2008 Year in Review: The Economy, Government and Financial Markets: January - September

In August of 2007, mounting losses on sub-prime mortgages and mortgage-related securities began to strain financial institutions around the world. The repercussions from these losses have triggered a period of severe turbulence in world financial markets. In response, the Federal Reserve, the U.S. Treasury and other federal agencies have taken a series of actions, some unprecedented, to stem the turmoil.

2008 - January - September

Jan. 11: Bank of America acquires failing Countrywide.
Jan. 22: The Federal Reserve cuts the discount rate to 3.5%.
Jan. 30: Federal Reserve cuts the discount rate to 3.0%.

Feb. 07: Congress passes the Economic Stimulus Act to provide 159 million rebate checks to help the economy.

Mar. 11:  The Federal Reserve announces the creation of Term Securities Lending Facility (TSLF) with a $200 billion rescue package to banks and investment houses, allowing them to put up the risky mortgage-backed securities as collateral.
Mar. 14: JP Morgan Chase and Company announces the acquisition of Bear Stearns.
Mar. 16: The Fed announces it will loan $29 billion to JP Morgan Chase to purchase Bear Sterns.
Mar. 18: The Fed cuts the discount rate to 2.25%.

Apr. 30: The Fed cuts the discount rate to 2.00%.

June 05: The Fed approves the acquisition of Countrywide by Bank of America.  Standard and Poor’s downgrades AMBAC and MBIA from AAA to AA.

July 11: The Office of Thrift Supervision seizes IndyMac Bank and FDIC pays out $9 billion to depositors.
July 13: The Fed increases the credit line to both Fannie Mae and Freddie Mac.
July 30: Congress passes the Housing and Economic Recovery Act, authorizing $300 billion to help troubled homeowners (HOPE Program).  Another $100 billion goes to Fannie and Freddie, to bring a steady supply of mortgages to homebuyers, and conforming loan amounts, including FHA, are increased

Aug. 05: The Fed lowers the discount rate to 1.75%.

Sept. 07: Treasury puts Freddie Mac and Fannie Mae into conservatorship, pledging $200 billion to back assets.
Sept. 14: Bank of America announces the acquisition of Merrill Lynch.
Sept. 15: The Fed can not find a buyer for Lehman Bros. which is forced to file for bankruptcy.
Sept. 16: The Fed injects $85 billion into AIG to cover major calls on credit default swaps.  The Fed injects $70 billion more into the nation’s financial system.
Sept. 17: SEC temporarily halts short-selling of stocks.
Sept: 19: The Fed guarantees $50 billion to depositors of money market funds.
Sept. 25: The Office of Thrift Supervision seizes Washington Mutual and then sells it to JP Morgan Chase with guarantees backed by FDIC.
Sept. 29: The Fed makes an extra $330 billion available to other central banks, boosting to $620 billion the amount available to the Fed through currency “swaps” arrangements for foreign currencies.  The Fed triples to $225 billion the amount available for short-term loans to U.S. financial institutions.  Citibank enters into an agreement to acquire Wachovia with guarantees from the FDIC.

Next Post - 2008 Economic Year in Review: Continued.
We will see how the Fed increased the activity in Decemeber leading into 2009. This is an excerpt from an economic forecast that I attended given by Gary Watts who is a Realtor and economist. You can find out more about me,  Brian Richard, on my website. Thanks for reading and let me know your thoughts...