Bear Stearns/Lehman Brothers weren't obscure at all, they just didn't generally offer consumer services except to high-net-worth individuals.

Similarly, Fannie Mae/Freddie Mac were founded to buy mortgages from banks, not to deal directly with consumers. They were both founded by the federal government (hence the similar names) but are private-sector entities.

> All I thought at that time was "Who the fuck is Bear Stearns and Lehman brothers???"

They weren't really the "cause" of the crisis - they were just two companies that were especially badly hit by it. They were both "investment banks", which are essentially banks that provide services to large companies, super-wealthy individuals, governments, etc.

The primary cause of the crisis was a reshaping of the US mortgage sector which increased the risks of people defaulting on their mortgages and which most of the global finance industry failed to see coming. Essentially, mortgage providers started packaging up the mortgages they held into financial products, which they sold off to investors. For example, they might sell you an agreement for, say, $1 million dollars, which gives you the rights to 1% of the repayments on 1000 specific mortgages. Traditionally, mortgages are seen as safe - people rarely default on them because banks are unwilling to hand them out to people who aren't financially secure. And by packaging up a large number of mortgages and selling off small fractions of the whole thing, it seemingly becomes even safer - 1 or 2 of the mortgages you own a share in might default, but not all 1000 of them.

These pacakged-up mortgages were seen by the wider financial industry as extremely safe investments, and so many businesses started buying them up and using them as the core of their investment portfolio, complementing investments that were deemed more risky. However, this led to a problem. The banks that were handing out mortgages no longer cared if people were able to pay them back, because they were selling off the rights to all the repayments anyway. And these packaged-up mortgages were so lucrative that they were under a lot of pressure to create more of them. So, in the US, it became very easy to get a mortgage. Lots of people ended up with mortgages that they couldn't really afford - they were often given a period of cheaper repayments at the start of the mortgage to entice them into it.

As the economy started slowing down and house prices started falling, lots of people in the US started defaulting on their mortgages. The global financial industry suddenly discovered that many of the "safe" investments that formed the bedrock of its portfolios were plummeting in value. There was an expectation that many businesses that were especially exposed to these investments were going to fail, but at first nobody really knew which businesses were heavily exposed. This meant that financial institutions became very wary of lending to other businesses, making the problem worse - businesses that could have weathered the storm by taking on more debt found that they were unable to. And it also started to emerge that many financial institutions had been cutting corners during the good times, lying to their investors and regulators about how much risk they were exposing themselves to.

In addition what made the while thing worse is that the financial system partly fulfills a critical role for the rest of society (like water, electricity, Internet). As a result when the rot was spread it became everyone's problem. Sadly nothing fundamental got done to isolate the infrastructural role of the financial sector from the high risk greedyness part, so a future case, maybe with a different financial invention can lead to the same fallout.

>but are private-sector entities.

Wellllllll....kind of. But this is ELI5 so we'll let it slide!

Bear Stearns and Lehman Brothers were giant investment banks back in the day, but they weren't commercial banks so they didn't advertise to attract customers like the banks who might look for customers to open checking or savings accounts, or small retail brokerage accounts. Their clients/customers were corporations, large institutional investors (insurance companies, mutual funds, university endowments), other investment banks and private equity firms, high net worth investors (those with many millions to invest)... these aren't clients you advertise to on a billboard or magazine ad. Maybe you'd see ads in the Wall St. Journal or Forbes magazine. Certainly you'd see many mentions of them in such publications.

I grew up in an upper middle class area in the '80's-'90's, lawyer dad, lots of lawyer, doctor, trader types among my friends' parents and my parents' friends... I knew of Bear Stearns and Lehman even as a kid because we knew people who worked for them, my dad did work with them (he was an in-house attorney, often doing corporate acquisitions with investment bank involvement). I had friends who had internships with them during college (I myself worked at a portfolio management firm who often managed 7-8 figure accounts held by those firms), or even got jobs with them after college (one of my best friends growing up was an associate at Lehman when it went bust).

Bear Sterns and Lehman did not cause the crisis. Every bank was holding onto large amount of mortgage back securities that were toxic. Bear Sterns and Lehman while not famous in the commercial world we’re big in the investment world. So, when these two began to fail it became apparent to everyone on Wall Street just how serious the situation was and the banks began to panic. Several other banks had so many toxic assets that they would have easily failed if the U.S. government did not step in.

I research a little bit more about the financial crisis itself, and you’ll get a better understanding of what was going on. Heck, watching the big short is a good introduction.