Financial Meltdown
An unprecedented upheaval in financial markets led to one of the most tumultuous times in Wall Street's 216-year history. Here is a brief synopsis of major events in the meltdown.
|
|
|
 |
Reports indicate state-owned Korea Development Bank was considering buying a 25 percent stake in Lehman Brothers.
Dow -29
LINK: Eye On The Economy
|
|
|
|
Officials seize both Fannie Mae and Freddie Mac, temporarily putting them in a government conservatorship, replacing their chief executives and taking a government financial stake in the companies.
|
|
|
|
Shares of Lehman Brothers plunge 52 percent amid worries the investment bank is struggling to find new investors and raise capital. Reports say the talks with KDB have ended.
Dow +286 (9/8), Dow -284 (9/9)
|
|
|
|
Lehman Brothers says it lost $3.9 billion in its fiscal third quarter and plans a number of moves to shore up its balance sheet. The firm says it will consider all "strategic alternatives," a Wall Street synonym for seeking a buyer.
Dow +35
|
|
|
|
The Federal Reserve Bank of New York holds an emergency meeting with top Washington policymakers and major financial institutions to discuss Lehman's future, as the firm struggles to find a buyer.
Dow -7
|
|
|
|
After a weekend of furious negotiations, U.S. regulators make it clear there will be no government bailout of Lehman Brothers. Fearful of the likely fallout from a Lehman failure, Merrill Lynch & Co. arranges a hasty deal to be bought by Bank of America Corp. for $50 billion in stock.
|
|
|
|
|
|
|
Lehman Brothers is forced to declare bankruptcy, the largest ever in the U.S. Investor concerns quickly turn to American International Group Inc., the nation's largest insurer, as downgrades to its debt by all three credit ratings agencies lead to a plunge in its stock price.
Dow -499
|
|
|
|
Government announces an $85 billion emergency loan to rescue AIG, saying a failure of the insurer could have sent shock waves throughout global markets. Two remaining major independent investment banks, Goldman Sachs Group Inc. and Morgan Stanley, report third-quarter profits above Wall Street's expectations. A massive pullout from Reserve Primary Fund, a $62 billion money market fund, causes its holdings to fall below its total deposits. Money market funds are typically considered to be almost as safe as cash.
Dow +153
|
|
|
|
A major investor in ailing Washington Mutual Inc. removes a potential obstacle to a sale of the thrift. Morgan Stanley and Wachovia Corp. are said to be in talks about a possible combination.
Dow -447
|
|
|
|
|
|
|
The Fed and several other central banks inject as much as $180 billion into money markets. The Fed also added another $55 billion in overnight loans. Putnam Investments closes a $15 billion money market fund after institutional clients pull their cash.
Dow +411
|
|
|
|
Treasury Secretary Henry Paulson says he will formulate a plan to help banks remove toxic assets from their books, Dow jumps than 350 points. The Fed says it will expand its emergency lending, let commercial banks finance purchases of asset-backed paper from money market funds. Injects another $20 billion in temporary reserves.
The Treasury Dept. says it will tap into a Depression-era fund to provide guarantees for money market funds.
SEC enacts temporary ban on the short-selling of nearly 800 financial stocks.
Dow +361
|
|
|
|
Congressional leaders and the Bush administration haggle over details of the massive $700 billion financial bailout legislation. Main stumbling blocks are executive compensation, government purchase of equity in faltering companies, allowing judges to rewrite bankrupt homeowners' mortgages so they could avoid foreclosure.
Dow -379
|
|
|
|
Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson testify before Senate Banking Committe about their bailout plan. Lawmakers in both parties demanded changes to the administration's proposal despite dire warnings from top economic officials of recessions, layoffs and lost homes if Congress doesn't approve it quickly.
Dow -162
|
|
|
|
Lawmakers and Bush administration officials got closer to agreement on a Wall Street rescue plan but were still wrangling over major elements, including how to phase in the eye-popping cost without spooking markets and the government's stake in troubled companies as part of the rescue. The president, in a prime-time television address, acknowledged that the bailout would be a "tough vote" for lawmakers but said failing to approve it would risk dire consequences for the economy and most Americans.
Dow -29
|
|
|
|
Federal Deposit Insurance Corp. seized Seattle-based Washington Mutual Inc., one of the country's biggest banks, and sold its banking assets to JPMorgan. Since the credit crisis started, WaMu has been hurt by a sharp rise in defaults in its mortgage portfolio. It is the largest bank ever to fail in the nation's history. Meanwhile, after early reports of agreement "in principal" on the Wall Street bailout, a White House meeting descended into arguments between Republicans which put the plan in jeopardy.
