Great Recession/Timelines

The 1980s

• Financial deregulation [1], [2].
• The US Savings and Loans crisis - failure of 296 US "Savings and Loans" mortgage lenders [3]

1990 - 2003

• Progressive discount rate cuts by the Federal Reserve (from 7% in 1990 t0 0.75% in 2003 [4].
• The United States housing boom begins (prices rise by 8% between 2002 and 2003)

2003 - 2006

• The Federal Reserve makes a series of discount rate increases (from 0.75% to 6.25% in 2006).
• The US housing boom continues [5] (Average 2006 house price about 70% above 2000 level)

2007

The year of the subprime mortgage crisis

June

• 25 Two of the Bear Stearns bank's hedge funds suffer losses from mortgage defaults [6].

August

• 6 The American Home Mortgage Corporation becomes bankrupt [7].
• 9 The French bank BNP Paribas freezes its funds because it is unable to value their mortgage-backed assets. [8]
• 13 BBC's Robert Peston reports that the Northern Rock bank was seeking help from the Bank of England.
  

     The Northern Rock bank suffers a bank run [9]

2008

The year of the crash of 2008

January

• Distress sale of US mortgage lender Countrywide the to Bank of America bank (after its share price had dropped by 48% [10].)

February

• The British Northern Rock bank is "nationalised [11].

March

• The US Bear Stearns bank is rescued from bankruptcy following losses relating to mortgage-related assets by its hedge funds. [12]

April

• The 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 [13].

June

• US house prices fall to 20% below their 2006 peak [14].

August

• The government-sponsored mortgage lenders Fannie Mae and Freddie Mac are rescued from bankruptcy[15].

September

• 7 Fannie Mae and Freddie Mac are nationalised [16].
• 12 The Lehman Brothers investment bank becomes bankrupt[17] with losses of up to $160 billion to holders of its unsecured bonds prompting a sudden loss of confidence in money market funds and the onset of a credit crunch.

October

• Govermnents act to support their banking systems> The UK's Gordon Brown offers unlimited support to all UK banks by capital support, equity purchase and lending guarantees [18] [19], and similar action is agreed by European Union leaders [20] and the US President[21].

• Rescues of individual banks in Europe [22][23] [24][25] and the United States [26].

• A coordinated fiscal stimulus. A discount rate cut of half per cent by the central banks of the United States, Europe, China, Britain, Canada, Sweden and Switzerland [27].

• Iceland suffers an economic crisis [28].

• The money market panic persists (LIBOR-OIS spreads reach over 350 basis points (compared with August 2007 rates of around 10 points)[29].)

November

• 15 G20 summit: leaders of the Group of Twenty countries agree on the need for fiscal stimulus
• 23 The US Citigroup bank is rescued from bankruptcy (the US government makes $20 billion cash injection and guarantees against loss on $306 billion of illiquid assets [30] [31] [32][33]
• The US Federal Reserve promises to buy up to $500 billion worth of mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac and up to $100billion worth of their direct debt [34].

December

• 16 The US Federal Reserve begins credit easing - using open market operations to raise the amount of base money from $0.9 trillion to $2.2 trillion [35]

2009

The year of the recession of 2009

January.

• 19 UK Fiscal and monetary stimulus [36]
• 19 UK Asset Protection Scheme [37] protection against credit losses in return for a fee.

February.

• 9 The US Financial Stability Plan[38] - including stress tests and capital assistance for major banks, a $500-1000 billion Public-Private Investment Fund[39], consumer and business lending and housing support.
• 13. The American Recovery and Reinvestment Act(H.R. 1) [40]) - a $839 fiscal stimulus package including $288 billion in tax cuts and benefits, $224 billion in increased education and health spending, and a $275 billion for contracts, grants and loans.

March.

• 3 The US Term Asset-backed Loan Facility [41].
• The US Making Home Affordable Program [42] (provides public money to lenders to reduce a borrower’s monthly payments)

April.

• The G20 summit agrees to increase IMF funding to $750 billion; an increase in countries’ access to special drawing rights and $250 billion-worth of new global-trade guarantees.

May.

• The European Central Bank cut its main policy interest rate by a quarter of a percentage point, to 1%
• The Bank of England increases quantitative easing by raising central-bank reserves from £75 billion ($113 billion) to £125 billion.

June.

• The European Central Bank lent €3 billion ($4.2 billion) to Sweden’s central bank
• US banks repay $68 billion in loans they had received under the Troubled Asset Relief Program (including Morgan Chase, Goldman Sachs, Morgan Stanley and American Express).
• 27 The European Central Bank provides a €442 billion loan to the euro area’s banking system through an offer of unlimited one-year funds at 1% interest.

October.

• The Reserve Bank of Australia raised its main interest rate by 25 basis points, to 3.25%,

December.

• 9 The UKs Fiscal Consolidation Plan[43]
• Greece’s credit rating was downgraded to BBB+, with a negative outlook, by the Fitch credit rating agency.