Crash of 2008/Timelines

See also the subprime mortgage timeline, the bank failures and rescues timelineand the recession of 2009 timeline

Deregulation and pre-Crash crisis (1980 -2000

• Banking deregulation measures are introduced in the USA, [1][2], the UK [3] and elsewhere [4].

• In the US Savings and Loans crisis - 296 US "Savings and Loans" mortgage lenders fail[5]

• The 1987 stock market crash [6].

• There are banking crises in Switzerland, United Kingdom, Norway, Sweden, Japan and the US [7].

• A further 451 US "Savings and Loans" mortgage lenders fail.

• The Asian banking crisis [8] ( 1997-8).

• The LTCM hedge fund is rescued[9]

• The cost to US taxpayers of the rescue of the Savings and Loans house mortgage lenders reaches $129 billion [10].

• The "Dot.com" crash (2000)

Prelude to the Crash (2001 - June 2007)

• The annual issue of US mortgage-backed bonds increases from ~ $500 billion to over $2,000 billion [11]

• A US housing boom in which the average price rises by 80% [12] .

• US mortgage foreclosures surge [13].

• US house prices fall to 8% below 2006 peak [14].

• There are further increases in US house mortgage defaults and foreclosures [15].

• The values of bank assets suffer large reductions (including the assets of the Bank of America and Citigroup banks in the US, the Barclays and HSBC banks in the UK, the BNP Paribas bank in France, and Credit Suisse bank in Switzerland.

The Crash stage 1 June - July 2007

2007

June

• Standard and Poor’s and Moody’s Investor Services downgrade over 100 bonds backed by subprime mortgages.

• 12 Two of the Bear Stearns'' investment bank's hedge funds are threatened by losses from mortgage defaults [16].

• 15 The Moody's credit rating agency cuts its ratings on bonds totalling $3billion.

July

• 11 Standard and Poor’s places 612 securities backed by subprime residential mortgages on a credit watch.

The Crash stage 2 (August 2007 - September 2008)

2007

August

• 2 Germany's IKB bank is rescued from bankruptcy [17]

• 6 The American Home Mortgage becomes bankrupt [18].

• 9 The European Central Bank announces the issue of 94 billion Euros requested by European banks [19]
  

    The French BNP Paribas bank freezes several of its funds because it is unable to value their bonds that are backed by UH house mortgages. [20]

    The interbank market suffers a virtual collapse [21].

• 15 The US major mortgage lender Countrywide announces a large increase in subprime mortgage defaults.

• 17 The US Federal Reserve cuts its discount rate by 0.5% to 5.75%.

• 31 The US National Association of Realtors announces an expected fall in house prices (the first since the 1930s)

September

• 13 BBC's Robert Peston reports that the Northern Rock bank was seeking help from the Bank of England.
  

    UK Northern Rock bank bank run [22]

December

• 12 The Federal Reserve Board announces the creation of a Term Auction Facility (TAF) in which fixed amounts of term funds will be auctioned to depository institutions against a wide variety of collateral. The bank authorizes temporary reciprocal currency arrangements (swap lines) with the European Central Bank and the Swiss National Bank . The Federal Reserve states that it will provide up to $20 billion and $4 billion to the European Central Bank and the Swiss National Bank, respectively, for up to 6 months [23].

2008

January

• US mortgage lender Countrywide sold to Bank of America after its share price drops by 48% [24].

February

• The Northern Rock bank is "nationalised [25].

March

• The Bear Stearns investment bank is rescued [26] - the JP Morgan Chase bank agrees to buy Bear Stearns for $10 a share (compared with previous week's market price of $18 and previous October's price of $131), supported by Treasury Department guarantees limiting losses on the purchase to $1 billion, and by Federal Reserve purchases of $30 billion of Bear's Assets. {GT258}

April

• The International Monetary Fund estimates that the global crisis costs could reach $1 trillion [27].

• Bank of England announces its Special Liquidity Scheme to allow banks to swap some of their illiquid assets for liquid Treasury Bills for up to three years [28].

June

• US house prices fall to 20% below their 2006 peak [29].

August

• The government-sponsored house mortgage lenders Fannie Mae and Freddie Mac are rescued from bankruptcy [30].

The Crash stage 3 (September - December 2008)

2008

September

• 7 Fannie Mae and Freddie Mac are "nationalised" [31].

• 12 The US Lehman Brothers investment bank is bankrupt [32][33] with losses of $365 billion to insurers of its bonds.

Negotiations with possible private sector rescuers fail [34]

• 16 $785m worth of Lehman Brother's funds are written off and money market investors suffer a massive loss [35].

panic in the money market and the virtual collapse of the interbank market

• 17 The American Insurance Group is "nationalised" [36].

• UK's Halifax/Bank of Scotland bank is rescued from bankruptcy by a bid from Lloyds TSB [37].

• 18 Paulson Rescue plan proposed (US Treasury scheme to take "toxic assets" out of the US banking system) [38]

• The UK Government imposes a temporary ban on short selling [39].

• 19 Federal Reserve announces that it is ready to finance loans from the money market [40].

• 23 The Federal Reserve Board announces a scheme to protect the Goldman Sachs and Morgan Stanley investment banks from failure [41].

• 26 The Washington Mutual bank is closed and its assets are sold to the JP Morgan Chase bank [42].

• Coordinated support is provided to their banks by US, UK, European and Swiss central banks [43].

• 28 The UK Bradford and Bingley is "nationalised" [44].

• Multiple European bank rescues [45].

• 30 Iceland's Glitnir bank is "nationalised" [46].

October

• 3 The (modified) $700 billion Paulson Plan (to purchase toxic assets) approved by Congress [47].

The Dutch Fortis and ABN Amro banks are "nationalised" [48].

The German Hypo Real Estate bank is rescued [49]

Iceland suffers an economic crisis [50].

• 6 The US Wachovia Corporation is to be rescued by a takeover by the Wells Fargo bank [51].

• 7 More European bank rescues [52].

UK credit insurer withdraws cover [53].

• There is a coordinated discount rate cut of half per cent by the central banks of the United States, Europe, China, Britain, Canada, Sweden and Switzerland [54].

• 8 UK Chancellor of the Exchequer announces unlimited support to all UK banks. His £500 billion bank rescue plan undertakes to inject capital or take equity in banks and to guarantee interbank lending, as required [55] [56].

• 11 US President Bush announces a similar bank rescue plan [57].

• 12 European Union leaders agree to adopt similar bank rescue plan [58].

• 19 A German bank rescue plan is agreed [59].

• 21 The US Federal Reserve Bank offers $540 billion loan support to money market mutual funds [60].

• 25 Denmark's Roskilde is bank to be taken over by its central bank [61].

November

• 12 A US government plan to purchase "toxic assets" is abandoned [62] [63]

• 23 The US Citigroup bank is rescued (the US government makes $20 billion cash injection and guarantees against loss on $306 billion of illiquid assets [64] [65] [66][67]

The US Federal Reserve Bank promises to buy up to $500 billion worth of mortgage-backed securities guarantee by Fannie Mae and Freddie Mac and up to $100billion worth of their direct debt [68].

(for later events see the recession of 2009 timeline)