Dow +197
|
|
|
|
Negotiators from Congress and the Bush administration continued to work on the administration's $700 billion bailout proposal.
Dow +124
|
|
|
|
The House defeated a $700 billion emergency rescue package, ignoring urgent pleas from President Bush and congressional leaders from both sides of the aisle to quickly bail out the staggering financial industry. Stocks plummeted on Wall Street even before the 228-205 vote to reject the bill was announced on the House floor.
Dow -778
|
|
|
|
Congressional leaders scrambled to come up with changes to help them sell the failed $700 billion U.S. financial rescue plan to rank-and-file members. One idea gathering support: raise the federal deposit insurance limit to reassure nervous savers and help small businesses. Meanwhile, President Bush made another statement at the White House. "Congress must act," he said.
Dow +485
|
|
|
|
The Senate prepared to vote on its own version of a financial rescue plan which passed easily in a vote held after markets closed and was sent to the House.
Dow -19
|
|
|
|
A Fed report revealed banks and investment firms ramped up borrowing from the Federal Reserve's emergency lending facility over the past week, providing fresh evidence of the credit stresses squeezing the country. Meanwhile President Bush and congressional backers of the $700 billion financial industry bailout carried out high-intensity lobbying on the eve of a crucial House vote.
Dow -348
|
|
|
|
The House voted 263-171 to send the Senate-passed version of an unprecedented $700 billion government bailout of the battered financial industry to President Bush, which the president promptly signed into law.
Dow -157
|
|
|
|
Wall Street suffered through another extraordinary and traumatic session with the Dow Jones industrials plunging as much as 800 points — their largest one-day point drop — before recovering to close with a loss of 370. The catalyst for the selling, which also took the Dow below 10,000 for the first time in four years, was investors' growing despair that the spreading credit crisis will take a heavy toll around the world.
Dow -370
|
|
|
|
Stocks continued to plunge after Federal Reserve chairman Ben Bernanke warned that the financial crisis will make the current economic downturn last even longer. In a speech to the National Association of Business Economics, Bernanke said "the outlook for economic growth has worsened." He says the financial turmoil is adding to how long we will see a period of a weakened economy and an increased "risk to economic growth."
Dow -508
|
|
|
|
The Federal Reserve, joined by other central banks, cut benchmark interest rates. Treasury Secretary Henry Paulson says global financial markets remain severely strained and that even with the implementation of the government's $700 billion rescue program to buy bad assets from financial institutions, some banks will fail. He also called for patience saying "the turmoil will not end quickly and significant challenges remain ahead."
Dow -191
|
|
|
|
Citigroup walks away from its attempt to buy Wachovia, handing victory to Wells Fargo. The Dow Jones falls below 9,000 for the first time in five years and briefly dips below 8,000.
Dow -682
|
|
|
|
European leaders agree to guarantee bank borrowing and use government money to prevent big lenders from going under, hoping to stave off a recession.
|
|
|
|
The Fed leads unprecedented push by central banks to flood the financial system with as many dollars as banks want, helping to reduce money-market rates. Royal Bank of Scotland Group Plc, HBOS Plc, and Lloyds TSB Group Plc get an unprecedented 37 billion bailout from the U.K. government as Germany, France and Spain prepare similar rescues. Wall Street storms back after its worst week ever, staging the biggest single-day stock rally since the Great Depression.
Dow +936
|
|
|
|
Despair over the economy sent Wall Street plunging again, propelling the Dow Jones industrials down to their second-largest point loss ever. Stocks fell on a combination of disheartening economic data, including a big drop in retail sales and a Federal Reserve report that said tight credit conditions are hurting businesses across the country.
Dow -733
|
|
|
|
Wall Street turned in another stunning finish and extended its unprecedented streak of volatility — this time, to the upside. The Dow Jones industrials finished up more than 400 points, after falling 380 in the opening minutes of the session.
Dow +401
|
|
|
|
Wall Street surged on a burst of optimism based on more signs of a reviving credit market and comments from Federal Reserve Chairman Ben Bernanke hinting that the government will take more steps to help the economy.
Dow +413
|
|
|
|
Wall Street retreated after forecasts from DuPont, Sun Microsystems and Texas Instruments raised fears that companies' outlooks for the fourth quarter and beyond could indeed signal a severe economic downturn. After logging sharp gains the previous session, the Dow Jones industrial average fell 2.5 percent, while the Nasdaq composite index lost more than 4 percent following a weak showing by technology names.
