How 2008 Unfolded

The 2008 crisis wasn't one failure — it was a chain of them.

Step 1: Banks gave mortgages to people who couldn't afford them ("subprime" lending) — no income checks, adjustable rates set to spike, zero down payments.

Step 2: Wall Street bundled these mortgages into complex securities (CDOs) and sold them as "safe." Rating agencies stamped them AAA, the top grade.

Step 3: When housing prices stopped rising, borrowers defaulted, the "safe" securities became worthless, and banks holding trillions in them faced collapse.

Step 4: The whole system nearly froze. Credit markets seized, Lehman Brothers went bankrupt, and the S&P 500 fell 57% from peak to trough.