ABSTRACT
The year 2008 will be remembered for the pictures of thousands of Lehman Brothers employees exiting their offices in New York City. Well-dressed men and women with a mix of emotions on their faces—anger, disbelief, surprise—were observed holding their boxes of mementos and personal belongings as they trudged off into the history of spectacular financial failures. Bush's "ownership society" also placed homeownership as a critical element in rectifying American racial inequalities. The US government ramped up support for homeownership, including spending $412 million on its American Dream Downpayment Initiative, providing grants for counseling, and committing more than $440 billion through Fannie Mae, Freddie Mac, and other government-backed mortgage institutions. The problem at Bear Stearns was that management vastly and devastatingly underestimated the impact of a downturn in the subprime bond market. Mark-to-model valuations proved to be wholly inadequate, and risk management failed.
