US Markets Loading... h m s
Newsletters
Markets
Business Insider
Updated
2018-09-14T09:55:00Z
Elevenyears ago, the US economy went into recession, the US housing market crashed, and credit markets seized bringing the banking industry to its knees. It was a global financial crisis.
Advertisem*nt
Businesses went down and workerslost jobs. And Americans were losing hope, which only made things work.
For many, the low critical moment was when Lehman Brothers went bankrupt on September 15, 2008.But the memory ofcritical eventsbefore and after that fateful day is slowly fading. Hearings, lawsuits, bailouts — it all gets muddled together.
Business Insider has outlined the major moments from 2007 to 2009. From the initial reports of subprime defaults to the collapse of Lehman Brothers to AIG's second bailout, here are the 27 scariest moments of the financial crisis.
Note: Former Business Insider reporters Steven Perlberg and Elena Holodny contributed to this feature.
Advertisem*nt
FEB. 8, 2007: HSBC says its bad debt provisions exploded because of a slump in the U.S. housing market. Normal people begin to learn what subprime is.
Source: BBC
APRIL 2, 2007: New Century files for bankruptcy. It was the largest subprime lender in the United States.
Source: SEC Filing
Advertisem*nt
JUNE 21, 2007: Merrill Lynch sells off assets in two Bear Stearns hedge funds as the funds hemorrhage billions of dollars on bad subprime bets.
Source: Reuters
AUG. 9, 2007: France's largest bank, BNP Paribas, freezes withdrawals from three investment funds after U.S. subprime mortgage losses crush markets. "The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating," BNP said in the release.
Source: Bloomberg
Advertisem*nt
SEPT. 4, 2007: Libor — the interbank interest rate — hits 6.7975%, its highest level since December 1998.
Source: BBC
OCT. 24, 2007: Merrill Lynch announces an $8.4 billion quarterly loss, the largest in its history, thanks to write-downs on subprime mortgages.
Source: Bloomberg
Advertisem*nt
OCT. 31, 2007: Meredith Whitney says Citigroup will have to cut its dividend. Later, it does.
Source: Bloomberg Businessweek
OCT to NOV 2007: Many CEOs would not make it through the financial crisis. Stan O'Neal at Merrill and Chuck Prince at Citigroup both exit, taking monster severance packages with them. O'Neal, for one, walked out with $161.5 million.
Source: NBC
Advertisem*nt
DEC. 11, 2007: The FOMC reduces the federal funds rate to 4.25% and cuts the primary credit rate to 4.75%.
Source: FOMC
Advertisem*nt
2008: Insurers like MBIA, who have written against the failure of CDOs, get downgraded and collapse. Hedge funder Bill Ackman would reportedly make his investors over $1 billion on a short position.
Source: Confidence Game
SEPT. 7, 2008: The saga of Fannie Mae and Freddie Mac, guarantor of half of U.S. mortgages, culminates with a takeover by the U.S. government.
Source: Treasury Dept. press release
Advertisem*nt
SEPT. 15, 2008: Meanwhile, Lehman Brothers can't find a buyer and files for bankruptcy.
Source: CNBC
Advertisem*nt
Advertisem*nt
SEPT. 29, 2008: The U.S. House of Representatives defeats a proposed $700 billion emergency bailout package, 228-205. Stocks plunge 778 points.
Source: NYT
Advertisem*nt
OCT. 3, 2008: TARP is passed. Congress approves a $700 billion bank bailout, but stocks continue to fall following investor worries that the bailout won't be enough.
Source:CNBC
Advertisem*nt
OCT. 13, 2008: Treasury Secretary Hank Paulson sits down with nine major bank CEOs. When they leave the room hours later, the federal government has taken a huge equity position in Wall Street. The total bailout package looks more like $2.25 trillion, well more than the original $700 billion available.
Source: NYT
Advertisem*nt
OCT. 16, 2008: Warren Buffett authors a New York Times op-ed called "Buy American. I Am." He gets absolutely crushed by critics when markets crash further. Rising stock prices in the post-crisis years would later vindicate him.
Source: NYT
OCT 2008: Commentators wonder if this is the end of life as we know it. "The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism," wrote The Washington Post's Anthony Faiola. Simon Jenkins at The Guardian called this line of thinking "journalistic wish-fulfillment and glee."
Advertisem*nt
Advertisem*nt
NOV 2008 — SPRING 2009: The Financial Crisis continues, crippling employment. Eventually the Dow Jones plunged to 6,547.05 on March 9, 2009. It was at its lowest since April 1997.
Source: CNN Money
Banks would continue to report losses, fight regulation efforts, and eventually stomach higher capital requirements.
Advertisem*nt
Eventually, after extraordinary bailouts from the Fed and Congress, the market bottomed and the economy slowly recovered.
And now, take a look at...
Read next
NEW LOOK
Sign up to get the inside scoop on today’s biggest stories in markets, tech, and business — delivered daily. Read preview
Thanks for signing up!
Access your favorite topics in a personalized feed while you're on the go.
Advertisem*nt