Despite this, the credit markets remained locked and the problem remained unsolved. Businesses closed, some went bankrupt and jobs were cut.
In March 2008, Bear Stearns became the first of the big banks to go down. Others followed and many, like insurance giant AIG, had to be bailed out.
"As recession was officially recognized in the US, American consumers stopped trekking to the malls, sinking our consumption-based economy even further"
Mortgage giants Fannie Mae and Freddie Mac were next to implode.
Suddenly the world was fixated on the fall of Wall Street. Lehman Brothers was not bailed out - creating a ripple worldwide with its many "counter parties" - and was soon driven into bankruptcy.
The Bank of America bought Merill Lynch in a transaction that is still being challenged.
On September 19, the Bush administration announced a $700bn bail-out plan to confront the crisis.
Ben Bernanke, the chairman of the Federal Reserve, would later privately say they acted to head off an imminent collapse - a new depression.