After Lehman

Malaise spreads from Wall Street banks to Main Street pocketbooks

Marketplace Staff Sep 11, 2013

Perhaps the most significant component of the fallout from the collapse of Lehman Brothers and other big banks: fear. Anyone and everyone involved with the financial system suddenly became a lot more conservative, worrying about whether consumers would be able to pay their bills, and what investments would turn out to be junk. As in the housing market, credit card lenders had handed out plastic to anyone with a pulse. Now, frightened by the prospect of holding a bunch of useless receivables that no-one would ever be able to pay, lenders decided to tighten up their standards again. That slowed the flow of cash into peoples’ pocketbooks and began to strangle an already stuttering economy.

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