About This Series

About This Series

Sunday: Boom

Forces converge to fuel the biggest American housing boom since the 1950s: plunging interest rates, exotic new Wall Street securities that flood the mortgage industry with cash, and easier loan packages for immigrants and others with less-than-stellar credit.

Monday: Bust

Banks and other mortgage lenders notice weakness in the housing market. New houses sit unsold and foreclosures rise as people who bought homes with adjustable-rate mortgages see sharp spikes in their monthly payments. Central bankers and other watchdogs are caught by surprise.

Tuesday: Aftermath

When subprime lenders implode, the contagion spreads quickly to Wall Street, which had packaged risky mortgage loans and sold the securities around the world. Investors panic that the housing collapse will reverberate through the rest of the economy.

Today's Characters

Jackie Pons, from left, a Florida schools superintendent who had to scramble to meet payroll

Thomas A. Barron, a Florida community banker who agreed to make a $10 million overnight loan

Jamie Dimon, chief executive of J.P. Morgan, who was called upon to save floundering investment bank Bear Stearns

Alan Schwartz, chief executive of Bear Stearns

Henry M. Paulson Jr., secretary of the Treasury

Ben S. Bernanke, chairman of the Federal Reserve

Alan Greenspan, former chairman of the Federal Reserve

Kevin Connelly, a mortgage broker in Virginia

David E. Zimmer, a Wall Street consultant

A Glossary of the Bubble

Mortgage-backed security: A bond that pays investors interest derived from the cash flow of a pool of hundreds or thousands of monthly mortgage payments. The securities, also known as collateralized mortgage obligations (CMOs), often slice the pool into sections -- called "tranches" -- that each carry different maturity dates and interest rates and are sold separately to investors.

Foreclosure: A process by which a mortgage lender seizes ownership of a home, usually when the owner falls seriously behind on payments.

Credit rater: A company that Wall Street and investors rely upon to analyze bonds, mortgage-backed securities and other debt issued by companies, financial institutions and even governments. The raters -- of which the Big Three are Standard & Poor's, Moody's and Fitch -- usually give letter grades to indicate the likelihood that the debtors will default.

Federal Reserve: The U.S. central bank, known as the Fed. Its control over a special interest rate for bank-to-bank lending influences the interest rates paid by consumers and businesses.