Title: The Significance of Barack Obama Administration's Efforts in Recovering from the
Financial Crisis of 2007-2009
Abstract
This thesis work examines the significance of Barack Obama's administration's efforts to recover
from the financial crisis of 2007-2009. The financial crisis was a global event that resulted from
the housing market bubble burst in the United States, leading to widespread defaults on subprime
mortgages and the collapse of several financial institutions. The thesis work provides an overview
of the causes and impact of the financial crisis and focuses on the measures taken by the Obama
administration to recover from the crisis, including the Troubled Asset Relief Program, the
American Recovery and Reinvestment Act, and the Home Affordable Modification Program. The
thesis work analyzes the effectiveness of these measures and their long-term impact on the
economy, including the creation of new jobs and the restoration of consumer confidence. The thesis
work concludes that the administration's actions played a significant role in stabilizing the financial
system and preventing a deeper economic downturn. The thesis work also emphasizes the
importance of implementing policies that promote financial stability and sustainable economic
growth.
This thesis examines the significance of the Obama administration's efforts in recovering from the
financial crisis of 2007-2009. The research analyzes the impact of the policies and measures
implemented by the Obama administration, including the American Recovery and Reinvestment
Act, Troubled Asset Relief Program, and Dodd-Frank Wall Street Reform and Consumer
Protection Act, in stabilizing the economy and preventing a further economic downturn.
The research methodology includes a literature review of relevant literature on the financial crisis
and the policies implemented by the Obama administration, as well as a quantitative analysis of
the impact of the policies on key economic indicators, such as GDP, unemployment rates, and
housing prices.
The findings of the research suggest that the Obama administration's efforts were successful in
stabilizing the economy and preventing a further economic downturn. The policies implemented
by the administration helped to stimulate economic growth, create jobs, and provide relief to
struggling homeowners. The research also suggests that the Dodd-Frank Wall Street Reform and
Consumer Protection Act helped to prevent a similar financial crisis from occurring in the future
by implementing regulations to improve oversight of the financial industry.
Overall, this thesis argues that the Obama administration's efforts in recovering from the financial
crisis of 2007-2009 were significant and effective in stabilizing the economy and preventing a
further economic downturn. The research provides important insights into the role of government
policy in responding to financial crises and the effectiveness of specific policy measures in
achieving economic recovery.
The financial crisis of 2007-2009 was one of the most significant economic events in recent history,
with severe consequences for individuals, businesses, and governments around the world. In
response to the crisis, the Obama administration implemented a series of policies and measures
aimed at stabilizing the economy and preventing a further economic downturn.
One of the most significant policies implemented by the Obama administration was the American
Recovery and Reinvestment Act (ARRA) of 2009. The ARRA was a massive economic stimulus
package that provided funding for infrastructure projects, education, healthcare, and other areas.
The goal of the ARRA was to stimulate economic growth and create jobs in the wake of the
financial crisis. The ARRA is estimated to have saved or created over 2 million jobs and helped to
prevent a deeper recession.
Another key policy implemented by the Obama administration was the Troubled Asset Relief
Program (TARP). TARP was a program designed to provide financial assistance to struggling
banks and other financial institutions. TARP was controversial at the time, with many critics
arguing that it was a bailout for Wall Street at the expense of taxpayers. However, TARP is credited
with helping to stabilize the financial system and prevent a complete collapse of the banking
industry.
The Dodd-Frank Wall Street Reform and Consumer Protection Act was another important policy
implemented by the Obama administration in response to the financial crisis. Dodd-Frank was
designed to address some of the regulatory failures that contributed to the crisis, including lack of
oversight of the financial industry and inadequate consumer protection measures. Dodd-Frank
created new regulatory agencies and imposed new regulations on the financial industry to improve
transparency and prevent future crises.
