Looking Back: Wall Street, a Year Later
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This is the VOA Special English ECONOMICS REPORT.
One year ago, the United States financial system was in danger of collapse. One of Wall Street's oldest investment houses had just sought protection from its creditors. The Lehman Brothers bankruptcy on September fifteenth was a shock to the system, but not the only one.
A week earlier, the government had seized Fannie Mae and Freddie Mac. These companies help finance most American housing loans. And one day after Lehman's failure, the government decided that the huge insurer A.I.G. was too big to fail. The Federal Reserve rescued the American International Group with an eighty-five billion dollar loan.
But soon, credit markets around the world slowed to a halt on fears about the health of banks. By early October, Congress passed the Troubled Asset Relief Program, a rescue plan for the financial system.
Banks and other financial companies have received more than two hundred billion dollars. But ten banks agreed in June to repay almost seventy billion of that. And so far, the government has earned about four billion on its investments.
But taxpayers still own almost eighty percent of A.I.G. They also hold big shares of Citigroup and a number of other banks, as well as sixty percent of General Motors.
On Monday, the anniversary of the Lehman collapse, President Obama renewed his call for reform of financial supervision. He said in a speech on Wall Street that some of the "old ways" that led to the crisis have already returned.
BARRACK OBAMA: "That's why we need strong rules of the road to guard against the kind of systemic risks we have seen. And we have a responsibility to write and enforce these rules to protect consumers of financial products, taxpayers, and our economy as a whole."
Fed Chairman Ben Bernanke said Tuesday that the recession "is very likely over at this point." But he said the labor market could remain weak through next year.
Next week, leaders of the world's largest economies will meet in Pittsburgh, Pennsylvania. They will discuss economic policies and ways to strengthen financial regulation after the crisis. But the Group of Twenty summit also comes as the United States and China face a growing trade dispute.
Last week the Obama administration placed high import taxes on Chinese tires. The aim is to stop what American officials call a "harmful" increase in tire imports. China, in turn, said this week that it will investigate imports of American chicken products and auto parts. China also asked the World Trade Organization to intervene, to avoid a trade war.
And that's the VOA Special English ECONOMICS REPORT, written by Mario Ritter. I'm Steve Ember.