New York's Financial Picture 10 Years After Bank Failures

Sep 21, 2018

The New York Stock Exchange
Credit Scott Pringle for WBGO News

This month marks the 10 year anniversary of the start of the financial crisis and market crash.

It was September 15th, 2008 when Lehman Brothers filed for bankruptcy. The collapse of the big bank shattered the too big to fail theory setting off the start of a financial crisis and huge plunge of the stock market over the months to come.

Ultimately, the government bailed out the banks. September 29th, 2008. The Dow, Nasdaq and S@P 500 all dropped between roughly seven and nine percent.

Michael Carig who runs a brokerage firm recalls that day.

“I was trying to get out of the stocks I was in as quick as I could. I guess I was lucky in a way that some of the trades that I wanted to make couldn’t be made because there was a breakdown in the system in the afternoon. Thankfully, because I didn’t sell them, they came back the next day to my delight of course, uh and I think that happened to a lot of people. Blind luck I guess. I don’t, I don’t know what else to call it."

Michael Green is in commercial banking.

“I don’t think much of the public understands how close we were to complete financial meltdown, to be going to uh ATM’s and not being able to get your cash out of the bank. I mean I think that’s literally how close we came. It may have been uh…It may not have been all financial institutions, but certainly many of the large ones.”

He was asked if he thinks it could happen again.

“Not in the short term. As a result of that, most of the banks, certainly the banks that were are involved in that type those types of transactions have put into place risk management and compliance programs coupled with regulatory oversight which is really making that much more difficult to occur.”

But Carig says yes.

“Absolutely, anytime you have people, they get too euphoric, they think that it will never go down and it does um but generally it comes back.”

Jason Abrahams is a hedge fund manager.

“I’m a little worried there we’re on the edge of another kinda bubble, another major correction, nine years since it started coming back, so it’s uh…yea it concerns me.”

He feels tariffs and overvaluation could cause another crash. The market has for the most part been rising ever since the crash a decade ago, even setting some new records. That’s drawing high fives and smiles on Wall Street, where many consider the financial capital of the world but some are still severely suffering from the crash like Ken’s buddy.

“I got a 55 year old friend that’s living with his mother. Ya know and he lived on a in a million dollar house on a hill overlooking Glendale, in L.A. So he was doing very well and he drove a Mercedes. And now he’s got nothing because of the market crash.”

He continued.

“He was in the structural engineering field and therefore when that happened, the market crash, there was no work in that entity, in the real estate and whatnot and so that really took a lot of hit on a lot of people in those areas.”

Click above to hear Scott Pringle's feature.