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Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion.
In September 2008, the government seized control of mortgage giants Fannie Mae and Freddie Mac, who had funded more than two-thirds of US home loans in recent months. Treasury Secretary Henry Paulson said the government would start buying securities backed by mortgages.
Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis.
In September 2008, the government seized control of mortgage giants Fannie Mae and Freddie Mac. Treasury Secretary Henry Paulson said the government would start buying securities backed by mortgages. The Federal Reserve elected not to raise interest rates but Wall Street worried as global stocks plunged. Oil had dropped below $100 a barrel. Insurance giant AIG used $20 billion from its own insurance subsidiaries to ease a financial crunch.
Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG.
In September 2008, the government seized control of mortgage giants Fannie Mae and Freddie Mac. Treasury Secretary Henry Paulson said the government would start buying securities backed by mortgages. The Federal Reserve elected not to raise interest rates but Wall Street worried as global stocks plunged. Oil dropped below $100 a barrel. AIG used $20 billion from its own insurance subsidiaries to ease a financial crunch.
Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling."
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling."
In September 2008, The Federal Reserve elected not to raise interest rates but Wall Street worried as global stocks plunged. Banks abruptly stopped lending to each other, so cash became scarce, driving up the cost of capital. The SEC adopted new rules prohibiting abusive “naked short-selling.”
Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses.
In September 2008, banks abruptly stopped lending to each other, so cash became scarce, driving up the cost of capital. The Federal Government and central banks in Europe, Japan, and Canada teamed up to inject $180 billion into global markets to ease the cash crunch, while investors withdrew $80 billion from money market funds. The Bush administration urgently prepared a massive rescue plan to revive the US financial system. Stocks whipsawed as word spread of a possible US plan to address the crisis.
Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge.
In September 2008, banks abruptly stopped lending to each other, so cash became scarce, driving up the cost of capital. The Federal Government and central banks in Europe, Japan, and Canada teamed up to inject $180 billion into global markets to ease the cash crunch, while investors withdrew $80 billion from money market funds. The Bush Administration announced a government plan to remedy the crisis, and SEC temporarily banned short-selling in shares and expanded its investigations into credit default swaps. Stock markets soared with the details of the multibillion-dollar financial rescue plan.
Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date.
In September 2008, Democrats called for a bailout plan to aid struggling homeowners after banks abruptly stopped lending to each other, so cash became scarce, driving up the cost of capital. The Bush Administration announced a government plan to remedy the crisis, and SEC expanded its temporary ban on short selling of financial stocks to 900 companies in total. Fearing massive transfers from bank accounts to money market funds, the Treasury Department said it would only guarantee existing investments in money market funds.
Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets.
In September 2008, with cash scarce and the cost of capital driven up, democrats called for a bailout plan, but House Republicans were reluctant to approve the massive rescue plan. The SEC expanded its temporary ban on short selling of financial stocks to 900 companies in total. Fearing massive transfers from bank accounts to money market funds, the Treasury Department said it would only guarantee existing investments in money market funds. Lawmakers from both parties questioned policymakers on the first day of Capitol Hill hearings, and the FBI launched an investigation into whether fraud played a role in the collapse of finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG.
Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating.
In September 2008, with cash scarce and the cost of capital driven up, democrats called for a bailout plan, but House Republicans were reluctant to approve the massive rescue plan. President Bush urged Congress and the entire nation to support the proposed economic bailout. During his second day of testimony on Capitol Hill, Federal Reserve chairman Ben Bernanke told lawmakers the US economy was faltering. The FBI was investigating if fraud played a role in the collapse of finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG. Peter R. Orszag, the director of the Congressional Budget Office told the House Budget Committee that the proposed Wall Street bailout could actually worsen the current financial crisis.
Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000.
In September 2008, with cash scarce and the cost of capital driven up, democrats called for a bailout plan, but House Republicans were reluctant to approve the massive rescue plan. Negotiators from the Republican and Democratic parties said an agreement had been reached on basic principles governing the massive financial bailout, but later Republicans denied reports of an agreement. The FBI was investigating if fraud played a role in the collapse of finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG. Federal regulators seized troubled Washington Mutual in the largest bank failure in US history, then immediately sold much of the company to J.P. Morgan Chase a deal that would create the largest bank in the country.
Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed. With cash scarce and the cost of capital driven up, democrats called for a bailout bill to solve the nation’s financial crisis, but House Republicans were reluctant to approve the massive rescue plan.
Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed. With cash scarce and the cost of capital driven up, democrats called for a bailout bill to solve the nation’s financial crisis, but House Republicans were reluctant to approve the massive rescue plan, and the House rejected the $700 billion bailout legislation by a vote of 228-205. The Federal Reserve injected hundreds of billions of dollars into the world financial system in late September, in response to a plunge in overseas financial markets as a wave of new bank troubles hit Europe. The Department of Justice and the SEC launched investigations into Fannie Mae and Freddie Mac over accounting, disclosure, and corporate governance matters.
Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed. With cash scarce and the cost of capital driven up, democrats called for a bailout bill to solve the nation’s financial crisis, but House Republicans were reluctant to approve the massive rescue plan, and the House rejected the $700 billion bailout legislation by a vote of 228-205. The Federal Reserve injected hundreds of billions of dollars into the world financial system in late September, in response to a plunge in overseas financial markets as a wave of new bank troubles hit Europe. The Department of Justice and the SEC launched investigations into Fannie Mae and Freddie Mac. President Bush delivered a nationally televised address saying that the economic damage to the nation would be “painful and lasting” if Congress failed to pass the bailout bill.
Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed, and financial markets plunged overseas as a wave of new bank troubles hit Europe. With cash scarce and the cost of capital driven up, democrats called for a bailout plan to solve the nation’s financial crisis, but the House rejected the bailout legislation. The Senate approved a revised bailout bill, which was sent back to the House for approval. General Motors, Ford, Toyota, and Chrysler all reported double-digit sales drops, and wary bank customers continued to shuffle their funds.
Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed, and financial markets plunged overseas as a wave of new bank troubles hit Europe. With cash scarce and the cost of capital driven up, the Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis, but the House rejected it. The Senate approved a revised bailout bill, which was sent back to the House for approval. US stocks plunged, along with oil and commodities, on worries the economy would not improve. The Justice Department said it would seek criminal charges against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reported its third-quarter profit plunged and that it may have to cut thousands of jobs if economic conditions do not improve.
Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed, and financial markets plunged overseas as a wave of new bank troubles hit Europe. US stocks plunged, along with oil and commodities, on worries the economy would not improve. The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was finally approved in early October 2008. US employers shed 159,000 jobs in September, the most in more than five years.
Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed, giving way to the start of the US's financial crisis. US stocks had plunged, along with oil and commodities. The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was finally approved in early October 2008. The Federal Reserve took steps to funnel more money into the banking system while the US Treasury said it would increase its bond sales to pay for the $700 billion rescue plan. By early October, global markets continued to plummet over the health of the European banking system.
Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed, giving way to the start of the US's financial crisis. US stocks had plunged, along with oil and commodities, and US employers had shed 159,000 jobs. The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was finally approved in early October 2008. The Federal Reserve took steps to funnel more money into the banking system while the US Treasury said it would increase its bond sales to pay for the $700 billion rescue plan. By early October, global markets continued to plummet over the health of the European banking system.
Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed, giving way to the start of the US's financial crisis. US stocks had plunged, along with oil and commodities, and US employers had shed 159,000 jobs. The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was finally approved in early October 2008. The Federal Reserve and European Central banks simultaneously ordered emergency rate cuts of half a percentage point. The International Monetary Fund predicted a major global economic downturn. The British government promised to inject tens of billions of dollars in capital into U.K. banks.
Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed, giving way to the start of the US's financial crisis. US stocks had plunged, along with oil and commodities, and US employers had shed 159,000 jobs. The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was finally approved in early October 2008. The Federal Reserve and European Central banks simultaneously ordered emergency rate cuts of half a percentage point. The Treasury Department says it would allow the government to buy stakes in banks. J.D. Power said the auto industry might collapse in 2009, and GM said that bankruptcy was “not an option.” The British government promised to inject tens of billions of dollars in capital into U.K. banks. Asian markets began to rebound after interest rate cuts across the region eased investor fears.
Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed, giving way to the start of the US's financial crisis. US stocks had plunged, along with oil and commodities, and US employers had shed 159,000 jobs. The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was finally approved in early October 2008. Despite remediation attempts across the global market, by mid-October, stocks in Europe and Asia continued to plummet, and stock prices swung wildly on Wall Street.
Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed, giving way to the start of the US's financial crisis. US stocks had plunged, along with oil and commodities, and US employers had shed 159,000 jobs. The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was finally approved in early October 2008. Despite European governments having put hundreds of billions of dollars into their banking systems, by mid-October, across the global market, stocks in Europe and Asia continued to plummet. JD Power said the auto industry might collapse in 2009, and GM said that bankruptcy was “not an option.” Executives of the nation’s largest banks agreed to accept direct investments of taxpayer dollars, which would give the government an ownership stake in a variety of financial institutions.
Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed, giving way to the start of the US's financial crisis. US stocks had plunged, along with oil and commodities, and US employers had shed 159,000 jobs. The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was finally approved in early October 2008. Despite European governments having put hundreds of billions of dollars into their banking systems, by mid-October, across the global market, stocks in Europe and Asia continued to plummet. JD Power said the auto industry might collapse in 2009, and GM said that bankruptcy was “not an option.” Executives of the nation’s largest banks agreed to accept direct investments of taxpayer dollars, which would give the government an ownership stake in a variety of financial institutions. The US Federal Reserve said it will back up their effort by making US currency available in unlimited amounts. President Bush angered community banking executives after he provided more details of the government’s $700 billion bailout plan.
Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending.
In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG financially collapsed, giving way to the start of the US's financial crisis. US stocks had plunged, along with oil and commodities, and US employers had shed 159,000 jobs. The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was finally approved in early October 2008. Despite European governments having put hundreds of billions of dollars into their banking systems, by mid-October, across the global market, stocks in Europe and Asia continued to plummet. September retail sales in the US were reported to have fallen by the largest amount in three years. Banks were now hoarding cash and restricting lending as consumer credit card default rates rose.
Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout.
The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was approved in early October 2008. In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG had financially collapsed, giving way to the start of the US's financial crisis. In the US, stocks had plunged, along with oil and commodities, US employers had shed 159,000 jobs, and retail sales in the US were reported to have fallen by the largest amount in three years. Despite European governments having put hundreds of billions of dollars into their banking systems, by mid-October, across the global market, stocks in Europe and Asia continued to plummet on fear of a recession.
Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded.
The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was approved in early October 2008. In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG had financially collapsed, giving way to the start of the US's financial crisis. In the US, stocks had plunged, along with oil and commodities, US employers had shed 159,000 jobs, and consumer confidence plunged by the steepest amount on record in October. Despite European governments having put hundreds of billions of dollars into their banking systems, by mid-October, across the global market, stocks in Europe and Asia continued to plummet on fear of a recession.
Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need.
The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was approved in early October 2008. In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG had financially collapsed, giving way to the start of the US's financial crisis. In the US, stocks had plunged, along with oil and commodities, US employers had shed 159,000 jobs, and consumer confidence plunged by the steepest amount on record in October. Despite European governments having put hundreds of billions of dollars into their banking systems, by mid-October, across the global market, stocks in Europe and Asia continued to plummet on fear of a recession. The US Federal Reserve Chairman proposed Congress on a second economic stimulus package. China’s growth decelerated unexpectedly, which raised fears that the global financial crisis could pull one of the world’s fastest-growing economies into a recession.
Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan.
The Bush administration proposed a $700 billion bailout plan to solve the nation’s financial crisis which was approved in early October 2008. In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG had financially collapsed, giving way to the start of the US's financial crisis. In the US, stocks had plunged, along with oil and commodities, and employers began to aggressively cut jobs and reduce costs over the fear of a long and painful recession. Despite European governments having put hundreds of billions of dollars into their banking systems, by mid-October, across the global market, stocks in Europe and Asia continued to plummet. China’s growth decelerated unexpectedly, which raised fears that the global financial crisis could pull one of the world’s fastest-growing economies into a recession.
Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. Despite European governments putting hundreds of billions of dollars into their banking systems, by mid-October, across the global market, stocks in Europe and Asia continued to plummet. Executives from the US's leading credit-rating companies had privately acknowledged for more than a year that conflicts of interest contributed to the industry’s failures.
Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. Despite European governments putting hundreds of billions of dollars into their banking systems, by mid-October, across the global market, stocks in Europe and Asia continued to plummet. Executives from the US's leading credit-rating companies had privately acknowledged for more than a year that conflicts of interest contributed to the industry’s failures. A month after the government stepped in to save it from bankruptcy, troubled insurance giant AIG had already consumed three-quarters of its rescue loan from the US government.
Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. Despite European governments putting hundreds of billions of dollars into their banking systems, by late October, tumbling corporate profit reports and poor economic news provoked a wave of selling that gutted Asian and European markets.
Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. Despite European governments putting hundreds of billions of dollars into their banking systems, by late October, tumbling corporate profit reports and poor economic news provoked a wave of selling that gutted Asian and European markets. In the US, home values continued to plummet despite a rise in new home sales. Fifteen banks agreed to accept government investments, joining the nine largest banks that were forced to accept the funding.
Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. Despite European governments putting hundreds of billions of dollars into their banking systems, by late October, tumbling corporate profit reports and poor economic news provoked a wave of selling that gutted Asian and European markets. In the US, home values continued to plummet despite a rise in new home sales. Fifteen banks agreed to accept government investments, joining the nine largest banks that were forced to accept the funding. Central bankers slash interest rates causing global stocks to rebound from a string of losses.
Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. Despite European governments putting hundreds of billions of dollars into their banking systems, by late October, tumbling corporate profit reports and poor economic news provoked a wave of selling that gutted Asian and European markets. In the US, home values continued to plummet despite a rise in new home sales. With 3 million homeowners struggling to avoid foreclosure, the Treasury and FDIC began crafting a plan in which the government would guarantee the mortgages. To prevent a global shortage of dollars, the Federal Reserve would lend money to central banks in several emerging nations.
Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. 3 million homeowners were struggling to avoid foreclosure as home values continued to plummet. Despite European governments putting hundreds of billions of dollars into their banking systems, by late October, tumbling corporate profit reports and poor economic news provoked a wave of selling that gutted Asian and European markets. Data showed that the US economy had shrunk, confirming an economic slowdown was already showing itself through steady job losses and declining consumer sales.
Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. 3 million homeowners were struggling to avoid foreclosure as home values continued to plummet. Despite European governments putting hundreds of billions of dollars into their banking systems, by late October, tumbling corporate profit reports and poor economic news provoked a wave of selling that gutted Asian and European markets. Data showed that the US economy had shrunk, confirming an economic slowdown was already showing itself through steady job losses and declining consumer sales. In early November 2008, J.P. Morgan Chase began modifying mortgages under a program for 400,000 families in their homes.
Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. 3 million homeowners were struggling to avoid foreclosure as home values continued to plummet. Despite European governments putting hundreds of billions of dollars into their banking systems, by late October, tumbling corporate profit reports and poor economic news provoked a wave of selling that gutted Asian and European markets. Data showed that the US economy had shrunk, confirming an economic slowdown was already showing itself through steady job losses and declining consumer sales. A survey of 102 top economists said the recession would continue through all of 2009.
Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. 3 million homeowners were struggling to avoid foreclosure as home values continued to plummet.
Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. 3 million homeowners were struggling to avoid foreclosure as home values continued to plummet. Despite European governments putting hundreds of billions of dollars into their banking systems, by late October, tumbling corporate profit reports and poor economic news provoked a wave of selling that gutted Asian and European markets. After Obama was elected as the 44th President of the United States, Nancy Pelosi, again called for Congress to approve a second economic-stimulus plan aimed at consumers. The Center for Automotive Research said that if Detroit automakers GM, Ford, and Chrysler failed, 3 million jobs across the entire auto sector would be lost.
Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. 3 million homeowners were struggling to avoid foreclosure as home values continued to plummet. By early November, central banks across the globe began to benchmark interest rates. US companies continued to cut down their workforce to reduce payroll, and the Labor Department reported spikes in long-term unemployment benefits, the highest in 25 years.
Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs and reduce costs after consumer confidence plunged over the fear of a long and painful recession. 3 million homeowners were struggling to avoid foreclosure as home values continued to plummet. Despite European governments putting hundreds of billions of dollars into their banking systems, by late October, tumbling corporate profit reports and poor economic news provoked a wave of selling that gutted Asian and European markets. By early November, central banks across the globe began to benchmark interest rates, and the US economy reported a loss of 240,000 jobs in October. The president of the Atlanta Fed predicts the US economy would not turn around until at least the second half of 2009.
Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs, with a reported loss of 240,000 jobs in the US Economy. 3 million homeowners were struggling to avoid foreclosure as home values continued to plummet. Meanwhile, in the US, AIG gets an expanded package from $123 billion to $150 billion. Companies DHL and Starbucks report more losses and job cuts, and Circuit City files for Chapter 11 bankruptcy.
Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, and employers began to aggressively cut jobs, with a reported loss of 240,000 jobs in the US Economy. 3 million homeowners were struggling to avoid foreclosure as home values continued to plummet. The US government announced a new program to help hundreds of thousands of homeowners at risk for foreclosure. Nancy Pelosi said the House would vote on a plan to provide emergency cash to the nation’s battered automobile industry.
Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers began to aggressively cut jobs, with a reported loss of 240,000 jobs in the US Economy. The US government announced a new program to help hundreds of thousands of homeowners at risk for foreclosure. Across the globe, governments had put hundreds of billions of dollars into their banking systems, and central banks across began to benchmark interest rates. China announced a $586 billion stimulus package, the largest in the country’s history. US Treasury Secretary said the $700 billion government rescue program would not be used to purchase troubled assets as originally planned.
Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers began to aggressively cut jobs, home foreclosures rose 25 percent, and jobless claims increased to 516,000. Across the globe, governments had put hundreds of billions of dollars into their banking systems, and central banks began to benchmark interest rates to mitigate and avoid a global recession.
Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers began to aggressively cut jobs, home foreclosures rose 25 percent, and jobless claims increased to 516,000. Across the globe, governments had put hundreds of billions of dollars into their banking systems, and central banks began to benchmark interest rates to mitigate and avoid a global recession. In Europe, Federal Reserve Chairman pledged to fix global financial problems proposing fresh interest rate cuts to help brace the sinking US economy.
Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000. Home foreclosures rose 25 percent. Across the globe, governments had put hundreds of billions of dollars into their banking systems, and central banks began to benchmark interest rates to mitigate and avoid a global recession. In Europe, Federal Reserve Chairman pledged to fix global financial problems proposing fresh interest rate cuts to help brace the sinking US economy.
Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000. Home foreclosures rose 25 percent, and reports showed that median home prices fell in 79 percent of 152 US cities surveyed, dropping 9% from the prior year. In Europe, Federal Reserve Chairman pledged to fix global financial problems proposing fresh interest rate cuts to help brace the sinking US economy.
Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000. Home foreclosures rose 25 percent, and October housing plunged to its lowest level since October 1959. Across the globe, governments had put hundreds of billions of dollars into their banking systems, and central banks began to benchmark interest rates to mitigate and avoid a global recession. In Europe, Federal Reserve Chairman pledged to fix global financial problems proposing fresh interest rate cuts to help brace the sinking US economy.
Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000. Home foreclosures rose 25 percent, and October housing plunged to its lowest level since October 1959. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the auto industry. Across the globe, governments were making attempts at avoiding a global financial crisis and recession by cutting interest rates and injecting money into their banking systems by providing bailouts.
Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000. Home foreclosures rose 25 percent, and October housing plunged to its lowest level since October 1959. The government sent GM, Ford, and Chrysler a letter with the terms that the troubled automakers must meet for Congress to consider a multi-billion-dollar loan.
Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000. Home foreclosures rose 25 percent, and October housing plunged to its lowest level since October 1959. Democrats were rapidly elaborating plans for a massive fiscal stimulus program that could total as much as $700 billion over the next two years.
Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000. Home foreclosures rose 25 percent, and October housing plunged to its lowest level since October 1959. Democrats were rapidly elaborating plans for a massive fiscal stimulus program. The Federal Reserve and Treasury moved to boost consumer spending by committing up to $800 billion to make it easier for households to borrow money for cars, tuition bills, and new homes. Across the globe, governments were making attempts at avoiding a global financial crisis and recession by cutting interest rates and injecting money into their banking systems by providing bailouts. China had announced a $586 billion stimulus package, the largest in the country’s history.
Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation. Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000, as consumer confidence had fallen to a 28-year low. Democrats were rapidly elaborating plans for a massive fiscal stimulus program to boost consumer spending by committing up to $800 billion to make it easier for households to borrow money for cars, tuition bills and new homes. Across the globe, governments were making attempts at avoiding a global financial crisis and recession by cutting interest rates and providing bailouts.
Date: 2008-11-28, Update: On Black Friday, the day after Thanksgiving, shoppers begin the holiday shopping season by looking for bargains. The British government takes over Royal Bank of Scotland Group with a nearly 60 percent stake in a $31 billion rescue after shareholders of the country's second-largest bank rejected an emergency share issue. Wall Street's holiday rally continues, with the Dow Jones Industrial Average up 9.7 percent for the week. Retailers successfully rouse many bargain-hungry shoppers out of bed with aggressive discounts on electronics, toys, and clothing, but consumers keep a close eye on their own bottom lines.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation. Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama. Date: 2008-11-28, Update: On Black Friday, the day after Thanksgiving, shoppers begin the holiday shopping season by looking for bargains. The British government takes over Royal Bank of Scotland Group with a nearly 60 percent stake in a $31 billion rescue after shareholders of the country's second-largest bank rejected an emergency share issue. Wall Street's holiday rally continues, with the Dow Jones Industrial Average up 9.7 percent for the week. Retailers successfully rouse many bargain-hungry shoppers out of bed with aggressive discounts on electronics, toys, and clothing, but consumers keep a close eye on their own bottom lines.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000, as consumer confidence had fallen to a 28-year low. Democrats were rapidly elaborating plans for a massive fiscal stimulus program to boost consumer spending by committing up to $800 billion to make it easier for households to borrow money for cars, tuition bills and new homes. Shoppers kicked off the holiday shopping season by bargain hunting as retailers manage to rouse man shoppers with aggressive discounts on electronics, toys, and apparel. The government had sent GM, Ford, and Chrysler a letter with the terms that the troubled automakers must meet for Congress to consider a multi-billion-dollar loan.
