Lessons From the Recession: Overview—What Caused the 2008–09 Financial Crisis and Recession?

On September 15, 2008, global financial services giant Lehman Brothers went under. In the weeks and months that followed, global capital flows and trade flows spiralled downward, and a vicious cycle of credit withdrawal, halting of investment, weaker growth, and debt impairment took hold. These developments eventually resulted in the first synchronized global recession since the 1940s. This briefing looks at the events that led to the crisis. While the Lehman Brothers collapse was the catalyst, it wasn’t the cause. There were many factors behind the global financial crisis that peaked in the fall of 2008. The combination of a loss of confidence and a loss of access to credit for businesses and consumers created the conditions for recession in the U.S.—a recession that quickly spread around the globe.