Financial Crisis Timeline
• Sunday, September 7, 2008: Fannie Mae and Freddie Mac's portfolio of bad subprime loans cause the mortgage giants to turn to the Federal government for a $200 billion guarantee, effectively nationalizing the companies. The takeover causes a panic on Wall Street, as Fannie and Freddie own or guarantee about half of the U.S. mortgage market.
• Sunday, September 14, 2008: Lehman Brothers announces it is filing for bankruptcy. Bank of America announces it will buy Merrill Lynch for $50 billion. AIG, the country’s largest insurer, announces that it will sell troubled assets to raise capital.
• Monday, September 15, 2008: AIG’s credit rating is downgraded after it has trouble raising capital. Reports emerge that Washington Mutual is also in danger of becoming insolvent. The Dow drops 500 points, its worst loss in 7 years.
• Tuesday, September 16, 2008: The Federal government announces an $85 billion bailout of AIG and takes an 80% stake in the company.
• Friday, September 19, 2008: President Bush announces support for a giant bailout of the financial industry, the details of which are outlined by Secretary of the Treasury Hank Paulson.
• Saturday, September 20, 2008: The President and Paulson deliver the $700 billion bailout plan to Congress.
• Sunday, September 21, 2008: Goldman Sachs and Morgan Stanley, the last remaining independent Wall Street investment banks, announce they will convert to traditional bank holding companies in order to have greater access to Federal Reserve funds while accepted stricter regulation by the federal government.
• Monday, September 22, 2008: Morgan Stanley agrees to sell up to a fifth of its company to a Japanese bank. The dollar suffers its biggest single-day loss of value in four years, and the Dow drops 373 points.
• Tuesday, September 23, 2008: Treasury Secretary Henry Paulson and Fed Chair Ben Bernanke testify before the Senate Banking committee, chaired by Chris Dodd, to defend the $700 billion bailout. Dodd proposes a bailout plan of his own that would give government ownership stakes in private companies.
• Wednesday, September 24, 2008: FBI begins investigations of firms at the heart of the financial crisis, including Fannie Mae, Freddie Mac, and AIG to determine whether high-level fraud played a role in the financial collapse.
• Thursday, September 25, 2008: Negotiations over the bailout package break down amid widespread outcry over the plan. On Thursday night, Washington Mutual collapses in the biggest bank failure in history. The FDIC backs a deal which allows JPMorgan Chase to acquire WaMu’s assets.
• Friday, September 26, 2008: Stocks tumble again. John McCain and Barack Obama discuss the financial crisis in the first presidential debate.
• Saturday, September 27, 2008: Republicans introduce alternative to $700 billion bailout plan which would insure troubled mortgages while limiting the use of taxpayer money. The plan is rejected by Democrats and the Treasury department.
• Sunday, September 28, 2008: Wachovia bank verges on collapse, sparking a bidding war between Citigroup and Wells Fargo.
• Monday, September 29, 2008: The House of Representatives defeats the $700 billion bailout bill amid widespread public opposition to the plan. Citibank agrees to buy Wachovia’s assets for $2.2 billion after the FDIC backs the deal. A federal grand jury begins investigating accounting and disclosure issues at Fannie Mae and Freddie Mac, which were taken over by the federal government earlier in the month. The Dow suffers it's largest one-day loss in history.
• Tuesday, September 30, 2008: FDIC increases the limit on the amount of money it can insure. President Bush addresses the country on the failure of the bailout plan. The Dow rebounds from the previous day’s losses, but credit markets remain frozen.
• Wednesday, October 1, 2008: Chris Dodd votes "Yes" on a Senate version of the bailout plan giving the government ownership stakes in private banks. The plan costs $810 billion, including $110 million in additional, unrelated spending not included in the defeated House plan.
