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Bailout
Crisis Home
Copyright
© 1998-2008 Roger A. Lee and History Guy Media; Last
Modified: 11.01.08
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Mortgage
and Credit Crisis Timeline
The crisis in world financial markets
began when prices started declining in the U.S. real
estate market in late 2006. So far, it is estimated that
banks worldwide have had to writedown more than $550
billion in assets. The crisis precipitated major
sell-offs in stock exchanges around the world.
A timeline of major events in the
world-wide mortgage and credit crisis:
March/April 2007:
 New
Century Financial corporation stops making new loans
as awarding high risk mortgage loans to consumers with
problematic credit histories becomes more financially
risky. The International Monetary Fund (IMF) warns of
risks to global financial markets from weakened US
home mortgage market.
June 2007:
Concerns
grow on Wall Street as two hedge funds of the New York
investment bank Bear Stearns move toward collapse due
to Bear Sterns' extensive investments in
mortgage-backed securities.
July and August 2007:
German
banks with bad investments in the American real estate
market become invol in the crisis, including IKB
Deutsche Industriebank, Sachsen LB (Saxony State Bank)
and BayernLB (Bavaria State Bank).
President George W. Bush rejects government
intervention to ease the crisis in the home mortgage
market, saying that he wants to let the market.
President Bush later promises help for struggling
homeowners as a means to help ease the mortgage
crisis.
Foreclosures
of American homes in July increased 93 percent from
the previous year, affecting 180,000
home-owners.
September 2007:
British
bank Northern Rock is in trouble, and depositors
became ver concerned; The British government and Bank
of England guarantee the deposits; the bank is
nationalized by the British government. The U.S.
Federal Reserve (also known as "The Fed") begins a
series of interest rate decreases, in an attempt to
ease the impact of the real estate slump and mortgage
crisis.
October 2007:
Profits
at financial giant Citigroup drop sharply. The
International Monetary Fund (IMF) lowers its 2008
growth forecast for the Euro to 2.1 percent from 2.5
percent, in part because of the spillover from the
U.S. subprime mortgage crisis and credit market
crunch.
December 2007:
President
Bush proposes a plan to help up to 1.2 million
homeowners pay their home loans.
January 2008:
Swiss
banking giant UBS reports a $18 billion write-down due
to its exposure to the American real estate market. In
the U.S., Bank of America acquires Countrywide
Financial, the nation's biggest mortgage lender. The
Fed slashes interest rates by three quarters of a
percentage point to 3.5 percent following a majpr
sell-off on the global markets. Another Fed cut the
end of January lowers the rate to only 3
percent.
February 2008:
Fannie
Mae, the largest financial institution for U.S. home
loans, reports a $3.55 billion loss for fourth quarter
2007, three times what had been expected.
March 2008:
On
the verge of collapse and under pressure by the Fed,
Bear Stearns has to accept a buyout by major American
investment bank JP Morgan Chase. The purchase is
backed by a $30 billion loan from the Federal
Reserve.
In Germany, Deutsche Bank reports a loss of 141
million euros for the first quarter of 2008, its first
quarterly loss in five years. Fed spearheads
coordinated push by world central banks to bolster
global economic confidence by announcing moves to pump
$200-billion liquidity into markets.
Carlyle
Capital defaults on $16.6 billion debt. The U.S.
government frees up $200 billion to support the
troubled Fannie Mae and Freddie Mac mortgage
giants.
April 2008:
The
International Monetary Fund projects a $945 billion
loss from financial crisis. G7 finance ministers agree
to institute a new wave of financial regulations to
better deal with the growing financial crisis.
June 2008:
Home
repossessions in the United States more than doubles
as the housing and mortgage crisis continues. Bear
Stearns executives are among over 400 individuals
charged in court with mortgage fraud.
July 2008:
California
mortgage lender IndyMac collapses. The condition of
Fannie Mae and Freddie Mac continues to worsen. The
U.S. Treasury and the Federal Reserve move to
guarantee the debts of Fannie Mae and Freddie Mac.
President Bush defends the move, telling Americans to
take a "deep breath" and to have "confidence in the
mortgage markets."
The
United States Congress gives final passage to
multi-billion-dollar program to address mortgage and
foreclosure crisis. Spain's largest property
developer, Martinsa-Fadesa, declares
insolvency.
September 7:
The
United States government seizes control of Fannie Mae
and Freddie Mac.
September 15:
Lehman
Brothers investment bank declares a $600-billion
bankruptcy. Merrill Lynch is acquired by Bank of
America.
September 17:
The
U.S. Government bails out AIG insurance giant for $85
billion.
September 19:
The
White House requests $700-billion
bailout plan from Congress
for all financial firms with bad mortgage securities
to free up tightening credit flow.
September 22:
The
last two standing investment banks, Morgan Stanley and
Goldman Sachs, convert to bank holding
companies.
September 26:
The
Federal government seizes Washington Mutual (WAMU) in
America's largest-ever U.S. bank failure.
September 29:
The
U.S. House of Representatives rejects mammoth
$700-billion bailout plan.
Governmental
bail-outs announced for key banks in Britain, the
Benelux countries and Germany, as well as a state
takeover of a major bank in Iceland. The British
government intervenes to save major mortgage lender
Bradford & Bingley. Netherlands, Belgium and
Luxembourg begin the process to take over substantial
parts of Belgian-Dutch banking and insurance company
Fortis.
The
German Finance Ministry announces that the government
and major banks were moving to inject billions of
Euros into troubled mortgage lender Hypo Real Estate.
Iceland government and Glitnir bank announce state
takeover of 75-percent stake in Glitnir.
September 30:
Wachovia
Bank nears collapse, and starts negotiations with
Citigroup for a takeoverby Citigroup.
October 1:
The
U.S. Senate adopts a massive
bail-out plan.
October 3:
Wells
Fargo bank and the fourth-largest U.S. bank, Wachovia,
announce their merger.
October 3:
The
largest government intervention in capital markets in
U.S. history clears the US House of Representatives,
becoming law with President Bush's signature.
Links and
Sources:
Wall
Street's 8 brutal days: Dow plunges 2,400 points, or 22%,
as panicked investors run for the
exits.--CNN, Oct. 12,
2008
The
crisis-A timeline:A shocking series of events that
forever changed the financial markets.
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