TimelineSubprime fallout sparks recession fears
07 October 2008 09:52 [Source: ICIS news]
SINGAPORE (ICIS news)--Here is a timeline highlighting the main events triggered by the US subprime mortgage crisis, which has changed the financial landscape of Wall Street and beyond sparking fears of a global recession.
June 2007 – Bear Stearns, US’ fourth largest investment bank, revealed huge losses from two hedge funds with significant holdings in mortgage-backed securities related to weakness in the US housing sector.
September 2007 – The Federal Reserve cut interest rates by 0.5% to 4.75% to pump-prime its economy amid a housing slump and rising concerns about tightening credit conditions.
The Fed continued to slash rates almost on a monthly basis until April 2008 and even did it twice in January 2008.
December 2007 – January 2008 – UBS, Merrill Lynch and Citigroup repeatedly raised billions of US dollars in capital to stave off massive subprime losses incurred starting the third quarter of 2007.
March 2008 – Bear Stearns crumbled under its dwindling liquidity levels, forcing the Federal Reserve to step in to provide a $30bn (€22.2bn) special financing deal and engineer the troubled bank’s sale to JP Morgan.
Bear Stearns’ near-collapse triggered a global stock-market rout that prompted the Fed to cut policy rates by a hefty 75 basis point in a bid to restore stability.
April 2008 – The Fed cuts rates by 25 basis points to 2.0% before a widely expected pause as global stock markets started to recover.
September 2008
08 Sep – The US Treasury nationalised giant mortgage lenders Freddie Mac and Fannie Mae, putting them under federal conservatorship and pledged billions of dollars to cover bad debt incurred by the two institutions.
14 Sep – Investment bank Lehman Brothers filed for bankruptcy protection after piling up $613bn in mortgage-related debts.
14 Sep – Bank of America took over rival bank Merrill Lynch in a $50bn deal.
16 Sep – World’s largest insurer American International Group received a huge $85bn rescue package from the Fed to prevent any aggravation of market fragility.
18 Sep – Britain’s HBOS got scooped up by Lloyds TSB for ₤12bn ($20.88bn/€15.3bn) in the first of a series of mergers and acquisitions stemming from the US-led credit crisis.
19 Sep – The Bush administration started crafting a massive financial rescue plan for its ailing economy and to salvage a credit crunch spiralling out of control.
25 Sep – US President George W Bush met with Congressional leaders to hammer out details for a proposed $700bn financial rescue plan meant to shore up the nation’s economy.
26 Sep – US banking group Washington Mutual was seized by federal bank regulators and sold to JP Morgan for $1.9bn. The Office of Thrift Supervision said the company was in an unsafe and unsound financial condition to meet its obligations.
29 Sep – The US House of Representatives voted down the controversial $700bn bailout package, sending the benchmark Dow Jones Industrial Average to post its biggest single-day losses on record at more than 7%.
29 Sep – The Federal Deposit Insurance Group facilitated the sale of Wachovia Group, the US’ sixth biggest bank, to Citigroup.
29 Sep – Britain rescues Bradford & Bingley bank with a mixture of nationalisation and asset disposal that sparked anger amongst shareholders crying insufficient communication and accountability of assets seized.
October 2008
2 Oct – Wachovia announced it would go for the higher $15bn stock-for-stock offer of Wells Fargo. Citigroup sued Wachovia and Wells Fargo for $60bn five days later.
2 Oct – US Senate approved a revised $700bn bailout plan after urgent calls from leading politicians to prevent the economy from grinding to a total halt.
3 Oct – The US House finally approved the bailout plan and President Bush signed HR-1424, the Emergency Economic Stabilisation Act into law.
3 Oct – The governments of the Netherlands, Luxembourg and Belgium acquired troubled international banking and insurance group Fortis for €16.8bn ($22.7bn).
06 Oct – Germany’s Hypo Real Estate received a €50bn credit line from the country’s government and the private finance sector in a bid to prevent a replay of the market turmoil following the collapse of Lehman Brothers in the US. The financial turmoil continued to negatively impact world stock markets, with London’s FTSE 100 witnessing its biggest one-day points fall, closing down almost 8%.
($1 = €0.74/$1 = ₤0.57)
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