Date: 2008-12-01, Update: While speaking at the Fortune 500 Forum in Washington, Treasury Secretary Henry Paulson provides an update on the Federal bailout. The nonprofit National Bureau of Economic Research announced in December 2007 that the US economy had entered a recession. In response, stock prices plummet. Treasury Secretary Henry Paulson says the administration is looking for new ways to tap a $700 billion financial rescue fund, while Federal Reserve Chairman Ben Bernanke says he is willing to keep cutting interest rates in order to limit the damage caused by the downturn. The Big Three automakers are rushing to create new business plans to present to Congress in their bid for $25 billion in federal assistance. Gas prices have dropped for the 75th consecutive day, to a national average of $1.82 per gallon, the biggest drop since January 2005.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation. Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama. Date: 2008-11-28, Update: On Black Friday, the day after Thanksgiving, shoppers begin the holiday shopping season by looking for bargains. The British government takes over Royal Bank of Scotland Group with a nearly 60 percent stake in a $31 billion rescue after shareholders of the country's second-largest bank rejected an emergency share issue. Wall Street's holiday rally continues, with the Dow Jones Industrial Average up 9.7 percent for the week. Retailers successfully rouse many bargain-hungry shoppers out of bed with aggressive discounts on electronics, toys, and clothing, but consumers keep a close eye on their own bottom lines. Date: 2008-12-01, Update: While speaking at the Fortune 500 Forum in Washington, Treasury Secretary Henry Paulson provides an update on the Federal bailout. The nonprofit National Bureau of Economic Research announced in December 2007 that the US economy had entered a recession. In response, stock prices plummet. Treasury Secretary Henry Paulson says the administration is looking for new ways to tap a $700 billion financial rescue fund, while Federal Reserve Chairman Ben Bernanke says he is willing to keep cutting interest rates in order to limit the damage caused by the downturn. The Big Three automakers are rushing to create new business plans to present to Congress in their bid for $25 billion in federal assistance. Gas prices have dropped for the 75th consecutive day, to a national average of $1.82 per gallon, the biggest drop since January 2005.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000, as consumer confidence had fallen to a 28-year low. Democrats were rapidly elaborating plans for a massive fiscal stimulus program to boost consumer spending by committing up to $800 billion to make it easier for households to borrow money for cars, tuition bills and new homes. The government had sent The Big Three automakers terms that the troubled automakers must meet for Congress to consider a multi-billion-dollar loan, and the three companies rushed to prepare new business plans for the $25 billion bid in federal aid.
Date: 2008-12-02, Update: The Big Three automakers unveil their new business plans to Congress in a bid for $25 billion in federal aid to help them survive and thrive. Major automakers report declining sales in November: Ford sales fell 31 percent, Toyota sales dropped 34 percent, General Motors sales were down 41.3 percent, Chrysler sales fell 47 percent and Honda sales fell 32 percent. President-elect Barack Obama meets with US state governors, who urge him to use a stimulus plan to build out infrastructure and support the poor as state budgets are pummeled by the economic downturn.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation. Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama. Date: 2008-11-28, Update: On Black Friday, the day after Thanksgiving, shoppers begin the holiday shopping season by looking for bargains. The British government takes over Royal Bank of Scotland Group with a nearly 60 percent stake in a $31 billion rescue after shareholders of the country's second-largest bank rejected an emergency share issue. Wall Street's holiday rally continues, with the Dow Jones Industrial Average up 9.7 percent for the week. Retailers successfully rouse many bargain-hungry shoppers out of bed with aggressive discounts on electronics, toys, and clothing, but consumers keep a close eye on their own bottom lines. Date: 2008-12-01, Update: While speaking at the Fortune 500 Forum in Washington, Treasury Secretary Henry Paulson provides an update on the Federal bailout. The nonprofit National Bureau of Economic Research announced in December 2007 that the US economy had entered a recession. In response, stock prices plummet. Treasury Secretary Henry Paulson says the administration is looking for new ways to tap a $700 billion financial rescue fund, while Federal Reserve Chairman Ben Bernanke says he is willing to keep cutting interest rates in order to limit the damage caused by the downturn. The Big Three automakers are rushing to create new business plans to present to Congress in their bid for $25 billion in federal assistance. Gas prices have dropped for the 75th consecutive day, to a national average of $1.82 per gallon, the biggest drop since January 2005. Date: 2008-12-02, Update: The Big Three automakers unveil their new business plans to Congress in a bid for $25 billion in federal aid to help them survive and thrive. Major automakers report declining sales in November: Ford sales fell 31 percent, Toyota sales dropped 34 percent, General Motors sales were down 41.3 percent, Chrysler sales fell 47 percent and Honda sales fell 32 percent. President-elect Barack Obama meets with US state governors, who urge him to use a stimulus plan to build out infrastructure and support the poor as state budgets are pummeled by the economic downturn.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000, as consumer confidence had fallen to a 28-year low. Democrats were rapidly elaborating plans for a massive fiscal stimulus program to boost consumer spending by committing up to $800 billion to make it easier for households to borrow money for cars, tuition bills and new homes. The Big Three automakers presented Congress with new business plans for the $25 billion bid in federal aid.
Date: 2008-12-03, Update: Alan Mulally, CEO of Ford, met with Post editors and reporters to discuss the auto bailout. The Treasury Department is considering a plan to intervene directly in the mortgage industry in order to significantly lower interest rates and stimulate the housing market. Capital One intends to acquire Chevy Chase Bank. According to reports in The Federal Government's Beige Book, business conditions in the United States have weakened as private employers cut jobs and the nation's service sector contracted. The UAW says it will allow automakers to postpone payments to a healthcare fund for retired workers and suspend a program that pays laid-off workers for up to two years in two new concessions.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation. Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama. Date: 2008-11-28, Update: On Black Friday, the day after Thanksgiving, shoppers begin the holiday shopping season by looking for bargains. The British government takes over Royal Bank of Scotland Group with a nearly 60 percent stake in a $31 billion rescue after shareholders of the country's second-largest bank rejected an emergency share issue. Wall Street's holiday rally continues, with the Dow Jones Industrial Average up 9.7 percent for the week. Retailers successfully rouse many bargain-hungry shoppers out of bed with aggressive discounts on electronics, toys, and clothing, but consumers keep a close eye on their own bottom lines. Date: 2008-12-01, Update: While speaking at the Fortune 500 Forum in Washington, Treasury Secretary Henry Paulson provides an update on the Federal bailout. The nonprofit National Bureau of Economic Research announced in December 2007 that the US economy had entered a recession. In response, stock prices plummet. Treasury Secretary Henry Paulson says the administration is looking for new ways to tap a $700 billion financial rescue fund, while Federal Reserve Chairman Ben Bernanke says he is willing to keep cutting interest rates in order to limit the damage caused by the downturn. The Big Three automakers are rushing to create new business plans to present to Congress in their bid for $25 billion in federal assistance. Gas prices have dropped for the 75th consecutive day, to a national average of $1.82 per gallon, the biggest drop since January 2005. Date: 2008-12-02, Update: The Big Three automakers unveil their new business plans to Congress in a bid for $25 billion in federal aid to help them survive and thrive. Major automakers report declining sales in November: Ford sales fell 31 percent, Toyota sales dropped 34 percent, General Motors sales were down 41.3 percent, Chrysler sales fell 47 percent and Honda sales fell 32 percent. President-elect Barack Obama meets with US state governors, who urge him to use a stimulus plan to build out infrastructure and support the poor as state budgets are pummeled by the economic downturn. Date: 2008-12-03, Update: Alan Mulally, CEO of Ford, met with Post editors and reporters to discuss the auto bailout. The Treasury Department is considering a plan to intervene directly in the mortgage industry in order to significantly lower interest rates and stimulate the housing market. Capital One intends to acquire Chevy Chase Bank. According to reports in The Federal Government's Beige Book, business conditions in the United States have weakened as private employers cut jobs and the nation's service sector contracted. The UAW says it will allow automakers to postpone payments to a healthcare fund for retired workers and suspend a program that pays laid-off workers for up to two years in two new concessions.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, with jobless claims increased to 516,000, as consumer confidence had fallen to a 28-year low. The Treasury Department considers a plan to intervene directly in the mortgage industry to dramatically force down rates and stimulate the housing market. Democrats were in plans for a massive fiscal stimulus program to boost consumer spending by committing up to $800 billion to make it easier for households to borrow money for cars, tuition bills and new homes. The Big Three automakers formulated new business plans for the $25 billion bid in federal aid. Across the globe, governments had been making attempts at avoiding a global financial crisis and recession by cutting interest rates and providing bailouts.