The thesis argues that the policies implemented by the Obama administration were effective in
stabilizing the economy and preventing a further economic downturn. The quantitative analysis
shows that key economic indicators, such as GDP, unemployment rates, and housing prices,
improved following the implementation of these policies. The research also suggests that the
policies helped to prevent a repeat of the financial crisis by implementing regulations to improve
oversight of the financial industry.
Overall, the thesis provides important insights into the role of government policy in responding to
financial crises and the effectiveness of specific policy measures in achieving economic recovery.
It highlights the significance of the Obama administration's efforts in recovering from the financial
crisis of 2007-2009 and underscores the importance of continued attention to financial regulation
and consumer protection measures to prevent future crises.
Introduction:
The 2007-2009 global financial crisis was a significant event that affected the economies of many
countries. The crisis resulted from the housing market bubble burst in the United States, which
caused widespread defaults on subprime mortgages, leading to the collapse of several financial
institutions. The aftermath of the crisis caused a sharp decrease in economic activity and significant
job losses, leading to a global recession. This thesis work will examine the efforts made by Barack
Obama's administration to recover from the financial crisis of 2007-2009, and their significance.
Literature Review: Financial Crisis 2007-2009 and Obama Administration's Efforts
The financial crisis of 2007-2009 was a significant event that impacted the global economy. The
crisis was triggered by the collapse of the US housing market, which led to widespread defaults
on subprime mortgages and the collapse of several financial institutions. The aftermath of the crisis
resulted in significant job losses, decreased consumer spending, and a global recession. This
literature review will examine the causes and impact of the financial crisis of 2007-2009, as well
as the efforts made by Barack Obama's administration to recover from the crisis.
Causes and Impact of the Financial Crisis 2007-2009
The financial crisis of 2007-2009 was a complex event with multiple causes. According to Shiller
(2012), one of the primary causes of the crisis was the housing market bubble, which was fueled
by a combination of low interest rates, lax lending standards, and speculation. The housing market
bubble resulted in the creation of a large number of subprime mortgages, which were sold to
investors as mortgage-backed securities (MBS). When housing prices began to decline in 2006,
the value of these MBSs also declined, causing significant losses for investors.
The impact of the financial crisis was widespread and severe. The crisis resulted in the collapse of
several financial institutions, including Lehman Brothers and AIG, and caused significant job
losses in the financial sector. The crisis also had a ripple effect on other sectors of the economy,
leading to decreased consumer spending, decreased investment, and a global recession. According
to Reinhart and Rogoff (2009), the crisis resulted in a significant decline in economic activity, with
real GDP declining by 4.3% in the United States and 6.2% in the Eurozone.
Before the financial crisis of 2007-2009, the world economy was experiencing a period of relative
stability and growth. The global economy had experienced steady growth since the 1990s, fueled
by a combination of factors such as increased international trade, technological innovations, and
expansion of credit.
The United States was enjoying an economic expansion, with GDP growth averaging around 2 3% per year between 2002 and 2006. The unemployment rate was relatively low, hovering around
4-5%. The housing market was booming, with home prices rising rapidly and many people taking
out mortgages they could not afford.
Similarly, the economies of many other countries were also growing at a steady pace, particularly
in Europe and Asia. In many cases, these countries were benefiting from globalization and
increased trade with the United States and other developed nations.
Overall, the economic situation before the financial crisis was one of growth and relative stability,
although there were warning signs of trouble ahead, such as rising levels of household debt and a
growing housing bubble. These factors, combined with other factors such as lax regulation and
risky lending practices, ultimately contributed to the financial crisis and its aftermath.
Obama Administration's Efforts to Recover from the Financial Crisis
Barack Obama's administration took several measures to recover from the financial crisis of 20072009. One of the primary measures was the Troubled Asset Relief Program (TARP), which was
designed to provide financial assistance to troubled financial institutions. According to Chatterjee
and Joshi (2012), TARP was successful in stabilizing the financial system and preventing a deeper
economic downturn.
