Okay, so the $700 billion “bailout” plan is passed -- and President Bush will surely sign it. Maybe now is a good time to reflect on what the !@#$ just happened.

But in just the last month so many things have gone so wrong, it’s been hard to keep up. So here’s a recap:

September 15: After failing to find a buyer or secure a government bailout, Lehman Brothers files for bankruptcy protection.

The government’s decision to let Lehman Brothers fail set off a disastrous chain of events that included:

• Stock market plunges
• One of the largest money market funds “breaks the buck”
• The commercial paper market all but freezes
• Banks become increasingly reluctant to make overnight loans to other banks, setting off liquidity problems at major banks around the country

September 15: Unable to regain investor confidence, Merrill Lynch is purchased by Bank of America for roughly $50 billion.

September 17: After disastrous credit rating downgrade, AIG gets $85 billion loan from the Federal Reserve.

September 22: Seeing the writing on the walls (in the form of the failure of the country’s other major investment banks), Morgan Stanley and Goldman Sachs file to become bank holding companies, which would allow them to increase their capital reserves by accepting federally insured deposits. In exchange they will be subject to federal oversight. There are now no stand-alone investment banks left on Wall Street.

September 25: On the brink of failure, WaMu seized by the government; some assets sold to JPMorgan Chase.

September 29: Facing bankruptcy, Wachovia bought by Citigroup (though now Wachovia’s seeking to sell itself to Wells Fargo instead).

In one single month, the face of America’s financial system has become completely unrecognizable (compared to the last decades, at least). There are now no stand-alone investment banks left to make the kind of risky bets that got us here in the first place. Government intervention (and, as a result) regulation is the greatest it’s been since the 1930s (the bailout plan is actually a bigger government intervention than any during the Great Depression).

So, that’s what the !@#$? happened. In my next post, we’ll explore why.