Date: 2008-12-04, Update: Embattled auto executives scored points with Congress by driving rather than flying to hearings on a potential US government assistance package. The Big Three auto executives return to Capitol Hill to answer senators' skeptical questions about federal aid. AT&T, Dupont, and Credit Suisse all announce layoffs. Ben Bernanke, chairman of the Federal Reserve, believes the government should do more to reduce foreclosures and keep troubled homeowners in their homes. November sales at major retailers were dismal. European central banks are lowering interest rates.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation. Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama. Date: 2008-11-28, Update: On Black Friday, the day after Thanksgiving, shoppers begin the holiday shopping season by looking for bargains. The British government takes over Royal Bank of Scotland Group with a nearly 60 percent stake in a $31 billion rescue after shareholders of the country's second-largest bank rejected an emergency share issue. Wall Street's holiday rally continues, with the Dow Jones Industrial Average up 9.7 percent for the week. Retailers successfully rouse many bargain-hungry shoppers out of bed with aggressive discounts on electronics, toys, and clothing, but consumers keep a close eye on their own bottom lines. Date: 2008-12-01, Update: While speaking at the Fortune 500 Forum in Washington, Treasury Secretary Henry Paulson provides an update on the Federal bailout. The nonprofit National Bureau of Economic Research announced in December 2007 that the US economy had entered a recession. In response, stock prices plummet. Treasury Secretary Henry Paulson says the administration is looking for new ways to tap a $700 billion financial rescue fund, while Federal Reserve Chairman Ben Bernanke says he is willing to keep cutting interest rates in order to limit the damage caused by the downturn. The Big Three automakers are rushing to create new business plans to present to Congress in their bid for $25 billion in federal assistance. Gas prices have dropped for the 75th consecutive day, to a national average of $1.82 per gallon, the biggest drop since January 2005. Date: 2008-12-02, Update: The Big Three automakers unveil their new business plans to Congress in a bid for $25 billion in federal aid to help them survive and thrive. Major automakers report declining sales in November: Ford sales fell 31 percent, Toyota sales dropped 34 percent, General Motors sales were down 41.3 percent, Chrysler sales fell 47 percent and Honda sales fell 32 percent. President-elect Barack Obama meets with US state governors, who urge him to use a stimulus plan to build out infrastructure and support the poor as state budgets are pummeled by the economic downturn. Date: 2008-12-03, Update: Alan Mulally, CEO of Ford, met with Post editors and reporters to discuss the auto bailout. The Treasury Department is considering a plan to intervene directly in the mortgage industry in order to significantly lower interest rates and stimulate the housing market. Capital One intends to acquire Chevy Chase Bank. According to reports in The Federal Government's Beige Book, business conditions in the United States have weakened as private employers cut jobs and the nation's service sector contracted. The UAW says it will allow automakers to postpone payments to a healthcare fund for retired workers and suspend a program that pays laid-off workers for up to two years in two new concessions. Date: 2008-12-04, Update: Embattled auto executives scored points with Congress by driving rather than flying to hearings on a potential US government assistance package. The Big Three auto executives return to Capitol Hill to answer senators' skeptical questions about federal aid. AT&T, Dupont, and Credit Suisse all announce layoffs. Ben Bernanke, chairman of the Federal Reserve, believes the government should do more to reduce foreclosures and keep troubled homeowners in their homes. November sales at major retailers were dismal. European central banks are lowering interest rates.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, as consumer confidence had fallen to a 28-year low. The Treasury Department considers a plan to intervene directly in the mortgage industry to dramatically force down rates and stimulate the housing market. Democrats were in plans for a massive fiscal stimulus program to boost consumer spending by committing up to $800 billion to make it easier for households to borrow money for cars, tuition bills and new homes. The Big Three automakers formulated new business plans for the $25 billion bid in federal aid. Across the globe, governments had been making attempts at avoiding a global financial crisis and recession by cutting interest rates and providing bailouts.
Date: 2008-12-05, Update: President George W. Bush demanded on Friday that any auto industry bailout legislation passed by Congress require car companies to repay taxpayers. Automakers seek bailout funds from the House Financial Services Committee, but are met with skepticism. Employers in the United States shed more than 500,000 jobs in November, the worst monthly showing in 34 years. The transition team of President-elect Barack Obama has agreed to accompany Treasury Department officials to meet with Capitol Hill leaders in order to assist the Bush administration in gaining access to the second half of the $700 billion financial rescue package. According to data, 7% of homeowners were delinquent on their mortgages and 3% were in the foreclosure process during the third quarter, a record high.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation. Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama. Date: 2008-11-28, Update: On Black Friday, the day after Thanksgiving, shoppers begin the holiday shopping season by looking for bargains. The British government takes over Royal Bank of Scotland Group with a nearly 60 percent stake in a $31 billion rescue after shareholders of the country's second-largest bank rejected an emergency share issue. Wall Street's holiday rally continues, with the Dow Jones Industrial Average up 9.7 percent for the week. Retailers successfully rouse many bargain-hungry shoppers out of bed with aggressive discounts on electronics, toys, and clothing, but consumers keep a close eye on their own bottom lines. Date: 2008-12-01, Update: While speaking at the Fortune 500 Forum in Washington, Treasury Secretary Henry Paulson provides an update on the Federal bailout. The nonprofit National Bureau of Economic Research announced in December 2007 that the US economy had entered a recession. In response, stock prices plummet. Treasury Secretary Henry Paulson says the administration is looking for new ways to tap a $700 billion financial rescue fund, while Federal Reserve Chairman Ben Bernanke says he is willing to keep cutting interest rates in order to limit the damage caused by the downturn. The Big Three automakers are rushing to create new business plans to present to Congress in their bid for $25 billion in federal assistance. Gas prices have dropped for the 75th consecutive day, to a national average of $1.82 per gallon, the biggest drop since January 2005. Date: 2008-12-02, Update: The Big Three automakers unveil their new business plans to Congress in a bid for $25 billion in federal aid to help them survive and thrive. Major automakers report declining sales in November: Ford sales fell 31 percent, Toyota sales dropped 34 percent, General Motors sales were down 41.3 percent, Chrysler sales fell 47 percent and Honda sales fell 32 percent. President-elect Barack Obama meets with US state governors, who urge him to use a stimulus plan to build out infrastructure and support the poor as state budgets are pummeled by the economic downturn. Date: 2008-12-03, Update: Alan Mulally, CEO of Ford, met with Post editors and reporters to discuss the auto bailout. The Treasury Department is considering a plan to intervene directly in the mortgage industry in order to significantly lower interest rates and stimulate the housing market. Capital One intends to acquire Chevy Chase Bank. According to reports in The Federal Government's Beige Book, business conditions in the United States have weakened as private employers cut jobs and the nation's service sector contracted. The UAW says it will allow automakers to postpone payments to a healthcare fund for retired workers and suspend a program that pays laid-off workers for up to two years in two new concessions. Date: 2008-12-04, Update: Embattled auto executives scored points with Congress by driving rather than flying to hearings on a potential US government assistance package. The Big Three auto executives return to Capitol Hill to answer senators' skeptical questions about federal aid. AT&T, Dupont, and Credit Suisse all announce layoffs. Ben Bernanke, chairman of the Federal Reserve, believes the government should do more to reduce foreclosures and keep troubled homeowners in their homes. November sales at major retailers were dismal. European central banks are lowering interest rates. Date: 2008-12-05, Update: President George W. Bush demanded on Friday that any auto industry bailout legislation passed by Congress require car companies to repay taxpayers. Automakers seek bailout funds from the House Financial Services Committee, but are met with skepticism. Employers in the United States shed more than 500,000 jobs in November, the worst monthly showing in 34 years. The transition team of President-elect Barack Obama has agreed to accompany Treasury Department officials to meet with Capitol Hill leaders in order to assist the Bush administration in gaining access to the second half of the $700 billion financial rescue package. According to data, 7% of homeowners were delinquent on their mortgages and 3% were in the foreclosure process during the third quarter, a record high.
