The 2008 Wall Street Bailout

Resource for Grades 6-12

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Media Type:
Video

Running Time: 5m 58s
Size: 22.2 MB

Source: FRONTLINE: "Money, Power and Wall Street"

This media asset was adapted from Episodes One and Two of FRONTLINE: "Money, Power and Wall Street."

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Funding for FRONTLINE is provided through the support of PBS viewers and by the Corporation for Public Broadcasting. Major funding for FRONTLINE is provided by the John D. and Catherine T. MacArthur Foundation and by Reva and David Logan. Additional funding is provided by the Park Foundation and by the FRONTLINE Journalism Fund.

Related Resources:

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FDR: New Deal Programs
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Finance and Responsible Lending
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The Origin of Banking
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The federal bailout of the largest Wall Street banks during the 2008 financial crisis is explored in this video segment adapted from FRONTLINE: "Money, Power and Wall Street." Prior to this unprecedented bailout, which began in September 2008, the Federal Reserve Bank in March 2008 had bailed out the first major bank on the verge of collapse—Bear Sterns. However, Treasury Secretary Henry Paulsen then informed the banks that it would be up to them to resolve the problem when Lehman Brothers was next to begin to collapse. With no federal bailout or support from other banks, Lehman Brothers soon failed. Fearful of further collapse, Paulsen bailed out the next financial institution in trouble—AIG. Yet the crisis only deepened, leading Ben Bernanke, Chairman of the Federal Reserve, to ask Paulson to get Congress to approve a massive bailout. Lawmakers were furious, but eventually approved $700 billion. The chairmen of nine major banks were forced to take funds from the bailout, which gave the federal government an ownership share in the banks, but did not force the banks to make any changes to their policies.

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Teaching Tips

Here are suggested ways to engage students with this video and with activities related to this topic.

Beginning a lesson: You may want to begin by first showing students “The Causes of the 2008 Financial Crisis” to give them more grounding in the beginning of the crisis before focusing on the bailout. Students should begin to recognize the tension between government intervention and regulation on the one hand and the "free market" on the other.
Viewing the video: Use the following suggestions to guide students' viewing of the video.
- Before: Define and differentiate some of the terminology that students will encounter in the video. For example, "bank," "investment bank," "insurance company," and "Federal Reserve." Having a baseline understanding of these terms will help students to better understand the video. You can also introduce the "players" that will be referenced in the video—such as Paulsen, Greenspan, Bernanke, and Geithner—and explain their job and the responsibilities of that job.
- During: Ask students to pay particular attention to discussions of how a bank can “fail” and what it means when the government decides to “bail out” a bank.
- After: Why did Treasury Secretary Paulsen decide to "bail out" some institutions but not others? What sorts of factors might have affected his decisions? The government eventually agreed to give the banks 700 billion dollars in TARP funds. TARP stands for Troubled Assets Relief Program. What does that mean? What is an "asset?" A "troubled asset?"
Connecting to subject areas: Have students research and prepare to discuss the stock market crash of October 1929 and how it relates to the 2008 financial crisis. In particular, students should learn about the role of the government that FDR instituted in 1933 and how that made a case for some government intervention in economic affairs. The research can be organized to support a general class discussion or a debate about the role that government should play in national financial crises. Students should consider why the decision to bail out banks in 2008 was so controversial and the reasons why some favored government interventions while others did not.