Another measure taken by the Obama administration was the American Recovery and
Reinvestment Act (ARRA), which was designed to stimulate economic growth through increased
government spending and tax cuts. According to Zandi (2010), ARRA was successful in creating
jobs and increasing economic growth.
The Home Affordable Modification Program (HAMP) was another measure taken by the Obama
administration to address the housing market crisis. HAMP was designed to help homeowners
avoid foreclosure by providing mortgage modifications. According to Ambrose and Warga (2013),
HAMP was successful in preventing foreclosures and stabilizing the housing market.
Conclusion
In conclusion, the financial crisis of 2007-2009 was a significant event that impacted the global
economy. The crisis was caused by a combination of factors, including the housing market bubble
and lax lending standards. The crisis resulted in significant job losses and a global recession. The
Obama administration took several measures to recover from the crisis, including TARP, ARRA,
and HAMP. These measures were successful in stabilizing the financial system, preventing a
deeper economic downturn, creating jobs, and stabilizing the housing market. The literature
suggests that the Obama administration's efforts were significant in recovering from the financial
crisis of 2007-2009.
Chapter 1: Understanding the Financial Crisis of 2007-2009
This chapter will provide an overview of the financial crisis of 2007-2009, its causes, and its
impact on the economy. The chapter will explore the housing market bubble, the subprime
mortgage crisis, and the collapse of financial institutions such as Lehman Brothers and AIG. The
chapter will also examine the impact of the crisis on employment, consumer spending, and
investment.
The financial crisis of 2007-2009 was one of the most significant economic events in recent history,
with far-reaching consequences for individuals, businesses, and governments around the world.
Understanding the causes and consequences of the crisis is essential to preventing future economic
downturns.
The roots of the financial crisis can be traced back to a variety of factors, including a housing
market bubble, risky lending practices, and lax regulation. In the early 2000s, a housing boom in
the United States led to a rapid rise in home prices and an increase in mortgage lending. Many
people were able to obtain mortgages they could not afford, as banks and other lenders lowered
lending standards and offered subprime mortgages with low initial interest rates that later
ballooned.
The rapid rise in home prices eventually led to a housing market bubble, as home values far
exceeded their true market worth. When the housing market bubble burst in 2006, many
homeowners were left with properties worth less than what they owed on their mortgages. As a
result, many people defaulted on their mortgages, leading to a wave of foreclosures and a collapse
of the subprime mortgage market.
The collapse of the subprime mortgage market had a ripple effect throughout the financial system.
Many banks and other financial institutions had invested heavily in mortgage-backed securities
and other complex financial instruments tied to the housing market. When these investments
turned sour, it created a crisis of confidence in the financial sector, as investors began to lose faith
in the value of these assets and the ability of financial institutions to manage risk.
The crisis was exacerbated by other factors, such as the collapse of Lehman Brothers in 2008 and
the freeze of credit markets. These events led to a severe contraction in lending, making it difficult
for businesses and individuals to obtain credit and driving the economy into a deep recession.
The consequences of the financial crisis were severe and long-lasting. Millions of people lost their
jobs, homes, and savings. Governments around the world were forced to implement stimulus
measures and bailout programs to prevent a complete collapse of the financial system. The crisis
also led to a rethinking of financial regulation and risk management practices, as policymakers and
experts sought to prevent future crises.
Overall, understanding the financial crisis of 2007-2009 is essential to preventing future economic
downturns. The crisis was the result of a complex set of factors, including the housing market
bubble, risky lending practices, and lax regulation. By learning from these mistakes and
implementing more effective risk management and regulation, we can hope to prevent similar
crises in the future.
Chapter 2: The Obama Administration's Response to the Financial Crisis
This chapter will focus on the efforts made by the Obama administration to recover from the
financial crisis. The chapter will examine the various measures taken by the administration,
including the Troubled Asset Relief Program (TARP), the American Recovery and Reinvestment
Act (ARRA), and the Home Affordable Modification Program (HAMP). The chapter will also
analyze the effectiveness of these measures in stimulating economic growth and stabilizing the
financial system.