The US approved a $700 billion bailout plan to solve the nation’s financial crisis which began when finance giants had financially collapsed, giving way to the start of a global financial crisis. In the US, stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs, as consumer confidence had fallen to a 28-year low. Data showed that seven percent of homeowners were delinquent on their mortgages and three percent were in the foreclosure process. The Treasury Department considers a plan to intervene directly in the mortgage industry to dramatically force down rates and stimulate the housing market. Democrats were in plans for a massive fiscal stimulus program to boost consumer spending by committing up to $800 billion to make it easier for households to borrow money for cars, tuition bills and new homes. The Big Three automakers formulated new business plans for the $25 billion bid in federal aid. Across the globe, governments had been making attempts at avoiding a global financial crisis and recession by cutting interest rates and providing bailouts. In September 2008, finance giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG had financially collapsed.
Date: 2008-12-08, Update: House Speaker Nancy Pelosi says: “We call this a barbershop. Everyone is getting haircuts.” Rep. Barny Frank says a bill is likely to pass this week. Congressional Democrats and the White House propose a $15 billion emergency loan to cash-strapped Detroit automakers. Industrial companies Dow Chemical and 3M announce layoffs and factory closings. The Senate confirms Neil M. Barofsky as special inspector general for the bailout. Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm. The Tribune Co. files for Chapter 11 bankruptcy protection.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation. Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama. Date: 2008-11-28, Update: On Black Friday, the day after Thanksgiving, shoppers begin the holiday shopping season by looking for bargains. The British government takes over Royal Bank of Scotland Group with a nearly 60 percent stake in a $31 billion rescue after shareholders of the country's second-largest bank rejected an emergency share issue. Wall Street's holiday rally continues, with the Dow Jones Industrial Average up 9.7 percent for the week. Retailers successfully rouse many bargain-hungry shoppers out of bed with aggressive discounts on electronics, toys, and clothing, but consumers keep a close eye on their own bottom lines. Date: 2008-12-01, Update: While speaking at the Fortune 500 Forum in Washington, Treasury Secretary Henry Paulson provides an update on the Federal bailout. The nonprofit National Bureau of Economic Research announced in December 2007 that the US economy had entered a recession. In response, stock prices plummet. Treasury Secretary Henry Paulson says the administration is looking for new ways to tap a $700 billion financial rescue fund, while Federal Reserve Chairman Ben Bernanke says he is willing to keep cutting interest rates in order to limit the damage caused by the downturn. The Big Three automakers are rushing to create new business plans to present to Congress in their bid for $25 billion in federal assistance. Gas prices have dropped for the 75th consecutive day, to a national average of $1.82 per gallon, the biggest drop since January 2005. Date: 2008-12-02, Update: The Big Three automakers unveil their new business plans to Congress in a bid for $25 billion in federal aid to help them survive and thrive. Major automakers report declining sales in November: Ford sales fell 31 percent, Toyota sales dropped 34 percent, General Motors sales were down 41.3 percent, Chrysler sales fell 47 percent and Honda sales fell 32 percent. President-elect Barack Obama meets with US state governors, who urge him to use a stimulus plan to build out infrastructure and support the poor as state budgets are pummeled by the economic downturn. Date: 2008-12-03, Update: Alan Mulally, CEO of Ford, met with Post editors and reporters to discuss the auto bailout. The Treasury Department is considering a plan to intervene directly in the mortgage industry in order to significantly lower interest rates and stimulate the housing market. Capital One intends to acquire Chevy Chase Bank. According to reports in The Federal Government's Beige Book, business conditions in the United States have weakened as private employers cut jobs and the nation's service sector contracted. The UAW says it will allow automakers to postpone payments to a healthcare fund for retired workers and suspend a program that pays laid-off workers for up to two years in two new concessions. Date: 2008-12-04, Update: Embattled auto executives scored points with Congress by driving rather than flying to hearings on a potential US government assistance package. The Big Three auto executives return to Capitol Hill to answer senators' skeptical questions about federal aid. AT&T, Dupont, and Credit Suisse all announce layoffs. Ben Bernanke, chairman of the Federal Reserve, believes the government should do more to reduce foreclosures and keep troubled homeowners in their homes. November sales at major retailers were dismal. European central banks are lowering interest rates. Date: 2008-12-05, Update: President George W. Bush demanded on Friday that any auto industry bailout legislation passed by Congress require car companies to repay taxpayers. Automakers seek bailout funds from the House Financial Services Committee, but are met with skepticism. Employers in the United States shed more than 500,000 jobs in November, the worst monthly showing in 34 years. The transition team of President-elect Barack Obama has agreed to accompany Treasury Department officials to meet with Capitol Hill leaders in order to assist the Bush administration in gaining access to the second half of the $700 billion financial rescue package. According to data, 7% of homeowners were delinquent on their mortgages and 3% were in the foreclosure process during the third quarter, a record high. Date: 2008-12-08, Update: House Speaker Nancy Pelosi says: “We call this a barbershop. Everyone is getting haircuts.” Rep. Barny Frank says a bill is likely to pass this week. Congressional Democrats and the White House propose a $15 billion emergency loan to cash-strapped Detroit automakers. Industrial companies Dow Chemical and 3M announce layoffs and factory closings. The Senate confirms Neil M. Barofsky as special inspector general for the bailout. Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm. The Tribune Co. files for Chapter 11 bankruptcy protection.
When finance giants financially collapsed, it gave way to the start of a global financial crisis in US history. Stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs. hundreds of thousands of jobs were cut and consumer confidence had fallen to a 28-year low. The US approved a $700 billion bailout plan to solve the nation’s financial crisis. Democrats were in plans for an $800 billion fiscal stimulus program to boost consumer spending. Across the globe, governments had been making attempts at avoiding a global financial crisis and recession by cutting interest rates and providing bailouts. Fannie Mae and Freddie Mac had funded more than two-thirds of US home loans in the prior months.
