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October 14th, 2008 Archive

Bloomberg: Subprime Collapse to Global Financial Meltdown: Timeline

Where were you on…

Subprime Collapse to Global Financial Meltdown: Timeline
2008-10-13 14:08:40.950 GMT

By Chris Dolmetsch
Oct. 13 (Bloomberg) — The following is a timeline of events
that led to the current global financial crisis.

March 5, 2007: HSBC Holdings Plc, Europe’s biggest bank by
market value, says the U.S. subprime market is “unstable” and
now in a “downturn,” making it the main drag on company

March 29, 2007: HSBC Chairman Stephen Green says the U.S.
subprime mortgage services division will be “run down
significantly” as the bank tries to recover from loan losses.

April 2, 2007: New Century Financial Corp., which
specialized in loans to people with poor credit, files
for bankruptcy protection after being overwhelmed by customer

July 17, 2007: Investors in two Bear Stearns Cos. hedge
funds that invested in collateralized debt obligations backed by
subprime mortgage loans are told there is no value left in the
funds, wiping out $1.6 billion originally invested.

July 19, 2007: Federal Reserve Chairman Ben S. Bernanke
tells the U.S. Senate’s Banking Committee that there may be as
much as $100 billion in losses associated with subprime mortgage

Aug. 9, 2007: BNP Paribas SA, France’s biggest bank,
halts withdrawals from three investment funds because it can’t
“fairly” value their holdings, as concern over U.S. subprime
mortgage losses roils credit markets.

Aug. 22, 2007: Countrywide Financial Corp., the biggest U.S.
mortgage lender, sells $2 billion of preferred stock to Bank of
America Corp., the biggest U.S. bank by market value, to bolster
its finances.

Sept. 14, 2007: Northern Rock Plc says the Bank of England
agreed to provide emergency funds to ease a “severe liquidity
squeeze” sparked by U.S. subprime mortgage defaults following
the first run on a British bank in more than a century.

Oct. 9, 2007: U.S. stock indexes rally to records for the
second time in a month after minutes from the Fed allayed
investor concern that the U.S. economy is heading for a
recession. The Dow Jones Industrial Average and the Standard &
Poor’s 500 Index set all-time highs, with the Dow closing at

Oct. 30, 2007: Merrill Lynch & Co. ousts Stan O’Neal as
chairman and chief executive officer after reporting a $2.24
billion loss, six times bigger than a forecast the firm offered
just three weeks earlier.

Nov. 4, 2007: Citigroup Inc. CEO Charles “Chuck” Prince,
who took over in 2003, steps down after the largest U.S. bank by
assets increased its estimate for mortgage-related writedowns.

Jan. 11, 2008: Bank of America, the biggest U.S. bank by
market value, agrees to buy Countrywide for about $4 billion.

March 14, 2008: Bear Stearns Cos. gets emergency funding
from the U.S. Federal Reserve and JPMorgan Chase & Co. as a run
on the bank depletes its cash reserves in three days.

March 16, 2008: JPMorgan Chase agrees to buy Bear Stearns
for 7 percent of its market value in a sale brokered by the Fed
and the U.S. Treasury.

April 1, 2008: Lehman Brothers Holdings Inc., the fourth-
largest U.S. securities firm, raises $4 billion from a stock sale
to quell speculation it’s short of capital.

April 9, 2008: Washington Mutual Inc. rejected an offer from
JPMorgan Chase to buy it for as much as $8 a share, or $7
billion, before announcing it received a $7 billion capital
infusion from a group led by TPG Inc., the Wall Street Journal
reports, citing people familiar with the situation.

April 28, 2008: The U.S. Internal Revenue Service starts
distributing tax rebates electronically as part of a $168 billion
economic stimulus plan.

May 31, 2008: Bear Stearns ceases to exist as the
acquisition by JPMorgan is completed.

June 20, 2008: The Dow closes below 12,000.

July 11, 2008: IndyMac Bancorp Inc., the second-biggest
independent U.S. mortgage lender, is seized by federal regulators
after a run by depositors depleted its cash.

July 31, 2008: Nationwide Building Society, Britain’s
fourth-biggest mortgage lender, says U.K. house prices declined
the most in almost two decades in July and consumer confidence
fell to a record low as the economy edged closer to a recession.

Aug. 31, 2008: Commerzbank AG agrees to buy Allianz SE’s
Dresdner Bank for 9.8 billion euros in Germany’s biggest banking
takeover in three years.

Sept. 7, 2008: The U.S. government seizes control of Fannie
Mae and Freddie Mac, the largest U.S. mortgage-finance companies.

Sept. 15, 2008: Lehman Brothers Holdings Inc. files the
largest bankruptcy in history, and Bank of America agrees to
acquire Merrill Lynch for about $50 billion.

Sept. 16, 2008: American International Group Inc. accepts an
$85 billion loan from the Fed to avert the worst financial
collapse in history, and the government takes over the company.

Sept. 18, 2008: Lloyds TSB Group Plc, the U.K.’s biggest
provider of checking accounts, agrees to buy HBOS Plc, Britain’s
largest mortgage lender, for 10.4 billion pounds.

Sept. 21, 2008: Goldman Sachs Group Inc. and Morgan Stanley
receive approval to become commercial banks regulated by the Fed
as tight credit markets forced Wall Street’s two remaining
independent investment banks to widen their sources of funding.

Sept. 23, 2008: Goldman Sachs says it will raise at least
$7.5 billion from Warren Buffett’s Berkshire Hathaway Inc. and
public investors in a bid to quell concerns that pushed up the
Wall Street firm’s borrowing costs and hurt its stock.

Sept. 26, 2008: The U.S. Securities and Exchange Commission
ends a program that monitored securities firms’ capital after
Morgan Stanley and Goldman Sachs, the only companies remaining
under its jurisdiction, became banks overseen by the Fed.

Sept. 26, 2008: The SEC’s inspector general releases a
report asserting that the agency failed in overseeing Bear
Stearns because it knew the firm had “high leverage” and was
too concentrated in mortgage securities before its forced sale to
JPMorgan Chase & Co.

Sept. 26, 2008: Washington Mutual Inc. is seized by
government regulators and its branches and assets sold to
JPMorgan Chase in the biggest U.S. bank failure in history.

Sept. 27, 2008: Washington Mutual files for bankruptcy

Sept. 28, 2008: Fortis, the largest Belgian financial-
services firm, receives an 11.2 billion-euro ($16.3 billion)
rescue from Belgium, the Netherlands and Luxembourg after
investor confidence in the bank evaporates.

Sept. 29, 2008: The House of Representatives rejects a $700
billion plan to rescue the U.S. financial system, sending the Dow
Jones Industrial Average down 778 points, its biggest point drop
ever. Citigroup agrees to acquire the banking operations of
Wachovia Corp. for about $2.16 billion after shares of the North
Carolina lender collapsed under the weight of overdue mortgages.
Bradford & Bingley Plc, the U.K.’s biggest lender to landlords,
is seized by the government. The Dow closes below 11,000.

Sept. 30, 2008: Dexia SA, the world’s biggest lender to
local governments, gets a 6.4 billion-euro state-backed rescue as
a worsening financial crisis forces policy makers across Europe
to aid ailing banks. Ireland says it will guarantee its banks’
deposits and debts for two years.

Oct. 1, 2008: The U.S. Senate approves a revised version of
the rescue plan that was refashioned to entice enough votes for

Oct. 3, 2008: The House passes the revised version of the
rescue plan. Wells Fargo & Co., the biggest U.S. bank on the West
Coast, agrees to buy all of Wachovia for about $15.1 billion,
trumping Citigroup’s government-assisted offer. U.S. President
George W. Bush signs the rescue plan into law.

Oct. 5, 2008: BNP Paribas SA, France’s biggest bank, will
take control of Fortis’s units in Belgium and Luxembourg after an
earlier government rescue failed to ensure the company’s
stability as the global credit crisis worsened.

Oct. 6, 2008: The Fed says it will double its auctions of
cash to banks to as much as $900 billion and is considering
further steps to unfreeze short-term lending markets as the
credit crunch deepens. The German government and the country’s
banks and insurers agreed on a 50 billion euro ($68 billion)
rescue package for commercial property lender Hypo Real Estate
Holding AG after an earlier bailout faltered. The Dow Jones
Industrial Average falls below 10,000 for the first time in four

Oct. 9, 2008: Citigroup walks away from its attempt to buy
Wachovia, handing victory to Wells Fargo. The Dow Jones falls
below 9,000 for the first time in five years and briefly dips
below 8,000.

For Related News:
For more on the economy: ECO <GO>.
For top stories on the financial crisis EXTRA <GO>

–Editors: Steve Dickson, Mark Schoifet.

To contact the reporter on this story:
Chris Dolmetsch in New York at +1-212-617-8969 or

To contact the editor responsible for this story:
Mark Schoifet at +1-212-617-4691 or

** Disclosure: no positions in the stocks mentioned. **