Sep. 7--INTERACTIVE: Financial Meltdown

A year ago, the jobless rate topped 6 percent for the first time in five years, but the peril posed by Tropical Storm Hanna received more attention.

We had little clue of the other storm that was approaching, coming not from nearby waters but from Wall Street.

A year ago today, the U.S. government took over faltering mortgage giants Fannie Mae and Freddie Mac because they were deemed too big to fail.

Thus began the meltdown -- the worst financial crisis since the Great Depression.

"Of course, now we're finding out how close we were to the abyss," Kent Engelke, chief economic strategist and managing director at Capitol Securities Management Inc., recalled last week

Between Labor Day and November, a series of financial crises -- bank failures, stock sell-offs, corporate takeovers and mergers, and acts of unprecedented government intervention into financial markets -- reduced once-stable companies to mere shells, wiped away billions from investment portfolios and contributed to massive layoffs.

As the turmoil of September continued through the fall, reporters at the Richmond Times-Dispatch turned to local financial analysts and experts for answers and insight. Some of their observations were fearful, others hopeful. Most were guarded.

Today, our expert sources take a look back at what they said then, reflect on what has happened in the interim and consider what the future may bring.

Sept. 7, 2008: The Bush administration says the takeover of Fannie Mae and Freddie Mac is necessary to avert the collapse of mortgage markets and more turmoil in the housing market, brought on by the subprime mortgage crisis.

Our expert then: "The problem can't be fixed overnight," said J. Alfred Broaddus Jr., former president of the Federal Reserve Bank of Richmond. "It will be a matter of years."

Broaddus now: Stepping in to the rescue was a good move. "It put a floor on how far down the market could go."

Discussions continue today about how Fannie Mae and Freddie Mac may look in the future. Their purpose, as publicly owned, government-sponsored corporations, was to help provide a robust mortgage securities market to foster housing in the United States, Broaddus said.

The problem was the two entities were gargantuan, guaranteeing or owning $5 trillion in home loans. A failure would send damaging ripples throughout the economy. Broaddus said smaller institutions with focused missions that provide government guarantees may be the answer, but it is one that will take time.

Our expert then: "In general, I am not supportive of government intervention," said Capitol Securities Management's Engelke. "But this was the right and the only thing to do. You and I will pay for it, but if we pay for it now, it will be a lot cheaper than if the companies had been allowed to go under."

Engelke now: The government acted correctly. "I believe very few really grasped the enormity of the situation. Who would have thought that Fannie Mae, Freddie Mac, AIG, Wachovia, Lehman Brothers would fail. It was an incredible time. Just thinking about it raises my stress."

Sept.