NEW YORK CITY—When investment bank Bear Stearns was sold in March 2008 for what was initially just $2 a share to JPMorgan Chase, GlobeSt.com reported that the capital markets were “whipsawed” by the transaction and by the fact that the deal was brokered by the then-chairman of the Federal Reserve, Ben Bernanke. “It is rare for the monetary authority to step into a private market transaction,” GlobeSt.com's Erika Morphy reported in March of '08. “However, given Bear Stearns' reach into the capital markets and its size—one of the largest brokers and underwriters in the financial markets—government involvement was all but expected.”

But as unsettling as the collapse of one of Wall Street's most venerable institutions was, it proved to be only a warning shot across the bow compared to what would transpire six months later. By the morning of Sept. 15, Bank of America would acquire another faltering investment banking giant—Merrill Lynch—while Lehman Brothers filed for the largest bankruptcy in US history.

On the West Coast, the FDIC seized the failing savings and loan giant Washington Mutual and sold it to JPMorgan for $1.9 billion later that same month, in the nation's largest bank failure. On the East Coast, Wachovia, its losses mounting, agreed to a $15-billion merger with Wells Fargo.

In the insurance sector, AIG was compelled to accept a bailout package from the Fed; However, unlike the other financial institutions that teetered that fall, AIG came back from the brink, fully repaying its government assistance package and relaunching its brand.

The consequences of the '08 financial crisis were both immediate and long term. As an example of the immediate impact, Hugh Finnegan, an attorney in the real estate group at Sullivan & Worcester LLP, told GlobeSt.com's Natalie Dolce that the result of financial industry failure in Manhattan would most definitely have an effect on the city's office leasing market. “

“The leasing market will soften," he says. 'There will be a lot of vacancies created wherever Lehman has large chunks of space.” Further, he added, “If Merrill Lynch, Bank of America, AIG, Washington Mutual and others start to lay off, there may be a significant number of vacancies. This will further erode the class A market in New York City.”

And there was other commercial space affected by the collapse and sale of large banks. Most respondents to a GlobeSt.com poll predicted that a big wave of brank branch closings would be seen in the near future, and C. Bradley Mendelson, executive managing director with Cushman & Wakefield, was inclined to agree.

“As far as other banks taking over these spaces when the leases run out, there aren't many other banks,” Mendelson told GlobeSt.com in October '08. “You're going to see some more bank mergers, and the numbers of different banks will dwindle. The space will go back to the landlord, and he can lease it to whomever he wants. If there's another bank, maybe they'll take it. But there really is no more bank business at the moment. That's pretty much dried up.”

Longer term, the cratering of the capital markets led to a commercial real estate trough that would take years to escape. Debt was difficult to come by, particularly for development and construction. Vacancies ticked upward as millions lost their jobs through the early months of 2009. A lack of investment sales made pricing a challenge on those assets that did come to market.

However, the tsunami of distressed assets at fire-sale prices, similar to what we saw in the early 1990s, never quite came to pass. Instead, “extend and pretend” and “kick the can down the road” became industry catchphrases.