based on the "gure “Mortgage Aid Extended More than 9.9 Million Times, Outpacing Foreclosures,” PAGE 10 Based on Figure 3.1, U.S. home price and related data, Robert J. Shiller, Irrational Exuberance, 3rd ed. PAGE 64 Guarantees: Re$ects the U.S. Treasury’s maximum commitments under the Temporary Guarantee Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: PAGE 31 Based on Chart 5, Adam Ashcraft, Allan Malz, and Zoltan Pozsar, “The Federal Reserve’s Term December 2016 Housing Scorecard, www.hud.gov/sites/documents/SCORECARD_2016_12_508C.PDF. (Princeton, NJ: Princeton University Press, 2015), as updated by the author, Program for Money Market Funds and the FDIC’s maximum commitments under the two components of the Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, Asset-Backed Securities Loan Facility,” Federal Reserve Bank of New York Economic Policy Review 18(3) Temporary Liquidity Guarantee Program, the Debt Guarantee Program, and the Transaction Account 2020). www.econ.yale.edu/~shiller/data.htm. PAGE 56 Some home owners may have participated in more than one program; the sum of home owners (November 2012): 29-66, https://www.newyorkfed.org/medialibrary/media/research/epr/2012/ Guarantee Program. helped across all categories does not necessarily re$ect the number of unique borrowers helped. EPRvol18n3.pdf. PAGE 69 Data for 63 "nancial crises in advanced economies, 1857 to 2013, were taken from Carmen Reinhart PAGE 11 Based on Figure 1, Panel 1, Michael Ahn, Michael Batty, and Ralf Meisenzahl, “Household Troubled Assets Relief Program (TARP): Re$ects principal outstanding for TARP programs including bank and Kenneth Rogo#, “Recovery from Financial Crises: Evidence from 100 Episodes,” American Economic Review: Based on Table 12.3, Michael Barr, Neel Kashkari, Andreas Lehnert, Phillip Swagel, “Crisis-Era Housing Programs,” Debt-to-Income Ratios in the Enhanced Financial Accounts,” FEDS Notes (Washington, DC: Board of Governors PAGE 33 Based on Panel A, Lawrence Schmidt, Allan Timmermann, and Russ Wermers, “Runs on Money Market support programs, credit market programs, auto industry support, assistance to American International Papers & Proceedings 104(5) (2014): 50–55, https://scholar.harvard.edu/"les/rogo#/"les/aer_104-5_50-55.pdf. in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: of the Reserve System, January 11, 2018), https://doi.org/10.17016/2380-7172.2138. Mutual Funds,” American Economic Review 106(9) (2016): 2625–57, Group, and housing programs. Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, 2020). www.aeaweb.org/articles?id=10.1257/aer.20140678. Based on Figure 18.3, J. Nellie Liang, Margaret M. McConnell, and Phillip Swagel, “Evidence on Outcomes,” in Federal Reserve Liquidity Programs: Re$ects loan amounts outstanding under credit and liquidity programs Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: PAGE 12 Based on Figure 4.1, Scott G. Alvarez, William Dudley, and J. Nellie Liang, “Nonbank Financial PAGE 58 Maximum commitments were taken from Table 2, Linda S. Goldberg, Craig Kennedy, and Jason Miu, PAGE 34 Based on Slide 4, “Reforming Wall Street, Protecting Main Street,” U.S. Treasury, July 2012, established the Federal Reserve Board. These include discount window lending (primary credit, secondary Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, Institutions: New Vulnerabilities and Old Tools,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, “Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs,” Federal Reserve Bank of New York Economic www.treasury.gov/connect/blog/Documents/20120719_DFA_FINAL5.pdf. credit, and seasonal credit), term auction credit, the Primary Dealer Credit Facility, the Asset-Backed 2020). Jr., with J. Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Policy Review 17(1) (May 2011): 3–20, Crisis (New Haven: Yale University Press, 2020). Commercial Paper Money Market Mutual Fund Liquidity Facility, the Term Asset-Backed Securities Loan PAGE 35 Commercial banks include depository institutions. Bank holding companies include bank holding www.newyorkfed.org/medialibrary/media/research/epr/11v17n1/1105gold.pdf. Facility, the Commercial Paper Funding Facility, and central bank liquidity swaps. Also re$ects the value of PAGE 70 Based on Table 2 in Baird Webel and Marc Labonte, “Costs of Government Interventions in Response companies, savings and loan holding companies, "nancial holding companies, and their funding a!liates. to the Financial Crisis: A Retrospective,” Congressional Research Service (updated September 2018), PAGE 13 Based on Exhibit 1, Gary Gorton and Andrew Metrick, “Who Ran on Repo?” (2012), PAGE 60 Based on Figure 17.9, Clay Lowery, Nathan Sheets, and Edwin (Ted) Truman, “International Coordination outstanding securities lent through the Term Securities Lending Facility. Nonbanks include nonbank entities and their a!liates, as well as bank holding companies with nonbank https://fas.org/sgp/crs/misc/R43413.pdf. http://faculty.som.yale.edu/garygorton/documents/whorancompleteoctober4.pdf. of Financial and Economic Policies,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. assets of nonbank subsidiaries comprising more than half of their total assets. Other Programs: Re$ects the Federal Reserve, FDIC, and Treasury’s commitments under the Asset Guarantee Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Banks’ portion includes net liabilities from federal funds agreements. Program; Federal Reserve Board assistance to Maiden Lane companies and support to American International All "gures except otherwise noted are reported on a cash basis and as of Aug. 1, 2018. GSE debt purchases, PAGE 41 Based on U.S. Treasury data and AIG infographic and timeline, Haven: Yale University Press, 2020). Group; Treasury support for Fannie Mae and Freddie Mac through the senior preferred stock purchase DIF losses and cumulative income, and TAGP are as of Dec. 31, 2017; Maiden Lane is as of Jan. 31, 2018; and www.treasury.gov/initiatives/"nancial-stability/TARP-Programs/aig/Pages/default.aspx. GSEs are as of Q2 2018. PAGE 28 Based on Figures 2.5 and 2.6, William English and Patricia Mosser, “The Use and E#ectiveness of PAGE 62 The stock market (NYSE/AMEX/NASDAQ/ARCA) is measured by total market value as reported by the agreements, as well as the face value of Treasury’s total mortgage-backed securities (MBS) portfolio at the Conventional Liquidity Tools Early in the Financial Crisis,” in Ben S. Bernanke, Timothy F. Geithner, and Henry PAGES 47, 48, 49 Based on Figure 16.3, Jason Furman, “The Fiscal Response to the Great Recession: Steps Center for Research in Security Prices and is shown to "nancial crisis trough. House prices are shown to three end of each month, from October 2008-March 2012. PAGE 72 Depository institutions include U.S.-chartered depository institutions, foreign banking o!ces in the M. Paulson, Jr., with J. Nellie Liang, eds. First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Taken, Paths Rejected, and Lessons for Next Time,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. years after peak. Household wealth is a comparison between the change in the annual average (in nominal Exposures via Treasury’s Temporary Guarantee Program for Money Market Funds were taken from U.S., and credit unions. Global Financial Crisis (New Haven: Yale University Press, 2020). Paulson, Jr., with J. Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global terms) of household wealth from 1929 to 1930, and the change in the nominal level of household wealth from “Guarantees and Contingent Payments in TARP and Related Programs: Congressional Oversight Panel Financial Crisis (New Haven: Yale University Press, 2020). Q1 2008 to Q1 2009.

