Ten years on 7th October 2008 Britain almost went bust. The giant Royal Bank of Scotland, known as RBS, ran out of cash. And the government had just 24 hours to save the British economy. This is the story of how a small Scottish bank became the biggest in the world. And the relentless ambition of its boss, Fred Goodwin, who drove it to the top … The bank went from boom to bust and threatened to take Britain down with it. The Bank That Almost Broke Britain, BBC 2018
A month earlier the giant US investment bank Lehman Brothers had dramatically collapsed and their were not real concerns about the stability of the global banking system. ibid.
The takeover of Nat West in January 2000 was seen as a great coup by the City. ibid.
The billions lent to RBS by the Bank of England was only the first step. ibid.
‘Morning meetings: Fred turned them into morning beatings.’ ibid. banker
The Treasury promised to underwrite losses of up to £500 billion to secure the banking system. ibid.
Since 1971 the US dollar and the global financial system have been based solely upon faith: faith in the guardian of that currency and of that system: the American Central Bank, the Federal Reserve. As the world’s reserve currency, the US dollar is how we measure our time, our products, our self world. Ours is a system based on trust and confidence, both of which began to disappear in the Fall of 2007. Money for Nothing: Inside the Federal Reserve, 2013
According to many economists and senior Fed officials, it was the Fed itself in the eye of the storm. ibid.
In 1910 Senator Nelson Aldrich summoned New York’s most powerful bankers to an island off the coast of Georgia to secretly negotiate plans for an American central bank: Jekyll Island. ibid.
In the 1920s the Fed reached beyond its original mandate and began to use this new-found power to steer the US economy. ibid.
‘We would have the kingdom of heaven right here in the United States of America.’ ibid. Jim Grant
At Bretton Woods the US had promised to be the world’s reserve currency backed by gold. But the Fed had created far more dollars than it could ever redeem in gold. And now the US could no longer keep that promise. ibid.
For the first time in history the dollar was just a piece of paper backed only by faith in the Federal Reserve and its policies. That promise was only as good as the Fed actions behind it … The dollar lost more than half its value. ibid.
What followed was the longest economic expansion and largest stock market boom in US history. ibid.
The Trouble with Bubbles: Japan was a cautionary tale of what can happen when stock market real estate bubbles explode in a frenzy of speculation, as they did in Tokyo in the 1980s. ibid.
Greenspan’s ideology won out … The nation’s most powerful banking regulator considered regulation itself obsolete. ibid.
He quickly responded with a series of interest rate cuts to soften the blow. ibid.
‘The Federal Reserve ended up encouraging a housing boom.’ ibid. Bill Poole
The greatest credit bubble in history. ibid.
Able to borrow money for nothing and earning huge fees for lending it out, Wall Street began simply giving money away. ibid.
‘It was a Ponzi scheme connived in by federal agencies. ibid.
‘The Bernanke Fed really blew it. They didn’t see it coming.’ ibid. commentator
The Problem with Models: A bank run but one that bore relation to those of the past involving not just the banks the Fed was created up to protect but the hedge funds, investment banks and insurance conglomerate the Fed had allowed to hide from its oversight. ibid.
The moment that defined the chaos of the 21st century: a financial atomic bomb exploded in the heart of the world’s banking system, sucking up the lifeblood of the global economy. The Treason Trilogy I: Casino Capitalism, Terror and Doom, 2011
Banks too big to go bust held nations to ransom. Trillions of dollars cascaded into bankers’ vaults. ibid.
Sub-prime mortgages blighted whole neighbourhoods, boarded up houses were vandalised, driving down the value of next-door properties. ibid.
The way we abuse each other in the scramble to monopolise the riches of Earth. ibid.
But we won’t be able to reform the laws if we allow corporations to compromise the democratic process by buying the privileges that put their profits above the interests of everyone else. ibid.
The world is out of control: a legacy of the West’s dirty secret. ibid.
Lives are shattered when people speculate in property. ibid.
And that charge of treason can be levelled against many governments in the twenty-first century. ibid.
Meltdown: A four-part investigation into the greed and recklessness that drove the world into financial collapse. Meltdown: The Secret History of the Financial Global Collapse I: The Men Who Crashed the World, CBC 2011
The crash of 2008 brought the largest bankruptcies in world history, pushed over 30 million people into unemployment, and brought many countries to the edge of insolvency. ibid.
Banks began making what were called sub-prime loans to people who could ill afford to pay back the money. ibid.
Greenspan was revered in Washington. ibid.
Banks and mortgage companies were indulging in all sorts of fraudulent practices. ibid.
Bankers went wild for these financial securities which were really just stacks of IOUs. ibid.
He [George Brown] called his approach the Light Touch. ibid.
Worried Northern Rock customers lined up to get their money out. ibid.
Rumours swept the financial world that Bear Stearns had liquidity problems. ibid.
The world financial system went into cardiac arrest. Meltdown: The Secret History of the Financial Global Collapse II: A Global Tsunami
The next crisis … The near-collapse of the world’s biggest insurance company AIG. ibid.
In the end they got the powers and the money but the signs of depressions started to appear anyway. ibid.
‘The biggest welfare cheque in history had been paid to Wall Street.’ ibid.
The orgy of greed and recklessness that drove the world into financial collapse. Meltdown: The Secret History of the Financial Global Collapse III: Paying the Price
The year since the 2008 collapse have been marked by demonstrations around the world … In some countries the struggle went much further. ibid.
The Caterpillar kidnapping incident made news around the world. ibid.
The big three US auto companies came to Washington to ask for a massive government bailout. Famously, they arrived in private corporate jets … Canada quickly followed suit. ibid.
After the fall: the Sheikh who pretends the crash never happened. The Wall Street king charged with fraud. The Congresswoman who wants to jail the bankers. And the world leaders who want a rethink about capitalism. Meltdown: The Secret History of the Financial Global Collapse IV: After the Fall
The search for the causes of the financial meltdown has led to some evidence of fraud and corruption. ibid.
Goldman Sachs eventually settled its fraud case by paying an unprecedented $550 million fine. ibid.
In the end, perception can matter more than the truth. The Last Days of Lehman Brothers, opening commentary, BBC 2009
Lehman Brothers: The market wasn’t appeased. There was a run on the bank. Everyone was dumping shares. Our rating was even downgraded. By Friday afternoon we were gasping for breath. ibid.
‘Is he kidding? I’m not going to go to the Fed and sit outside some goddamned boardroom which Paulson and my enemies decide my fate!’ ibid.
‘The West is fucked. We fucked it up. Oh not just you and me. All of us. The West. It’s done. It’s over.’ ibid. Hank Paulson
‘So the idea is we spin off another company – a bad bank – where we can place all of our toxic assets. And we’re gonna call is SpinCo.’ ibid. den of thieves
‘You were holding a pair of 8s, dick. And you bet the farm on the river card. The time came when you should have folded and you didn’t. Something in you told you to take the leap. You were remarkable. The blindness was exquisite. ibid. Paulson
‘The world has gone to hell in a handbasket. AIG is in the building. They’re haemorrhaging liquidity.’ ibid. Paulson to John the Barclays bloke