The 2007-2009 recession was the worst financial crisis since the 1930s. However, the financial crisis of the 1930s was very different from the financial crisis of 2007-2009. The crisis of the '30s was obviously punctuated by the stock market crash, but the real damage was done by the wipeout of the banking system. Lots of small banks got wiped out. In that era, they didn’t have branch banking. If your local banker was gone, there was no source of funds in the local community. That was a severe impediment to the financial system. Also, there was no deposit insurance in those days, so people lost serious money when a bank failed.
The financial crisis was really focused on the collapse of the banking system and the shrinkage of the money supply. The 2007-2009 financial crisis was centered in the whole subprime mortgage lending arena and came about through the collapse of house prices and so many mortgage securities not paying their contracted amounts. The problem was centered more outside the commercial banking system and more in this kind of shadow banking area—the investment banks, the securities firms, the mortgage brokers and so forth.