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Freddie Mac
Feb. 27: The Federal Home Loan Mortgage Corporation known as Freddie Mac states that it will stop buying risky subprime loans. -
Credit Crisis Deepens
2007: In 2007 the housing crisis started to deepen and the banks that invested in subprime mortgages were left with worthless assets due to most homeowners not being able to make their mortgage payment . One of the reasons they did this instead of investing in treasury bond was because their interest rates were really low. This left the retail investors with worthless assets as they were left with useless homes and were not getting any money in return. This crisis started due to financial servic -
New Century Financial
April 2: New Century Financial files for bankruptcy-court protection. -
Bear Stearns
July 31: Bear Stearns investment bank faces huge loses and can’t return money to their investors. -
American Home Mortgage
August 6: American Home Mortgage Investment files for bankruptcy protection. -
Fitch Ratings
August 16: Fitch Ratings cuts their credit rating causing Countrywide Financial to borrow their credit line from other banks. -
Economic Decline
2008: The U.S. economy is in an economic decline. The crisis in subprime mortgages ruins the credit market. -
Merger Agreement
January 11: Bank of America agreed to buy Countrywide Financial for about $4 billion and both signed a merger agreement that entered into a common interest agreement. The bank failed by purchasing it because Countrywide financed 20% of all mortgages in the United States raising the risk of being bankrupt and default on some loans. -
Bear Stearns
March 16 The Federal Reserve (the central bank of the US created to provide the nation with a safer and more flexible financial system) authorized a decrease in the primary credit rate and a financing arrangement that guaranteed 30 billion dollars of Bear Stearns assets. -
IMB
July 11: The federal government took control IndyMac Bank in what regulators called the second-largest bank failure in U.S. history. The bank lost $614.8 million in 2007 and $184.2 million during the first quarter of this year, largely as the result of disillusion of home loans. Also the mortgage giants were taken over by the government. -
Bank of America Merrill Lynch
September 15: Merrill Lynch had lost $51.8 billion on mortgage-backed securities as part of the subprime mortgage crisis. Bank of America agrees to purchase Merrill Lynch (the wealth management division of Bank of America) for $50 billion. -
Lehman Brothers
September 15: Lehman Brothers filed for bankruptcy. With $639 billion in assets and $619 billion in debt. Lehman's collapse roiled global financial markets for weeks, given the size of the company and its status as a major player in the U.S. and internationally. -
AIG
September 16: The American International Group(AIG) is one of the most powerful insurance companies in the world but it went through a terrible credit crisis in 2008, they lacked securitization. Their business started collapsing during 2007-2008 and in September 16 of 2008 AIG made a huge mistake by agreeing to borrow $89 billion putting the government debt in danger by 79.9%. -
Goldman Sachs and Morgan Stanley
September 21: Goldman Sachs and Morgan Stanley had a colossal financial crisis because they gave out so much money that it made it really hard for them to get it back. Their liquidity was so low that the authorities of Federal Reserve Board authorized the Federal Banks of New York to help Morgan Stanley, Goldman Sachs, Merrill Lynch and some other companies so they could cover part of the debt they owed. -
Washington Mutual
September 25: In September 25 the Federal Regulators close the Washington Mutual Bank because it was declared bankrupt by the statement in Chapter 11 Bankruptcy. They sold its branches and assets and the loans to JPMorgan Chase during the worst financial crisis ever seen. -
TARP
September 29: Congress rejects a $700 billion Wall Street financial rescue package, known as the Troubled Asset Relief Program or TARP. The Dow Jones market dropped 778 points, this was even worse than the crisis during 1929 where people in America went crazy and lost all their money. -
Wells Fargo buys Wachovia
October 3: The big banks tried to rescue the smaller banks therefore Bush signed the revised version of the TARP. Wells Fargo one of the main banks of America bought Wachovia(one of the smaller banks) for $14.8 dollars. -
GM and Chrysler go bankrupt
November 18: Ford, General Motors and Chrysler go bankrupt and ask the TARP program for a loan to benefit the automotive industry to rise from the ground and solve the bankruptcy problem. Many people feared losing their jobs. -
Citigroup
November 23: The Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. agree to rescue Citigroup with a package of guarantees in exchange for some capital shares of citigroup. Citigroup had lost $306 billion dollars of pools and the reason they made some capital shares was because if Citigroup suddenly the business went back up then they would get the money back. -
GM and Chrusler loan
December 19: This day the US treasury makes a loan of $13.4 billion, $9,400,000.00 of which went to General Motors and $4,000,000 of which went to Chrysler. This loans were for the next three years. -
Conclusion
The US has been living on borrowed money for a long time and it is predicted that by the end of 2019 they will reach the 22 trillions. According to Donald Trump Unites States soon could become a large-scale Spain or Greece reaching the edge of being financially ruined. He also said that the unemployment rate will be as high as 21 percent. But there are some good things coming too, business credit in the central banks have pumped in much of the liquidity needed and they have replaced their financ -
Bibliography
http://www.usatoday.com/story/money/business/2013/09/08/chronology-2008-financial-crisis-lehman/2779515/
http://www.investopedia.com/articles/economics/09/lehman-brothers-collapse.asp
http://money.cnn.com/2008/12/19/news/companies/auto_crisis/
http://www.federalreserve.gov/newsevents/press/bcreg/20080921a.htm
http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=0