Dow -232
|
|
|
|
Wall Street tumbled again as investors worried that the global economy is poised to weaken even as parts of the credit market slowly show signs of recovery. Corporate profit forecasts, a jump in the dollar and falling oil prices signaled investor fears that an economic slowdown will sweep the globe even if lending begins to approach more normal levels.
Dow -514
|
|
|
|
Wall Street retreated again as fears about the health of the economy scared off bargain hunters who had briefly given the market a lift after two days of selling. The buying that had come in spurts disappeared as investors fretted that the economy is either in a recession or headed for one despite government relief efforts and gradual improvements in world credit markets. Two days of selling that sliced nearly 750 points off the Dow had drawn out some bargain seekers.
Dow -203
|
|
|
|
Wall Street capped another difficult week with steep losses, sending the major indexes to their lowest levels in more than five years as markets around the world skidded lower on the belief that a punishing economic recession is at hand.
Dow -312
|
|
|
|
Wall Street ended another highly volatile session with a big last-minute loss as investors' worries about a protracted economic downturn and tight credit erased budding optimism about a housing sector recovery. Almost all the decline in the Dow Jones Industrial Average came in the last 10 minutes.
Dow -203
|
|
|
|
It was another astounding day on Wall Street, with the Dow Jones industrials soaring as investors scooped up stocks that were pounded lower in recent sessions. Analysts said some investors were buying in anticipation of the expected Federal Reserve rate cut. Others said the market had just fallen too far. Investors also brushed off a big drop in consumer confidence reported by the Conference Board.
Dow +889
|
|
|
|
Wall Street received the interest rate cut it wanted, but still turned in a baffling late-day performance, shooting higher and then skidding lower in the very last minutes of trading as some investors rushed to cash in profits after the market's big advance.
Dow -74
|
|
|
|
Wall Street displayed some welcome signs of stability, pushing the Dow Jones industrial average up in a relatively calm session despite some downbeat economic news. The market that a week ago was reeling from fears about a recession took in stride the government's report of a drop in gross domestic product during the third-quarter.
Dow +190
|
|
|
|
The stock market closed out a horrendous October, its worst month in 21 years, with a big advance as more investors took chances on stocks turned into bargains by waves of intense selling.
Dow +144
|
|
|
|
Investors brushed off more weak economic data while they bought up stocks and propelled the Dow Jones industrials to its highest close in four weeks in the biggest Election Day rally ever for the Dow.
Dow +305
|
|
|
|
Volatility returned on Wall Street as a case of post-election nerves sent stocks plunging as investors, again anxious about a recession, wondered what impact a Barack Obama presidency will have on business and the overall economy.
Dow -486
|
|
|
|
Wall Street plunged for a second day as weak economic and corporate data triggered broad fears about the economy. Comments from computer gear maker Cisco Systems warning of slumping demand and retailers reporting weak sales for October have been the latest triggers for selling.
Dow -443
|
|
|
|
Wall Street hit levels not seen since 2003, with the Dow Jones industrial average falling below the 8,000 mark, as the fate of Detroit's Big Three automakers and the economy disheartened investors. Stocks tumbled as automakers pleaded for relief in Washington. Investors were also discouraged by the Fed's sharply lowered projection for economic activity this year and next.
Dow -427
|
|
|
|
Stocks plunged again to levels not seen in more than five years as hopes faded that lawmakers would quickly put together an aid package for U.S. automakers. Huge declines in the financial and energy sectors led stocks lower.
Dow -445
|
|
|
|
Wall Street put a stop to a terrifying decline and zoomed higher when word reached Wall Street that President-elect Barack Obama was going to tap the chief of the New York Federal Reserve, Timothy Geithner, as the next treasury secretary and hand him the herculean task of righting the U.S. financial system.
Dow +494
|
|
|
|
Plans announced for the Federal Reserve to inject another $800 billion into the U.S. economy in a further effort to stabilize the financial system. Treasury Secretary Henry Paulson said the stimulus package aims to make more lending available to consumers. About $600 billion will be used to buy up mortgage-backed securities while $200 billion is being targeted at unfreezing the consumer credit market.
|
|
|
|
Some of the world's wealthiest private and corporate investors are reported to be victims of an alleged $50 billion fraud by Wall Street broker Bernard Madoff. Madoff is said to have confessed to a huge Ponzi scheme fraud.
Prosecutors say Madoff, former head of Nasdaq has described the fraud as "one big lie."
|
|
|
|
Credits:
CBS/AP
|
|
|
