The timeline of the financial collapse could have almost daily entries.
But several events stand out as real markers of the Depression of our times.
From the then-shocking collapse of 85-year-old invesment bank Bear Stearns to the record-busting profits Goldman Sachs reported mid-July, here is a quick run-through.
On March 10, Bear Stearns denied it had liquidity problems. But on March 14 it announced it was accepting a $30 billion loan from J.P. Morgan, backed by the government. By March 16 J.P. Morgan announced it was purchasing Bear for a startingling low $2 per share, though it was upped to $10 per share by March 24. And then the 85-year-old investment bank was no more.
After the fall, long-time Bear chairman Jimmy Cayne (pictured) told the shareholders, 'I have no anger, only regret... Fourteen thousand families were affected. I personally apologise. I feel an enormous amount of pain and management feels an enormous amount of pain.' His words were reportedly met with silence.
Bank of America took over Countrywide - the poster-child for bad mortgage companies - on July 1. The deal was valued at $2.8 billion, down $1.2 billion from when Bank of America inintially announced the stock purchase in January 2008. The Bank of America purchase came near the end of Countrywide's storied collapse. Once boasting assets of $200 billion, the company was forced to draw down its $11.5 billion credit line in August 2007 when it could no longer sell or borrow against the home loans it had made.
The country's founder Angelo Mozillo left when Bank of America took over. In June 2009, the SEC charged Mozilo with securities fraud and insider trading and released emails where Mozilo called Countrywide's loan products 'toxic.'
September 2008 (Part 1)
September 2008 will go down in history as one of the most disatrous months in U.S. economic history, and it was kicked off on September 7, when the government took control of Fannie Mae and Freddie Mac, the country's two largest, and, at that point, highly controversial, mortgage finance companies. When the Fannie and Freddie executives, pictured, visited Congress, it is fair to say they didn't have too much fun. The New York Times called the bailout an 'extraordinary federal intervention in private enterprise' - a take that seems almost quaint today.
September 2008 (Part 2)
September 15 was a big day. Bank of America announced it would pay $50 billion for Merrill Lynch, turning BofA into a Citigroup-style monolith. Of course, we would later learn that Merrill was in even more trouble than assumed, BofA shareholders believe they were decevied and many a lawsuit and Congressional hearing followed.
Lehman Brothers (Chairman Dick Fuld, pictured), filed for bankruptcy on the 15th after announcing its third quarter, $3.9 billion loss on September 10. On September 16 the Federal Reserve loaned insurer AIG a cool $85 billion and we started hearing the phrase 'too big to fail' over and over.
On October 3, Wells Fargo and Wachovoia executives (pictured) found a reason to celebrate, as California-based Wells agreed to merge with Wachovia in a $15.1 billion all-stock merger, shocking Citi who thought it had the deal in the bag. Not surprisingly, litigation ensued.
By October 23, when Alan Greenspan testified before before a House committee and admitted a 'flaw' in his free market ideology, confidence in his past performance was more or less dismal. On October 28, consumer confidence hit its lowest point ever. A day later, the Fed cut its target for the federal funds rate to 1 per cent.
Following a week when Citigroup lost half its value in the stock market and deemed another institution that was 'too big to fail,' on November 23 the government approved a plan to try to stabilise the via assitance from the Fed, the FDIC and Treasury, all to the tune of more than $320 billion. And CEO Vikram Pandit would begin spending a lot of uncomfortable time in Washington.
President-elect Obama's choice for Treasury secretary, Timothy Geithner - then president of the New York Federal Reserve - was an active participant in the negotiations.
December 2008 - February 2009
It was on December 11 that Bernie Madoff told his sons of his Ponzi scheme - later valued at $65 billion - and was quickly arrested by federal agents. Of course, since none of the money was actually in the market, it had no true effect on the economy. But it was of course the spiraling economy that kept Madoff from continuing his game.
On December 16, the Fed dropped the interest rate to a range of 0 per cent to .25 per cent and on December 20, eleven of the world's largest banks were downgraded by the S&P. January 10 saw the unemployment rate rise to 7.2%
One month later, on February 10, Geithner testified in front of Congress about deriviate regulation and was largely criticised for lacking specifics.
Obama and the Treasury unveiled their Financial Regulatory Reform plan on June 17, proposing sweeping regulatory changes including the creation of several new agencies and increased authority for the Federal Reserve. Criticism came from all sides - some calling it overbroad and some saying it will do little to regulate the so-called 'shadow banking' system. Which of the proposals will actually be implemented remains to be seen.
As the July earnings report season continues to play out, it is already clear that no earnings announcement will make as big a splash as Goldman Sachs did on July 14. The boys at 85 Broad (pictured) posted a massive $3.44 billion second-quarter net profit, or $4.93 per share. Turns out, risk sometimes still pays. On June 16, J.P. Morgan's $2.7 billion profit led The New York Times to proclaim that 'a couple of victors are starting to tower over the handful of financial titans that used to dominate the industry.'
This month also brought us the roller-coaster that was CIT. The company, which provides loans to approximately a million small and mid-size companies, reached the brink of bankruptcy after being denied a federal bailout on July 15. It was saved on July 21 when some of its creditors agreed to provide CIT with a $3 billion emergency loan.
Also on July 21, Fed chair Bernanke told Congress that the economy is slowly improving, but not enough to merit interest rates much higher than zero. In other words, the sage continues...
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