The Financial Crisis, 2007–2008

<jats:title>Abstract</jats:title> <jats:p>In the final year of George W. Bush’s presidency, a global financial crisis threatened to become the next Great Depression. The proximate cause was a collapse of what historically was a pillar of US financial institutions: residential housing. A profusion of highly risky lending to “subprime” mortgage borrowers contributed to an unparalleled bubble in that industry. When it burst, the entirety of the nation’s financial system nearly sank because of the widespread securitization of those ill-conceived loans. Trillions of dollars in assets were disappearing in days. Indeed, there were times when routine commercial activity nearly froze up because solvent businesses could not move money around to conduct normal enterprise. The oral-history accounts provided here recall how the president and his advisers worked to avoid what counselor Ed Gillespie called “the abyss”—working with a skeptical Congress. This chapter reviews those efforts, and the extreme tensions of those days.</jats:p>