Date: 2008-12-09, Update: Former executives from Fannie Mae and Freddie Mac appear before the House Oversight and Government Reform Committee to answer questions about why the companies rushed into buying and guaranteeing risky mortgages despite warnings. "In perfect hindsight, I think we always wish we hadn't bought them," former Freddie Mac CEO said. Sony plans to cut 5% of its workforce and close a dozen manufacturing plants. Danaher expands its layoffs. According to the World Bank, global growth in 2009 will be the slowest since records began in 1970. For the first time ever, the yield on three-month Treasury bills falls into negative territory. The National Credit Union Administration says that it will offer credit unions $2.5 billion in low-interest loans to support new lending.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation. Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama. Date: 2008-11-28, Update: On Black Friday, the day after Thanksgiving, shoppers begin the holiday shopping season by looking for bargains. The British government takes over Royal Bank of Scotland Group with a nearly 60 percent stake in a $31 billion rescue after shareholders of the country's second-largest bank rejected an emergency share issue. Wall Street's holiday rally continues, with the Dow Jones Industrial Average up 9.7 percent for the week. Retailers successfully rouse many bargain-hungry shoppers out of bed with aggressive discounts on electronics, toys, and clothing, but consumers keep a close eye on their own bottom lines. Date: 2008-12-01, Update: While speaking at the Fortune 500 Forum in Washington, Treasury Secretary Henry Paulson provides an update on the Federal bailout. The nonprofit National Bureau of Economic Research announced in December 2007 that the US economy had entered a recession. In response, stock prices plummet. Treasury Secretary Henry Paulson says the administration is looking for new ways to tap a $700 billion financial rescue fund, while Federal Reserve Chairman Ben Bernanke says he is willing to keep cutting interest rates in order to limit the damage caused by the downturn. The Big Three automakers are rushing to create new business plans to present to Congress in their bid for $25 billion in federal assistance. Gas prices have dropped for the 75th consecutive day, to a national average of $1.82 per gallon, the biggest drop since January 2005. Date: 2008-12-02, Update: The Big Three automakers unveil their new business plans to Congress in a bid for $25 billion in federal aid to help them survive and thrive. Major automakers report declining sales in November: Ford sales fell 31 percent, Toyota sales dropped 34 percent, General Motors sales were down 41.3 percent, Chrysler sales fell 47 percent and Honda sales fell 32 percent. President-elect Barack Obama meets with US state governors, who urge him to use a stimulus plan to build out infrastructure and support the poor as state budgets are pummeled by the economic downturn. Date: 2008-12-03, Update: Alan Mulally, CEO of Ford, met with Post editors and reporters to discuss the auto bailout. The Treasury Department is considering a plan to intervene directly in the mortgage industry in order to significantly lower interest rates and stimulate the housing market. Capital One intends to acquire Chevy Chase Bank. According to reports in The Federal Government's Beige Book, business conditions in the United States have weakened as private employers cut jobs and the nation's service sector contracted. The UAW says it will allow automakers to postpone payments to a healthcare fund for retired workers and suspend a program that pays laid-off workers for up to two years in two new concessions. Date: 2008-12-04, Update: Embattled auto executives scored points with Congress by driving rather than flying to hearings on a potential US government assistance package. The Big Three auto executives return to Capitol Hill to answer senators' skeptical questions about federal aid. AT&T, Dupont, and Credit Suisse all announce layoffs. Ben Bernanke, chairman of the Federal Reserve, believes the government should do more to reduce foreclosures and keep troubled homeowners in their homes. November sales at major retailers were dismal. European central banks are lowering interest rates. Date: 2008-12-05, Update: President George W. Bush demanded on Friday that any auto industry bailout legislation passed by Congress require car companies to repay taxpayers. Automakers seek bailout funds from the House Financial Services Committee, but are met with skepticism. Employers in the United States shed more than 500,000 jobs in November, the worst monthly showing in 34 years. The transition team of President-elect Barack Obama has agreed to accompany Treasury Department officials to meet with Capitol Hill leaders in order to assist the Bush administration in gaining access to the second half of the $700 billion financial rescue package. According to data, 7% of homeowners were delinquent on their mortgages and 3% were in the foreclosure process during the third quarter, a record high. Date: 2008-12-08, Update: House Speaker Nancy Pelosi says: “We call this a barbershop. Everyone is getting haircuts.” Rep. Barny Frank says a bill is likely to pass this week. Congressional Democrats and the White House propose a $15 billion emergency loan to cash-strapped Detroit automakers. Industrial companies Dow Chemical and 3M announce layoffs and factory closings. The Senate confirms Neil M. Barofsky as special inspector general for the bailout. Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm. The Tribune Co. files for Chapter 11 bankruptcy protection. Date: 2008-12-09, Update: Former executives from Fannie Mae and Freddie Mac appear before the House Oversight and Government Reform Committee to answer questions about why the companies rushed into buying and guaranteeing risky mortgages despite warnings. "In perfect hindsight, I think we always wish we hadn't bought them," former Freddie Mac CEO said. Sony plans to cut 5% of its workforce and close a dozen manufacturing plants. Danaher expands its layoffs. According to the World Bank, global growth in 2009 will be the slowest since records began in 1970. For the first time ever, the yield on three-month Treasury bills falls into negative territory. The National Credit Union Administration says that it will offer credit unions $2.5 billion in low-interest loans to support new lending.
When finance giants financially collapsed, it gave way to the start of a global financial crisis in US history. Stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs. hundreds of thousands of jobs were cut and consumer confidence had fallen to a 28-year low. The US approved a $700 billion bailout plan to solve the nation’s financial crisis. Democrats were in plans for an $800 billion fiscal stimulus program to boost consumer spending. Across the globe, governments had been making attempts at avoiding a global financial crisis by cutting interest rates and providing bailouts. The automakers made their pleas for a $25 billion bid in the federal bailout.
Date: 2008-12-10, Update: Detroit's auto industry has struggled to persuade congressional opponents of a taxpayer bailout. The House approves an emergency plan to prevent the collapse of the nation's domestic automobile industry, but Republican opposition in the Senate is concerned about the effectiveness of the rescue package. GMAC says its investors are refusing to participate in a plan to save the company by transitioning it into a bank holding company. Recessions in the United States, Europe, and Japan reduce consumer spending significantly and slow the global economy. Yahoo and NPR have both announced layoffs.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation. Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama. Date: 2008-11-28, Update: On Black Friday, the day after Thanksgiving, shoppers begin the holiday shopping season by looking for bargains. The British government takes over Royal Bank of Scotland Group with a nearly 60 percent stake in a $31 billion rescue after shareholders of the country's second-largest bank rejected an emergency share issue. Wall Street's holiday rally continues, with the Dow Jones Industrial Average up 9.7 percent for the week. Retailers successfully rouse many bargain-hungry shoppers out of bed with aggressive discounts on electronics, toys, and clothing, but consumers keep a close eye on their own bottom lines. Date: 2008-12-01, Update: While speaking at the Fortune 500 Forum in Washington, Treasury Secretary Henry Paulson provides an update on the Federal bailout. The nonprofit National Bureau of Economic Research announced in December 2007 that the US economy had entered a recession. In response, stock prices plummet. Treasury Secretary Henry Paulson says the administration is looking for new ways to tap a $700 billion financial rescue fund, while Federal Reserve Chairman Ben Bernanke says he is willing to keep cutting interest rates in order to limit the damage caused by the downturn. The Big Three automakers are rushing to create new business plans to present to Congress in their bid for $25 billion in federal assistance. Gas prices have dropped for the 75th consecutive day, to a national average of $1.82 per gallon, the biggest drop since January 2005. Date: 2008-12-02, Update: The Big Three automakers unveil their new business plans to Congress in a bid for $25 billion in federal aid to help them survive and thrive. Major automakers report declining sales in November: Ford sales fell 31 percent, Toyota sales dropped 34 percent, General Motors sales were down 41.3 percent, Chrysler sales fell 47 percent and Honda sales fell 32 percent. President-elect Barack Obama meets with US state governors, who urge him to use a stimulus plan to build out infrastructure and support the poor as state budgets are pummeled by the economic downturn. Date: 2008-12-03, Update: Alan Mulally, CEO of Ford, met with Post editors and reporters to discuss the auto bailout. The Treasury Department is considering a plan to intervene directly in the mortgage industry in order to significantly lower interest rates and stimulate the housing market. Capital One intends to acquire Chevy Chase Bank. According to reports in The Federal Government's Beige Book, business conditions in the United States have weakened as private employers cut jobs and the nation's service sector contracted. The UAW says it will allow automakers to postpone payments to a healthcare fund for retired workers and suspend a program that pays laid-off workers for up to two years in two new concessions. Date: 2008-12-04, Update: Embattled auto executives scored points with Congress by driving rather than flying to hearings on a potential US government assistance package. The Big Three auto executives return to Capitol Hill to answer senators' skeptical questions about federal aid. AT&T, Dupont, and Credit Suisse all announce layoffs. Ben Bernanke, chairman of the Federal Reserve, believes the government should do more to reduce foreclosures and keep troubled homeowners in their homes. November sales at major retailers were dismal. European central banks are lowering interest rates. Date: 2008-12-05, Update: President George W. Bush demanded on Friday that any auto industry bailout legislation passed by Congress require car companies to repay taxpayers. Automakers seek bailout funds from the House Financial Services Committee, but are met with skepticism. Employers in the United States shed more than 500,000 jobs in November, the worst monthly showing in 34 years. The transition team of President-elect Barack Obama has agreed to accompany Treasury Department officials to meet with Capitol Hill leaders in order to assist the Bush administration in gaining access to the second half of the $700 billion financial rescue package. According to data, 7% of homeowners were delinquent on their mortgages and 3% were in the foreclosure process during the third quarter, a record high. Date: 2008-12-08, Update: House Speaker Nancy Pelosi says: “We call this a barbershop. Everyone is getting haircuts.” Rep. Barny Frank says a bill is likely to pass this week. Congressional Democrats and the White House propose a $15 billion emergency loan to cash-strapped Detroit automakers. Industrial companies Dow Chemical and 3M announce layoffs and factory closings. The Senate confirms Neil M. Barofsky as special inspector general for the bailout. Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm. The Tribune Co. files for Chapter 11 bankruptcy protection. Date: 2008-12-09, Update: Former executives from Fannie Mae and Freddie Mac appear before the House Oversight and Government Reform Committee to answer questions about why the companies rushed into buying and guaranteeing risky mortgages despite warnings. "In perfect hindsight, I think we always wish we hadn't bought them," former Freddie Mac CEO said. Sony plans to cut 5% of its workforce and close a dozen manufacturing plants. Danaher expands its layoffs. According to the World Bank, global growth in 2009 will be the slowest since records began in 1970. For the first time ever, the yield on three-month Treasury bills falls into negative territory. The National Credit Union Administration says that it will offer credit unions $2.5 billion in low-interest loans to support new lending. Date: 2008-12-10, Update: Detroit's auto industry has struggled to persuade congressional opponents of a taxpayer bailout. The House approves an emergency plan to prevent the collapse of the nation's domestic automobile industry, but Republican opposition in the Senate is concerned about the effectiveness of the rescue package. GMAC says its investors are refusing to participate in a plan to save the company by transitioning it into a bank holding company. Recessions in the United States, Europe, and Japan reduce consumer spending significantly and slow the global economy. Yahoo and NPR have both announced layoffs.
