The Motley Fool is celebrating the Banksgiving season with this tongue-in-cheek series skewering the worst banking offenses. Check it all out by clicking here.
To properly celebrate this Banksgiving season, we Fools are taking a step back into yesteryear -- and by yesteryear, we mean last year.
Thanks to the banks, times are tough. So we've gone low-tech and made a video whose quality would make a B-movie director shudder.
We stick to three of the more satirical (or is that Satanic?) elements of the crisis:
1. A look at one of the guys approving all those crazy mortgages.
2. The Behind the Music of one of the big bank mergers.
3. A fly-on-the-wall view of the original government bailout of the big banks.
We'll spare you the gory details of the financial crisis, since you've heard it all before. (But if you need a refresher, we've provided one beneath the video). And with that, we wish you a happy, gizzard-in-cheek Banksgiving. Enjoy the video!
The 1-minute financial-crisis primer
Throughout most of the 2000s, the Federal Reserve kept interest rates low, and home prices shot through the roof. Not satisfied with just the low rates, lenders offered exotic stuff* such as ARMs, liar loans, balloon payments, and pick-a-payment options to ever-lower-quality borrowers. This stuff* was then securitized with the help of Fannie Mae (NYSE: FNM ) , Freddie Mac, and Wall Street and overrated by Moody's (NYSE: MCO ) , S&P, and Fitch; meanwhile, 30-to-1 banking leverage and derivatives such as credit default swaps upped the risk-taking.
No worries, as long as housing prices continued to rise.
As with all bubbles, the music stopped and the stuff* hit the fan. Housing prices plummeted, credit went dry, and everyone was scared stuff*-less. The term "run on a bank" was no longer a quaint Great Depression expression. To quell the panic, the government stepped in with bailouts, stimulus packages, and bank consolidations, so that Bank of America (NYSE: BAC ) , Wells Fargo (NYSE: WFC ) , and JPMorgan Chase (NYSE: JPM ) all went from "too big to fail" to "too gargantuan to fail."
The video above focuses on the lenders, one of the bank consolidations (Bank of America and Merrill Lynch), and the bank bailouts.
Ready for seconds? After you’ve forwarded our video to your friends, check out the rest of our Banksgiving content by clicking here!