2008 Woodie Awards
Forum explores causes of the current financial crisis
Jaci Bjorne
Issue date: 10/23/08 Section: News
n informational forum describing the U.S. government's role in creating the downfall of the global economy was held in Jamrich 104 on Wednesday.
During the Economic and Financial Crisis of 2008 forum, the Economics Student Association discussed and showed videos about how the crisis started, what could have been done to prevent it and what can be done in the future to keep from making the same mistakes.
The lockdown of the financial market was brought on by the government allowing some banks to fail and some to continue operating, said Robert Doepker, senior economics major.
"After Lehman Brothers' financial records came into question, other banks started looking over their shoulders wondering who might be next," he said. "When the Feds allowed Lehman Brothers to fail but helped AIG, they simply added to the fear by making bankers wonder who was going to be rescued and who was going to be allowed to fail."
After the failure of multiple U.S. banks, the federal government proposed a bailout plan to help get the remaining banks back on their feet, Doepker continued.
"The bailout plan was introduced to Congress with the objective of stabilizing the banking system at the estimated cost of $700 billion," he said. "Instead it stabilized individual banks rather than the whole banking system by simply pumping capital in banks."
Three weeks after the failure of Lehman Brothers, the global stock market crashed, said Keith Voorheis, junior economics and political science major.
"Essentially, this stems from the fact that confidence was lost in the American market," he said. "This is not just an American epidemic; it is global, because so many global markets are dependent on American markets."
For students, this economic crisis could mean no longer receiving student loans, Voorheis said.
"With the crisis, the market stopped, you might still be able to get some, but you'll have to have a really good credit score and they're not going to give them out as easily as they used to," he said. "Two years ago, there were 130 companies giving student loans, today there are 20."
During the Economic and Financial Crisis of 2008 forum, the Economics Student Association discussed and showed videos about how the crisis started, what could have been done to prevent it and what can be done in the future to keep from making the same mistakes.
The lockdown of the financial market was brought on by the government allowing some banks to fail and some to continue operating, said Robert Doepker, senior economics major.
"After Lehman Brothers' financial records came into question, other banks started looking over their shoulders wondering who might be next," he said. "When the Feds allowed Lehman Brothers to fail but helped AIG, they simply added to the fear by making bankers wonder who was going to be rescued and who was going to be allowed to fail."
After the failure of multiple U.S. banks, the federal government proposed a bailout plan to help get the remaining banks back on their feet, Doepker continued.
"The bailout plan was introduced to Congress with the objective of stabilizing the banking system at the estimated cost of $700 billion," he said. "Instead it stabilized individual banks rather than the whole banking system by simply pumping capital in banks."
Three weeks after the failure of Lehman Brothers, the global stock market crashed, said Keith Voorheis, junior economics and political science major.
"Essentially, this stems from the fact that confidence was lost in the American market," he said. "This is not just an American epidemic; it is global, because so many global markets are dependent on American markets."
For students, this economic crisis could mean no longer receiving student loans, Voorheis said.
"With the crisis, the market stopped, you might still be able to get some, but you'll have to have a really good credit score and they're not going to give them out as easily as they used to," he said. "Two years ago, there were 130 companies giving student loans, today there are 20."
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