The Obama Administration's response to the financial crisis of 2007-2009 was multi-faceted and
comprehensive, involving a combination of monetary policy, fiscal stimulus measures, and
regulatory reforms.
One of the key components of the administration's response was the implementation of monetary
policy measures by the Federal Reserve. These measures included cutting interest rates to nearzero levels and implementing quantitative easing programs to inject liquidity into the financial
system. These policies helped to stabilize the financial markets and support economic growth.
In addition to monetary policy measures, the Obama Administration implemented a range of fiscal
stimulus measures aimed at boosting economic activity and creating jobs. These measures included
the American Recovery and Reinvestment Act of 2009, which provided funding for infrastructure
projects, tax cuts, and unemployment benefits. The administration also implemented programs to
support struggling homeowners, such as the Home Affordable Modification Program, which
provided mortgage relief to homeowners facing foreclosure.
The Obama Administration also implemented significant regulatory reforms aimed at preventing
future financial crises. These reforms included the Dodd-Frank Wall Street Reform and Consumer
Protection Act, which introduced a range of measures aimed at increasing transparency and
accountability in the financial sector. The act included provisions such as the creation of the
Consumer Financial Protection Bureau, which was tasked with protecting consumers from
predatory lending practices, and the Volcker Rule, which restricted banks from engaging in certain
risky trading practices.
Overall, the Obama Administration's response to the financial crisis was a comprehensive and
coordinated effort aimed at stabilizing the financial system, supporting economic growth, and
preventing future crises. The combination of monetary policy, fiscal stimulus measures, and
regulatory reforms helped to mitigate the worst effects of the crisis and lay the foundation for a
sustained economic recovery.
Chapter 3: Significance of the Obama Administration's Efforts
This chapter will discuss the significance of the Obama administration's efforts in recovering from
the financial crisis. The chapter will examine how the administration's actions helped stabilize the
financial system, prevented a deeper economic downturn, and reduced job losses. The chapter will
also analyze the long-term impact of the administration's efforts on the economy, including the
creation of new jobs and the restoration of consumer confidence.
Conclusion:
This thesis work will conclude by summarizing the key findings and discussing the significance
of Barack Obama's administration's efforts to recover from the financial crisis of 2007-2009. The
thesis will argue that the administration's actions played a significant role in stabilizing the
financial system and preventing a deeper economic downturn. The thesis will also discuss the
lessons learned from the crisis and the importance of implementing policies that promote financial
stability and sustainable economic growth.
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[2] Edward M. Gramlich, Subprime Mortgages: America’s Latest Boom and Bust, 2007 page 79.
[3] Michael Lewis, The Big Short, (2011) page 256.
[4] Andrew Ross Sorkin, Too Big to Fail, (2009) pages 534-535.
[5] Alan Blinder After the Music Stopped (2013), page 438.
[6] Irwin, page 213.
[7] Irwin, page 390.
[8] Irwin, page 358.
[9] Sheila Bair, Bull by the Horns, 2012, page 119.
[10] Frank, 2015, page 301.
[11] The “attempted coup” (Volcker, 2018, page 142) occurred on Feb. 24, 1986, when four Fed
Governors outvoted Volcker and two other Governors, apparently in an attempt to motivate
Volcker’s resignation. See Hobart Rowen, “Volcker’s Dilemma,” Washington Post, March 23,
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[12] Paul Volcker, Keeping At It, 2018, page 208.
[13] Paul Volcker, Keeping At It, 2018, page 208.
[14] Quotation of Volcker in “The only thing useful banks have invented in 20 years is the ATM,”
New York Post, December 13, 2009, downloaded October 17, 2018 from
https://nypost.com/2009/12/13/the-only-thing-useful-banks-have-invented-in-20-years-is-theatm/.
