101 Events That Rocked The World - A Timeline Of Significant Market Events

2008 changed the global economic landscape. Unexpected events

occurring in compressed time destabilized many Wall Street

institutions. On Main Street, jobs were lost and small businesses

stalled. And across the globe, stock markets retrenched as

increasingly interconnected economies braced for a deep recession.

As we reflect today on what the future holds, it is instructive to

also reflect on the events that brought us to where we are now. The

following is a summary of 101 critical market events that have

defined the crisis thus far and supplements our prior timeline

(located at

http://www.mofo.com/docs/pdf/081118CrisisTimeline.pdf). The arc

of these events clearly demonstrates how quickly, widely and deeply

the credit contagion spread.

2007 – The Clouds Gather

January 5 Ownit Mortgage Solutions, a

California based subprime lender, filed for bankruptcy.

February 5 Mortgage Lenders Network USA,

another subprime lender in California, filed for bankruptcy.

Mortgage Lenders was the fifteenth largest subprime lender.

February 8 HSBC announced it would increase

its reserves for loan losses because of its exposure to U.S.

mortgages.

February 13 ResMae Mortgage, a large U.S.

subprime lender, filed for bankruptcy.

March 4 HSBC announced write downs of $11

billion from U.S. mortgages, marking the beginning of a parade of

write downs linked to the valuation of mortgages.

March 20 People's Choice Home Loan,

another California subprime lender, filed for bankruptcy.

April 3 New Century Financial, another

California subprime lender, declared bankruptcy. New Century was

the second largest U.S. subprime lender.

April 12 SouthStar, another subprime lender,

filed for bankruptcy.

June 23 Bear Stearns bailed out one of its

hedge funds by pledging $3.2 billion in loans, marking the largest

bailout of a hedge fund since Long Term Capital Management in 1998.

The hedge fund ran into trouble because of exposure to U.S.

subprime mortgages.

July 16 Alliance Bancorp declared bankruptcy.

Alliance Bancorp specialized in Alt-A mortgages.

July 31 Two Bear Stearns hedge funds filed for

bankruptcy.

August 6 American Home Mortgage, reported at

one time to be the tenth largest retail mortgage lender in the

U.S., filed for bankruptcy, adding concern that the credit crisis

had hit non-subprime borrowers.

August 10 Homebanc, another mortgage lender,

filed for bankruptcy.

August 14 Goldman Sachs and investors injected

$3 billion in the firm's Global Equity Opportunities Fund,

about $2 billion of which was provided by Goldman.

August 17 The Fed cut the discount rate by 25

basis points to 5.75% from 6.00%. The discount rate is the rate at

which the Fed lends to commercial banks and other depositary

institutions for short periods of time in order to provide

short-term liquidity.

September 14 The Bank of England extended

emergency funding to Northern Rock, a large U.K. mortgage lender.

The mortgage crisis had crossed the borders of the United

States.

September 18 The Fed cut the discount rate and

the federal funds rate by 50 basis points to 5.25% and 4.75%,

respectively. The federal funds rate is the interest rate at which

depository institutions lend balances at the Fed to other

depository institutions overnight.

October 1 UBS announced write downs of $3.4

billion.

October 15 Citigroup announced write downs of

$5.9 billion.

October 24 Merrill announced a loss from its

loan portfolio (primarily CDOs) of $7.9 billion.

October 31 Deutsche Bank announced write downs

of $3 billion.

October 31 The Fed cut the discount rate and

the federal funds rate each by 25 basis points to 5.00% and 4.50%,

respectively.

November 1 Credit Suisse announced write downs

of $1 billion.

November 7 Morgan Stanley announced write

downs of $3.7 billion.

November 9 Wachovia announced write downs of

$1.1 billion.

November 13 Bank of America announced write

downs of $3 billion.

November 27 Citigroup raised capital by

issuing mandatory convertible securities to Abu Dhabi Investment

Authority. The securities had a yield of 11%.

December 5 Fannie Mae announced it would raise

$7 billion in capital and reduce dividends paid to its

shareholders.

December 6 The Paulson-Jackson plan was

announced, which froze mortgage rates on subprime adjustable rate

mortgages for a period of five years for eligible participants. To

be eligible, in general, the subprime adjustable rate mortgage must

have been originated between January 2005 and July 2007, and the

interest rate must be reset at a higher rate. The plan was limited

to owner occupied properties. In addition, in general, the borrower

must be current in payments, must prove that he/she cannot afford a

higher payment, and must have some equity in the home.

December 10 UBS announced write downs of an

additional $10 billion.

December 11 The Fed cut the discount rate and

the federal funds rate by 25 basis points to 4.75% and 4.25%,

respectively.

December 20 Congress enacted the Debt Relief

Act of 2007, designed to provide relief to borrowers in foreclosure

by excluding mortgage debt forgiven by a lender from gross income.

2008 – The Perfect Storm

January 11 Bank of America announced it would

acquire Countrywide, the largest U.S. mortgage lender, for $4

billion. Countrywide was on the verge of bankruptcy.

January 15 Citigroup announced a loss of $9.8

billion and write downs of $18 billion.

January 17 Merrill announced a loss of $7.8

billion and write downs of $14.1 billion.

January 22 The Fed cut the discount rate and

the federal funds rate each by an unexpected 75 basis points to

4.00% and 3.50%, respectively.

January 24 A $150 billion U.S. economic

stimulus plan was unveiled in which eligible taxpayers would

receive tax refunds ranging from $300 to $1,200, subject to a

phase-out for high-income earners.

January 30 The Fed cut the discount rate and

the federal funds rate by an additional 50 basis points to 3.50%

and 3.00%, respectively.

February 12 Auctions of auction rate

securities, reported to be a $330...

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