83 Notes

PAGE 5 Re-created with data underlying Figure 10, “The Distribution of Household Income, 2014,” PAGE 30 Based on Figure 3.7, Lorie Logan, William Nelson, and Patrick Parkinson, “The Fed’s Novel Lender of PAGE 53 Monthly mortgage-related securities issuance "gures may not match annual "gures reported by the Estimates of real household net worth (wealth) during the Great Depression were taken from Table 1, Frederic November Oversight Report,” Congressional Oversight Panel (November 2009), Congressional Budget O!ce (2018), www.cbo.gov/publication/53597. See link for de"nitions of income and Last Resort Programs,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, Securities Industry and Financial Markets Association on its website owing to a methodological di#erence in S. Mishkin, “The Household Balance Sheet and the Great Depression,” The Journal of Economic History 38(4) https://fraser.stlouisfed.org/title/5018. income groups. eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale the reporting of each series. (December 1978): 918–37, www.jstor.org/stable/2118664. University Press, 2020). Based on Figure 18.5, J. Nellie Liang, Margaret M. McConnell, and Phillip Swagel, “Evidence on Outcomes,” in PAGE 54 Based on the "gure “Mortgage Aid Extended More than 9.9 Million Times, Outpacing Foreclosures,” PAGE 64 Guarantees: Re$ects the U.S. Treasury’s maximum commitments under the Temporary Guarantee PAGE 10 Based on Figure 3.1, U.S. home price and related data, Robert J. Shiller, Irrational Exuberance, 3rd ed. Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: PAGE 31 Based on Chart 5, Adam Ashcraft, Allan Malz, and Zoltan Pozsar, “The Federal Reserve’s Term December 2016 Housing Scorecard, www.hud.gov/sites/documents/SCORECARD_2016_12_508C.PDF. Program for Money Market Funds and the FDIC’s maximum commitments under the two components of the (Princeton, NJ: Princeton University Press, 2015), as updated by the author, Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, Asset-Backed Securities Loan Facility,” Federal Reserve Bank of New York Economic Policy Review 18(3) Temporary Liquidity Guarantee Program, the Debt Guarantee Program, and the Transaction Account 2020). www.econ.yale.edu/~shiller/data.htm. PAGE 56 Some home owners may have participated in more than one program; the sum of home owners (November 2012): 29-66, https://www.newyorkfed.org/medialibrary/media/research/epr/2012/ Guarantee Program. helped across all categories does not necessarily re$ect the number of unique borrowers helped. EPRvol18n3.pdf. PAGE 69 Data for 63 "nancial crises in advanced economies, 1857 to 2013, were taken from Carmen Reinhart PAGE 11 Based on Figure 1, Panel 1, Michael Ahn, Michael Batty, and Ralf Meisenzahl, “Household Troubled Assets Relief Program (TARP): Re$ects principal outstanding for TARP programs including bank and Kenneth Rogo#, “Recovery from Financial Crises: Evidence from 100 Episodes,” American Economic Review: Based on Table 12.3, Michael Barr, Neel Kashkari, Andreas Lehnert, Phillip Swagel, “Crisis-Era Housing Programs,” Debt-to-Income Ratios in the Enhanced Financial Accounts,” FEDS Notes (Washington, DC: Board of Governors PAGE 33 Based on Panel A, Lawrence Schmidt, Allan Timmermann, and Russ Wermers, “Runs on Money Market support programs, credit market programs, auto industry support, assistance to American International Papers & Proceedings 104(5) (2014): 50–55, https://scholar.harvard.edu/"les/rogo#/"les/aer_104-5_50-55.pdf. in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: of the Reserve System, January 11, 2018), https://doi.org/10.17016/2380-7172.2138. Mutual Funds,” American Economic Review 106(9) (2016): 2625–57, Group, and housing programs. Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, 2020). www.aeaweb.org/articles?id=10.1257/aer.20140678. Based on Figure 18.3, J. Nellie Liang, Margaret M. McConnell, and Phillip Swagel, “Evidence on Outcomes,” in Federal Reserve Liquidity Programs: Re$ects loan amounts outstanding under credit and liquidity programs Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. Nellie Liang, eds., First Responders: PAGE 12 Based on Figure 4.1, Scott G. Alvarez, William Dudley, and J. Nellie Liang, “Nonbank Financial PAGE 58 Maximum commitments were taken from Table 2, Linda S. Goldberg, Craig Kennedy, and Jason Miu, PAGE 34 Based on Slide 4, “Reforming Wall Street, Protecting Main Street,” U.S. Treasury, July 2012, established the Federal Reserve Board. These include discount window lending (primary credit, secondary Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Haven: Yale University Press, Institutions: New Vulnerabilities and Old Tools,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, “Central Bank Dollar Swap Lines and Overseas Dollar Funding Costs,” Federal Reserve Bank of New York Economic www.treasury.gov/connect/blog/Documents/20120719_DFA_FINAL5.pdf. credit, and seasonal credit), term auction credit, the Primary Dealer Credit Facility, the Asset-Backed 2020). Jr., with J. Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Policy Review 17(1) (May 2011): 3–20, Commercial Paper Money Market Mutual Fund Liquidity Facility, the Term Asset-Backed Securities Loan Crisis (New Haven: Yale University Press, 2020). www.newyorkfed.org/medialibrary/media/research/epr/11v17n1/1105gold.pdf. PAGE 35 Commercial banks include depository institutions. Bank holding companies include bank holding Facility, the Commercial Paper Funding Facility, and central bank liquidity swaps. Also re$ects the value of PAGE 70 Based on Table 2 in Baird Webel and Marc Labonte, “Costs of Government Interventions in Response companies, savings and loan holding companies, "nancial holding companies, and their funding a!liates. to the Financial Crisis: A Retrospective,” Congressional Research Service (updated September 2018), PAGE 13 Based on Exhibit 1, Gary Gorton and Andrew Metrick, “Who Ran on Repo?” (2012), PAGE 60 Based on Figure 17.9, Clay Lowery, Nathan Sheets, and Edwin (Ted) Truman, “International Coordination outstanding securities lent through the Term Securities Lending Facility. Nonbanks include nonbank entities and their a!liates, as well as bank holding companies with nonbank https://fas.org/sgp/crs/misc/R43413.pdf. http://faculty.som.yale.edu/garygorton/documents/whorancompleteoctober4.pdf. of Financial and Economic Policies,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Paulson, Jr., with J. assets of nonbank subsidiaries comprising more than half of their total assets. Other Programs: Re$ects the Federal Reserve, FDIC, and Treasury’s commitments under the Asset Guarantee Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global Financial Crisis (New Banks’ portion includes net liabilities from federal funds agreements. Program; Federal Reserve Board assistance to Maiden Lane companies and support to American International All "gures except otherwise noted are reported on a cash basis and as of Aug. 1, 2018. GSE debt purchases, Haven: Yale University Press, 2020). PAGE 41 Based on U.S. Treasury data and AIG infographic and timeline, Group; Treasury support for Fannie Mae and Freddie Mac through the senior preferred stock purchase DIF losses and cumulative income, and TAGP are as of Dec. 31, 2017; Maiden Lane is as of Jan. 31, 2018; and www.treasury.gov/initiatives/"nancial-stability/TARP-Programs/aig/Pages/default.aspx. GSEs are as of Q2 2018. PAGE 28 Based on Figures 2.5 and 2.6, William English and Patricia Mosser, “The Use and E#ectiveness of PAGE 62 The stock market (NYSE/AMEX/NASDAQ/ARCA) is measured by total market value as reported by the agreements, as well as the face value of Treasury’s total mortgage-backed securities (MBS) portfolio at the Conventional Liquidity Tools Early in the Financial Crisis,” in Ben S. Bernanke, Timothy F. Geithner, and Henry PAGES 47, 48, 49 Based on Figure 16.3, Jason Furman, “The Fiscal Response to the Great Recession: Steps Center for Research in Security Prices and is shown to "nancial crisis trough. House prices are shown to three end of each month, from October 2008-March 2012. PAGE 72 Depository institutions include U.S.-chartered depository institutions, foreign banking o!ces in the M. Paulson, Jr., with J. Nellie Liang, eds. First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 years after peak. Household wealth is a comparison between the change in the annual average (in nominal Taken, Paths Rejected, and Lessons for Next Time,” in Ben S. Bernanke, Timothy F. Geithner, and Henry M. Exposures via Treasury’s Temporary Guarantee Program for Money Market Funds were taken from U.S., and credit unions. Global Financial Crisis (New Haven: Yale University Press, 2020). terms) of household wealth from 1929 to 1930, and the change in the nominal level of household wealth from Paulson, Jr., with J. Nellie Liang, eds., First Responders: Inside the U.S. Strategy for Fighting the 2007–2009 Global “Guarantees and Contingent Payments in TARP and Related Programs: Congressional Oversight Panel Financial Crisis (New Haven: Yale University Press, 2020). Q1 2008 to Q1 2009.