Think of this as the month when Fannie and Freddie entered everyday speech as something other than friendly names, when Americans realized that WaMu wasn’t an over-performing Orca at SeaWorld but a massive failing savings bank, and that Wachovia wasn’t a watch brand, but a finance group, as well as the fourth largest bank holding company in the U.S.
And the faster we learned those names, the faster they disappeared into the dustbin of history. First, Bear Stearns hit the skids, then Lehman Brothers vanished into the ether just as Fannie Mae and Freddie Mac were being absorbed by the U.S. government. Merrill Lynch headed directly down the gullet of Bank of America. Just behind was a desperate American International Group (A.I.G.), the world’s largest insurer, in a state of financial collapse, only to be bailed out by the Bush administration. Next, Washington Mutual (or WaMu) fell into the clutches of JP Morgan Chase, and Wachovia into the embrace of Citigroup, just as five big banks in Europe were being "rescued" and two of them essentially nationalized. Meanwhile, other banks in the U.S., Europe, Russia, and East Asia, as well as brokerage houses, and even hedge funds seemed to be stumbling like so many zombies to the brink of catastrophe, teetering over the abyss of… well, we really don’t yet know what.
As the stock market began its trip south, the Bush administration made one of its typical grabs for unparalleled executive power (to be vested in the person of the Secretary of the Treasury). Unfortunately — for its top officials — they had a tad of a "credibility gap" problem and, after an outpouring of popular anger at the thought of bailing out the rich and improvident, a revolt in the House of Representatives by anxious Democrats and a horde of angry conservative Republicans got the administration’s plan voted down. Politicians across the political spectrum, especially those up for election in competitive districts, surely feared being labeled supporters of the "bailout party," especially when the bailout was to be run by the gang that couldn’t shoot straight in Iraq, Afghanistan, Pakistan, or New Orleans.