Like the assassination of Archduke Franz Ferdinand that touched off World War I, the collapse of Lehman Brothers, the largest underwriter of bonds backed by subprime loans when it declared bankruptcy on Sept. 15, 2008, was an event whose repercussions extended far beyond its executives, investors and creditors. It touched off a financial crisis that's affected employment and earnings of the middle class.

The bankruptcy of the 158-year-old Lehman Brothers wasn't the first sign of trouble in the economy, or in the mortgage backed securities market–the bad investments that brought the firm down. More than a year earlier, in August 2007, Lehman Brothers shut down its own subprime mortgage lending unit, BNC Mortgage, laying off 1,200 workers. In February 2008, President George W. Bush signed a stimulus bill–a $152 billion mix of tax cuts and direct payments. In March, the Federal Reserve had stepped in to carve up and sell off Bear Stearns, another venerable financial firm about to go south.

A sign that the crisis that began with Lehman's collapse is still ongoing came yesterday, when the Federal Reserve's Open Market Committee, which sets interest rates and regulates the money supply, announced it would print an additional $40 billion a month, and use it to buy mortgage backed securities from Fannie Mae and Freddie Mac, the quasi-governmental patronage factories whose finances were so bad that the federal government had to take them over in the wake of the Lehman Brothers collapse. Currently, the Securities and Exchange Commission is suing former Fannie and Freddie executives for misleading investors about the quality of the loans it marketed to them as investments.

Perhaps nothing better captures the collapse than the tale of American International Group, the financial behemoth that insured other financial firms against losses on their complex investments. The government took over the firm in that fateful month of September 2008, and used taxpayer money to make good those investment houses who relied on AIG to protect them from their own bad deals. By March 2009, it became clear just who taxpayers were bailing out: firms like Goldman Sachs, France's Societe Generale, Deutsche Bank and UBS, the Swiss firm that helped wealthy Americans evade tens of millions of dollars in taxes–and counting. During the unwinding of AIG, executives in its financial services division were paid $540 million in bonuses.

In trying to unravel the causes of the 2008 market meltdown, the congressionally appointed Financial Crisis Inquiry Commission noted in conclusions to its final report the explosive growth of the financial sector–by 2006, it generated 27 percent of the corporate profits in the United States, up from 15 percent in 1980. They also noted that the ten biggest commercial banks–the too big too fail institutions–held 55 percent of bank deposits, more than twice the percentage in 1990.

One of the causes of the concentration and interconnectedness of financial firms that made the collapse of a Lehman Brothers or an AIG imperil the whole system, was passage of a 1999 bill that did away with Depression era reforms that separated the businesses of banks, brokerages and insurers called Gramm Leach Bliley Act. Three Republican members of Congress sponsored the bill; President Bill Clinton, a Democrat, signed it.

When he formally nominated President Barack Obama for a second term in Charlotte, Clinton blamed Republican policies for the market meltdown. "They want to get rid of those pesky financial regulations designed to prevent another crash and prohibit future bailouts," he said. That sounds remarkably like the signing statement Clinton issued on signing Gramm Leach Bliley, in which he stated, "The Act repeals provisions of the Glass-Steagall Act that, since the Great Depression, have restricted affiliations between banks and securities firms. It also amends the Bank Holding Company Act to remove restrictions on affiliations between banks and insurance companies. It grants banks significant new authority to conduct most newly authorized activities through financial subsidiaries." He added, "Removal of barriers to competition will enhance the stability of our financial services system."

As the events of the fall of 2008–the collapse of financial firms and the government takeover of others, culminating in passage of the Emergency Economic Stabilization Act in October 2008, which required hundreds of billions of dollars in taxpayer money to stabilize banks and brokerages, Clinton could not have been more wrong.

Politicians were not solely to blame–the financial industry itself had quite a bit to do with creating the regulatory environment that led to its downfall. As the Financial Crisis Inquiry Commission noted, "…the financial industry itself played a key role in weakening regulatory constraints on institutions, markets, and products. It did not surprise the Commission that an industry of such wealth and power would exert pressure on policy makers and regulators. From 1999 to 2008, the financial sector expended $2.7 billion in reported federal lobbying expenses; individuals and political action committees in the sector made more than $1 billion in campaign contributions."

Clinton raised campaign cash from the industry; in 1996 the Center for Public Integrity found that Goldman Sachs was his top career campaign contributor. He also drew from Goldman Sachs his second Treasury Secretary, Robert Rubin, who promoted Glass-Steagall repeal for Citigroup, which hired Rubin after he left government service. And the financial industry continues to wield considerable political influence today. UBS' president of U.S. operations, Robert Wolf, is a top bundler for President Barack Obama and has vacationed and golfed with the president. In the 2012 election cycle, securities and investment firms have contributed a staggering $172.6 million to campaigns, PACs and parties. Mitt Romney, the Republican nominee for president, is the industry's top recipient in the current election cycle, while Obama is the top recipient of all time. Commercial banks have pumped in $33.4 million, again favoring Romney more than any other candidate.

Bloomberg News showed as clear a sign of the industry's influence on policy, unearthing emails from a top banking lobbyist and former SEC official, explaining to the agency how it should craft regulations mandated under the Dodd Frank Wall Street Reform and Consumer Protection Act–Congress' response to the crisis.

While Wall Street got its bailouts and bonuses from Washington, the middle class hasn't fared so well–Census data shows it continues to shrink–as the number of those whose annual incomes wouldn't be enough to buy a ticket to some campaign fundraising events held by the Romney or Obama campaigns continues to fall further and further behind.