Ten years ago Wednesday, French bank BNP Paribas blocked withdrawals from hedge funds that specialized in U.S. mortgage debt. That Aug. 9, 2007, marked the beginning of a credit crisis that caused investment bank Lehman Brothers to collapse a year later and usher in the Great Recession of 2007-09.
"It's true that the subprime mortgage crisis in the U.S. started a little earlier, in February 2007, but the money markets did not notice until that day in August," said Alexis Stenfors, a former trader for Merrill Lynch who famously lost his company $450 million on currency bets. He is now a business professor at Britain's University of Portsmouth.
"We realized that this problem was going to be a lot bigger than American subprime mortgages and that it was going to spread to all markets — everywhere."
A decade after the meltdown, here's what's changed.