A chronology of the 2008 financial crisis
Root causes

The bubble




Chronology of events
Feb.27th, 2007: Mortgage giant Freddie Mac announces it will no longer buy the most risky subprime loans.
Apr.2nd, 2007: Subprime mortgage lender New Century Financial files for bankruptcy-court protection.
June, 2007: Amid losses in its portfolio, the Bear Stearns High-Grade Structured Credit Fund receives a $1.6 billion bailout from Bear Stearns, which would help it to meet margin calls while it liquidated its positions.
July, 2007: IKB (a German bank) announces that it has been affected by the subprime mortgage financial crisis in the United States. First European entity affected by subprime mortgages crisis.
Jul.17th, 2007: in a letter sent to investors, Bear Stearns Asset Management reported that its Bear Stearns High-Grade Structured Credit Fund had lost more than 90% of its value, while the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund had lost virtually all of its investor capital. The larger Structured Credit Fund had around $1 billion, while the Enhanced Leveraged Fund, which was less than a year old, had nearly $600 million in investor capital.
Jul.31st, 2007: Investment bank Bear Stearns liquidates two hedge funds that invested in risky securities backed by subprime mortgage loans.
Aug.6th, 2007: American Home Mortgage Investment, which specializes in adjustable-rate mortgages, files for bankruptcy protection.
Aug.16th, 2007: Fitch Ratings cuts the credit rating of giant mortgage lender Countrywide Financial to its third-lowest investment-grade rating.
Sep.28th, 2007: NetBank acquired by ING Direct.
Jan.11th, 2008: Bank of America, the biggest U.S. bank by market value, agrees to buy Countrywide Financial for about $4 billion.
Feb.22nd, 2008: Northern Rock taken over by the Government of the United Kingdom. The nationalisation followed two unsuccessful bids to take over the bank, neither being able to fully commit to repayment of savers’ and investors’ money.
Mar.16th, 2008: The Federal Reserve agrees to guarantee $30 billion of Bear Stearns’ assets in connection with the government-sponsored sale of the investment bank to JPMorgan Chase.
Apr.1st, 2008: Bear Stearns acquired by JP Morgan Chase.
Jul.1st, 2008: Bank of America acquires Countrywide Financial. Countrywide was very exposed to the mortgage market and on the brink of bankruptcy.
Jul.11th, 2008: Federal regulators seize IndyMac Federal Bank after it becomes the largest regulated thrift to fail.
Sep.7th, 2008: Mortgage giants Fannie Mae and Freddie Mac are taken over by the US government. Keeping the two afloat cost taxpayers $187 billion over time. Treasury paid $116 billion for Fannie and $71 billion for Freddie.
Sep.14th, 2008: Bank of America agrees to purchase Merrill Lynch for $50 billion. That was a surprising movement at that moment. Bank of America was the main candidate to rescue Lehman, but they decided it was a better play to rescue Merrill instead. The situation with Lehman was way more complicated.
Sep.14th, 2008: Barclays Bank, which was the other candidate to buy Lehman, leaves the negotiation table. There were deep concerns among British regulators regarding this operation.
Sep.15th, 2008: Lehman Brothers files for bankruptcy-court protection. With $639 billion in assets and $619 billion in debt, Lehman’s bankruptcy filing was the largest in history, as its assets far surpassed those of previous bankrupt giants such as WorldCom and Enron. Lehman was the fourth-largest U.S. investment bank at the time of its collapse, with 25,000 employees worldwide. Lehman’s operations were instantly stopped in London, and that created a huge panic in stock markets.
Sep.15th, 2008: Dow Jones falls 504 points after Lehman filed for bankruptcy and Bank of America swallowed Merrill and amid fears that insurance titan AIG was the next to fall.
Sep.16th, 2008: American International Group, the world’s largest insurer, accepts an $85 billion federal bailout that gives the government a 79.9% stake in the company. The root cause of the AIG crisis was the huge number of risky Credit Default Swaps issued by the company.
Sep.21st, 2008: Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies subject to greater regulation by the Federal Reserve.
Sep.25th, 2008: Federal regulators close Washington Mutual Bank and its branches and assets are sold to JPMorgan Chase in the biggest U.S. bank failure in history.
Sep.29th, 2008: Congress rejects a $700 billion Wall Street financial rescue package, known as the Troubled Asset Relief Program or TARP, sending the Dow Jones industrial average down 778 points, its single-worst point drop ever.
Oct.3rd, 2008: Congress passes a revised version of TARP (Troubled Asset Relief Program) and President Bush signs it. Wells Fargo & Co., the biggest U.S. bank on the West Coast, agrees to buy Wachovia for about $14.8 billion.
Oct.13th, 2008: Sovereign Bank acquired by Banco Santander.
Oct.24th, 2008: National City Bank acquired by PNC Financial Services.
Oct.24th, 2008: Commerce Bancorp acquired by Toronto-Dominion Bank.
Nov.18th, 2008: Ford, General Motors and Chrysler executives testify before Congress, requesting federal loans from TARP.
Nov.21st, 2008: Downey Savings and Loans taken over by US Bank.
Nov.23rd, 2008: The Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. agree to rescue Citigroup with a package of guarantees, funding access and capital. Citigroup will issue preferred shares to the Treasury and FDIC in exchange for protection against losses on a $306 billion pool of commercial and residential securities it holds.
Dec.19th, 2008: The U.S. Treasury authorizes loans of up to $13.4 billion for General Motors and $4.0 billion for Chrysler from TARP.
Jan.10th, 2009: IndyMac Federal Bank acquired by IMB Management Holdings.
Mar.2nd, 2009: HSBC Finance Corporation shuts down US consumer lending.
Aug.14th, 2009: Colonial Bank taken over by BB&T.
Aug.21st, 2009: Guaranty Bank taken over by BBVA Compass.
Dec.18th, 2009: Federal Bank of California acquired by OneWest Bank.
Nov.8th, 2010: Ambac files for bankruptcy protection.
Oct.31st, 2011: Man Financial Global taken over by the SEC.
Nov.23rd, 2011: PMI Group taken over by the State of Arizona.
Jun.11th, 2012: Financial Guaranty Insurance Company taken over by the State of New York.
August, 2012: the Treasury decided it would send all Fannie and Freddie profits into the general fund. Since then, the bailout has been paid back with $58 billion in profit. Fannie remitted $147 billion and Freddie paid $98 billion. The Fannie and Freddie bailout was greater than the 1989 saving and loan crisis, which cost the taxpayers $124 billion. It was on par with the subsequent bailout of AIG, which started at $85 billion but grew to $182 billion.
2014: The market for Bespoke Tranche Opportunities increased to $20bn by the end of the year according to BNP Paribas. BTOs are just a different name for a well known product: CDOs.

