Sept. 15, 2008: Lehman Brothers filed for bankruptcy. Like a spark to dry tinder, Lehman's collapse set off a chain of events that reverberate through the economy to this day.
Money markets, banks, the auto industry and homeowners had to be bailed out in the weeks, months and years following the inciting incidents. The crisis revealed deep fault lines in the economy that regulators have attempted to address but have yet to eradicate.
To mark the occasion and chart the progress from the depths of economic turmoil, President Barack Obama gave a speech on the work still to be done in strengthening the economy.
"My No. 1 priority since taking office was making sure we recover from the worst economic crisis of our lifetime," the president said in his speech today. "When I took office, the economy was shrinking by an annual rate of more than 8 percent; businesses were shedding 800,000 jobs each month."
Along with the president's speech, the administration also released a report from the National Economic Council, the president's economic advisers, the Domestic Policy Council, and the Office of Management and Budget.
Here's how the efforts to recover have fared so far, according to the report.
The Treasury is making money from the recovery
As of Aug. 13, of the $700 billion originally approved for the Troubled Asset Relief Program by Congress, the Treasury has disbursed $421 billion. Already, the Treasury has received nearly $422 billion in payments recovered on the TARP-related rescue programs, together with Treasury's additional proceeds from American International Group.
AIG is doing fine and paid everyone back
Rather than lose tens of billions of dollars, the administration successfully recouped the federal government’s full support for AIG, along with positive returns of nearly $23 billion. Despite widespread predictions that American taxpayers stood to lose billions on its $182.3 billion in assistance to AIG, the administration successfully recouped more than $205 billion for a total positive return to the taxpayers of $22.7 billion, while AIG's loan from the Federal Reserve was fully repaid.
Made in the USA still applies to cars
The Detroit Three American automakers are profitable. In 2011, the auto industry reached an important milestone when all three major American automakers posted net profits for the first time since 2004. In fact, each of the Detroit Three has posted positive net income every year since. The growing profitability of the American auto industry is reflected in the growing value of General Motors and Ford, which are both up more than 50 percent over the past year.
Plus American auto sales are growing, according to the report.
Millions of homeowners kept their homes, and housing is improving
- The Home Affordable Modification Program led to 7 million homeowners getting government or private mortgage modifications -- twice as many as those who went through foreclosure during the Obama presidency. The program has directly helped more than 1.2 million borrowers to date, and an additional 1.9 million homeowners have received foreclosure prevention assistance through the Federal Housing Administration.
- Home prices are rising at the fastest pace in seven years, up more than 12 percent in the past year. Rising prices have brought nearly 5 million families out from being underwater in the last six quarters.
Small businesses are rebounding
The Small Business Lending Fund successfully increased the amount of capital available for small business. As of March 31, SBLF participants increased their small business lending by $9 billion over a $36.3 billion preprogram baseline. More than 80 percent of these participants had increased their lending by 10 percent or more.
Households have more money, and jobs are coming back
- By the end of 2012, Americans had recovered $14.7 trillion of aggregate household net worth, recouping 91 percent of the recession losses.
- Housing wealth is up $2.8 trillion since hitting a low at the beginning of 2009.
- Strong employment growth has also aided in household wealth recovery. As of July, the economy had added private sector jobs for 42 consecutive months, and a total of 7.5 million jobs had been added over that period. American manufacturers have added more than 500,000 jobs since January 2010, the strongest period of job growth since 1989.
And it is hoped that this particular horse will never get out of the barn again, thanks to financial reform.
Key Wall Street reforms have been passed into law and are being implemented to prevent the problems that arose with AIG from happening again, including the Financial Stability Oversight Council's designation of AIG for enhanced standards and oversight by the Federal Reserve. The FSOC designation of AIG will subject it to enhanced prudential standards and Federal Reserve regulation, including tough capital, liquidity and stress-testing requirements.
Today marks five years since the first day of the financial crisis. Do you think you're doing better than you were five years ago?
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Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers.