Financial Crisis 2008 Timeline

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The Crisis Timeline

Before September 2008

Government chartered enterprises, Fannie Mae and Freddie Mac, were up to $200 billion just one week ago, and months earlier engineered JP Morgan's purchase of Bear Stearns with a $29 billion guarantee.[1]

September 2008

Sunday, September 14, 2008

  • Lehman Brothers collapses.
    • Lehman Brothers stock lost 94% of their value, making them nearly worthless after markets closed on Sept. 15.
    • Over the previous six months, the firm lost close to $7 billion dollars because of bad bets on both the housing and commercial real estate markets.
    • The company announced its intention to file for Chapter 11 with the U.S. Bankruptcy Court, the largest ever announced in the United States. [2]
  • American International Group, the nation's largest insurer, said that it planned to sell some of its troubled assets in order to raise cash and boost investors confidence.[1]
  • The Federal Reserve, along with 10 banks, announced a $70 billion pool of funds to aid troubled financial firms. It also loosened its lending restrictions.[1]

Monday, September 15, 2008

Tuesday, September 16, 2008

  • Investors poured money into bonds, yield 10 year Treasury note fell to a 5 year low.
  • The Fed unanimously decided to hold rates steady at 2%.
  • DOW jumped 140 points at closing
  • British bank Barclays agreed to buy up to $2 billions of Lehman Brothers' assets and real estate holdings. [4]
  • The Federal government allowed $85 billions bailout to AIG and now have 80% stake in company [5]

Wednesday, September 17, 2008

  • The price of gold rose to $70, a new record
  • The price of oil rose $6, its largest jump.
  • Yield on 3 months Treasury note fell .02%, lowest level since 1940.
  • DOW dropped 450 points.
  • Goldman Sachs shares dropped to less than $100, first time since 2005. [6]
  • Many Wall Street analysts blamed stock market's collapse on "naked" short sellers. Subsequently, SEC banned naked short selling. [1]

Thursday, September 18, 2008

Friday, September 19, 2008

Saturday, September 20, 2008

  • The administration asked for $700 billion to buy troubled mortgage assets and get the financial system flowing again.[1]

Sunday, September 21, 2008

  • [[Goldman Sachs] and Morgan Stanley converted into traditional bank holding companies, which will increase their regulation by the federal government.[1]

Monday, September 22, 2008

  • Morgan Stanley agreed to sell up to a fifth of the company to Mitsubishi UFJ Financial Group, one of Japan's largest banks.
  • The dollar depreciated, posting its biggest single-day drop in four years.
  • The price of oil surged more than $25, its biggest dollar gain ever, to $130 a barrel before settling at $120 as big investor scrambled to fill obligations as the October contract expired.[1]

Tuesday, September 23, 2008

  • Department Treasury Secretary Paulson and Federal Reserve Chairman Bernanke went before the Senate Banking Committee to defend the Bush administration's bailout plan. The two faced strong criticism from both Democrats and Republicans who argued that the program needed more restrictions. [1]
  • After the market close, Goldman Sachs announced that it will raise capital by selling $5 billion of preferred stock to Berkshire Hathaway.[1]

Wednesday, September 24, 2008

  • Before markets opened, the Fed announced that it would add more money into the system, making $30 billion available to the central banks of Australia, Denmark, Norway, and Sweden.
  • Debate about the Bush administration's proposed $700 billion continued in front of the House Financial Services Committee. [1]
  • President Bush made a televised speech. "We are in the midst of a serious financial crisis," he said. "Our entire economy is in danger."[1]

Thursday, September 25, 2008

  • Key lawmakers announced that they reached an agreement on set principles for legislation in order to enact the Bush administration's proposal. [1]
  • Congressional leaders and presidential nominees Barack Obama and John McCain met with President Bush and Secretary Paulson at the White House, the negotiations broke down, revealing a split between Democrats and Republicans. [1]
  • House Republicans issued a statement of economic rescue principles that called for Wall Street to fund the recovery by injecting private capital, not taxpayer dollars, into the financial markets.
    • plan also called for participating firms to disclose the value of the mortgage assets on their books,
    • ending Fannie Mae and Freddie Mac's securization of "unsound mortgages,"
    • reviewing the performance of the credit rating agencies,
    • having the SEC audit failed companies to ensure their financial standing was accurately portrayed,
    • and creating a panel to make recommendations for reforming the financial industry by year's end. [1]
  • Lawmakers and Paulson failed to end in agreement. [1]
  • Washington Mutual collapsed, marking the biggest bank failure in history.
    • Federal regulators orchestrated a deal in which JPMorgan Chase paid $1.9 billion for Washington Mutual's assets.[10]

Friday, September 26, 2008

  • Debate continued on Capitol Hill.
  • The first presidential debate scheduled, earlier, Senator John McCain decided to return to Capitol Hill to help work on the plan and plan to skip the debate. But Senator Barack Obama said there was no need to cancel or postpone the debate. Later, both candidates went on with the debate with the nation's economic crisis as the primary issue.[1]

Saturday, September 27, 2008

  • Negotiators contacted billionaire investor Warren Buffet for guidance, and according to two sources, he warned if Congress did not act, the nation would face the "biggest financial meltdown in American history." [1]
  • After midnight, congressional leaders said they reached a tentative deal and aimed to have draft legislation by Sunday evening. [1]
  • Key points included who would oversee the program, when the money would go out, government stakes in companies to mitigate taxpayer losses and curbs on executive compensation.[1]




Articles and resources

Related SourceWatch articles

Sources

  1. 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 1.19 1.20 1.21 CNN Money’s page on The Crisis Timeline.
  2. CNN Money’s page on Lehman Brothers.
  3. The New York Times' page on Wall St.’s Turmoil Sends Stocks Reeling.
  4. International Herald Tribune’s article on Barclays reaches $1.75 billion deal for Lehman Brothers unit.
  5. The Washington Post’s page on Government Again Expands AIG Rescue Plan.
  6. CNN Money’s page on Morgan and Goldman take a beating.
  7. Forbes.com’s article on AIG replaced by Kraft in Dow Industrials.
  8. U.S SEC’s page on SEC Halts Short Selling of Financial Stocks to Protect Investors and Markets.
  9. Cite error: Invalid <ref> tag; no text was provided for refs named Treas
  10. The New York Times’ article on Government Seizes WaMu and Sells Some Assets.

External resources

External articles

How the Fed Create Money