Yes, that was part of it. But a greater part of it was checking one’s 401(k) (etc.) accounts and seeing they had dropped by 40% in one week. Then that effect was exacerbated by calling one’s mortgage company and asking about refinancing, and being told that it didn’t matter they had put over $150K down on their home, it didn’t matter that they had perfect credit and good income-—there was NO WAY to refi because their home value was 40% down from its purchase price.
No amount of “the sky is falling” from the government would have affected so many people had those two events not occurred to millions across the country in a very short timeframe.
It was predictable that we would have trouble, because some people were living off of money they took out of their houses in refinances.
People living within their means would certainly have been upset at losing so much money in the market (i know I was), but they wouldn’t have had to call about a refinance, if they were living within their means already.
I could still refinance my house if I had to, because I didn’t refinance and take out money when it ran up in value, so I still have significant equity even though my house dropped by 40% like everybody else’s house.
And frankly, I don’t think the 401Ks would have fallen as much as fast if people hadn’t been spooked by the actions of the government.