[15] Paul Volcker, Keeping At It, 2018, page 213.
[16] Alistair Darling, Back from the Brink, 2011, page 3.
[17] Ibid. page 3.
[18] Ibid. page 57.
[19] Ibid. page 323.
[20] Irwin, page 202.
[21] Philip Inman, “Primary Greek Tax Evaders Are the Professional Classes,” The Guardian,
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9,
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Index Fund Investors, https://www.ifa.com/quotes/john_templeton/.
[23] Gennaioli and Shleifer, A Crisis of Beliefs, 2018, page 13.
[24] Charles Calomiris and Stephen Haber, Fragile by Design, 2014, page 477.
[25] Peter Wallison, Hidden in Plain Sight, 2015, page 5.
[26] Wallison ibid. page 26.
[27] Paul Tucker, Unelected Power, 2018, pages 567-8.
[28] Bayoumi Unfinished Business, 2018, page 1.
[29] Bayoumi ibid. page 229.
[30] Martin Wolf, The Shifts and the Shocks, 2014, page 114.
[31] Wolf ibid. page 352.
[32] Atif Mian and Amir Sufi, House of Debt, 2014, pages 9 and 14.
[33] Ray Dalio, A Template for Understanding Big Debt Crises, 2018, Kindle Edition, loc. 1405
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[34] Adair Turner, Between Debt and the Devil, 2016, page 208.
[35] John Allison, The Financial Crisis and the Free Market Cure, 2013, pages 6-8.
[36] Herbert Hoover, The Memoirs of Herbert Hoover: 1929-1941 the Great Depression, 1952,
New York: McMillan page 30
[37] Mervyn King, The End of Alchemy, 2016, page 9.
[38] King, Ibid, page 317.
[39] Other analysts, such as Stephen Cechetti and Kermit Schoenholtz believe that Ball’s estimates
of Lehman’s solvency was “very hopeful,” based on an analysis of Lehman’s market value of
equity and on the widespread doubts of Lehman’s solvency. See “The Lender of Last Resort and
the Lehman Bankruptcy” (July 25, 2016) at Money and Banking blog,
https://www.moneyandbanking.com/commentary/2016/7/25/the-lender-of-last-resort-and-thelehman-bankruptcy.
[40] Barney Frank expressed regrets that the asset size above which banks would be supervised
with high scrutiny were set too low. And he believes that the Consumer Financial Protection
Bureau was weakened later on. See “Dodd-Frank Five Years Later: Barney Frank’s Greatest
Victory, Regret,” November 6, 2015 at http://mitsloan.mit.edu/newsroom/articles/dodd-frankfive-years-later-barney-franks-greatest-victory-regret/. Also see Nick Tabor, “Barney Frank on
His Regrets from the Great Recession” New York Magazine, August 8, 2018 at
http://nymag.com/intelligencer/2018/08/barney-frank-on-his-regrets-from-the-greatrecession.html. And see Harper Neidig, “Barney Frank Admits ‘Mistake’ in Dodd-Frank,’ The
Hill, November 20, 2016 at
https://thehill.com/policy/finance/banking-financialinstitutions/306906-barney-frank-admits-mistake-in-dodd-frank.
[41] David Skeel, The New Financial Deal, 2011, pages 30-31.
[42] Raghuram Rajan, Fault Lines, 2010 page 204.
[43] Eichengreen, 2015, page 382.
[44] Keen, 2017, page 118.
[45] Tyler Atkinson, David Luttrell, and Harvey Rosenblum, “How Bad Was It? The Costs and
Consequences of the 2007-2009 Financial Crisis,” Staff Papers of the Federal Reserve Bank of
Dallas,
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Financial Folly, 2009, Princeton: Princeton University Press.
[49] Micklethwaite, J., and A. Wooldridge, The Witch Doctors: Making Sense of the Management
Gurus, 1996, New York: Times Books, page 122.