When finance giants financially collapsed, it gave way to the start of a global financial crisis in US history. Stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs. Hundreds of thousands of jobs were cut and consumer confidence had fallen to a 28-year low. Recessions in the United States, Europe, and Japan sharply lowered consumer spending and slowed the global economy. The US had approved a $700 billion bailout plan to solve the nation’s financial crisis. Democrats were in plans for an $800 billion fiscal stimulus program to boost consumer spending. Automakers made their pleas for a massive bid in the federal bailout.
Date: 2008-12-11, Update: At the Senate a $14 billion bailout for Detroit's struggling Big Three was killed. The collapse occurred after bipartisan talks on the auto rescue fell through due to Republican demands that the labor union agree to steep wage cuts. The auto bailout talks have collapsed due to a stalemate in the Senate between Republicans and Democrats over the timing of deep wage cuts for union workers. The number of people filing for unemployment for the first time has reached a 26-year high. According to a new Fed report, Americans have reduced their debt levels for the first time on record, while falling home values and tightening credit standards have reduced the net worth of American households by nearly 5%.
Date: 2008-09-07, Update: The government seizes control of mortgage giants Fannie Mae and Freddie Mac, promising to inject up to $100 billion into each if they fail. In recent months, the two companies funded more than two-thirds of all home loans in the United States. Treasury Secretary Henry Paulson says the government will initially buy mortgage-backed securities worth up to $5 billion. Date: 2008-09-15, Update: Lehman Brothers declares bankruptcy, and Bank of America agrees to buy Merrill Lynch. Despite Wall Street's pleas and concerns about falling global stocks, the Federal Reserve opts not to raise interest rates. Oil falls below $100 per barrel. The state of New York has authorized AIG to use $20 billion from its own insurance subsidiaries to lessen a financial crisis. Date: 2008-09-16, Update: The federal government lends $85 billion to insurance giant American International Group in exchange for nearly 80% of its stock. Lawmakers demand government action and are considering other dramatic interventions. Lehman Brothers has filed for bankruptcy, attempting to sell off parts of its business in order to ease the process. Oil prices have dropped nearly $4.56 per barrel, continuing a two-month decline from all-time highs. The Dow Jones industrial average goes up on news that the federal government has agreed to assist AIG. Date: 2008-09-17, Update: When banks abruptly stop lending to one another, cash becomes scarce, raising the cost of capital. Washington Mutual decides to sell itself. Morgan Stanley and Goldman Sachs both saw their stock prices fall by 24 and 14 percent, respectively. Morgan Stanley and Wachovia have begun merger discussions. The price of gold rises by more than 8%. The AIG takeover bothers investors, causing markets to suffer significant losses. The Securities and Exchange Commission (SEC) adopts new rules prohibiting abusive "naked short-selling." Date: 2008-09-18, Update: To help mitigate the cash crunch, the Federal Government and central banks in Europe, Japan, and Canada join forces to inject $180 billion into global markets, while investors withdraw $80 billion from money market funds. The Bush administration is busily preparing a massive rescue plan to revive the US financial system by acquiring bad debts and choking financial institutions' books. Stocks swung back and forth, ending on a high note as word spread of the US plan to address the crisis. Putnam Investments closes a $12.3 billion money-market fund in order to contain its investors' losses. Date: 2008-09-19, Update: President Bush announces a government plan to buy troubled assets from financial firms with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson. The Treasury Department offers to protect money market fund investments. According to the Treasury Department, Fannie Mae and Freddie Mac will buy more mortgage-backed securities. The SEC temporarily restricts short-selling in nearly 800 financial institutions' shares and expands its investigation into credit default swaps. Stock markets soar as details of the multibillion-dollar financial rescue plan emerge. Date: 2008-09-22, Update: Democrats call for the bailout plan to include executive pay caps and assistance for homeowners going under. Those developing the bailout plan are struggling with how to value and auction the troubled securities that would be purchased. Goldman Sachs and Morgan Stanley have been converted into bank holding companies, which provides them with broader government protection in exchange for tighter regulation. Asian banks buy Morgan Stanley and devour what remains of Lehman Brothers. The SEC extends its temporary restriction on short-selling financial stocks to 100 more companies. Fearing massive transfers from bank accounts to money market funds, the Treasury Department has stated that it will only guarantee existing money market fund investments. Fears of inflation cause the dollar to fall, the most in years, as gold prices soar and oil prices jump more than $16 a barrel, the largest one-day price jump to date. Date: 2008-09-23, Update: On the first day of Capitol Hill hearings, lawmakers from both parties questioned policymakers. According to James B. Lockhart III of the Federal Housing Finance Agency, Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government assistance. The FBI opens an investigation into whether fraud played a role in the failure of financial giants Fannie Mae, Freddie Mac, Lehman Brothers, and AIG, bringing the total number of bureau investigations into the crisis to 26. Major Japanese banks continue to acquire Wall Street assets. Date: 2008-09-24, Update: President Bush delivers a nationally televised speech in which he asks the country to support the financial bailout plan. Senator John McCain suspends his presidential campaign to focus on the bailout package and asks Senator Barack Obama to delay and reschedule Friday's debate. Obama believes that the debate is more important than ever. Federal Reserve Chairman Ben Bernanke tells lawmakers on Capitol Hill on his second day of testimony that the US economy is in trouble. The director of the Congressional Budget Office, Peter R. Orszag, tells the House Budget Committee that the proposed Wall Street bailout could worsen the current financial crisis. The Dow takes a breather, moving little amid light trading. The credit rating of troubled bank Washington Mutual went from BB to CCC after Standard & Poors cuts its rating. Date: 2008-09-25, Update: Senator Richard Shelby, R-Ala., ranking member of the Finance Committee, speaks to the media following a meeting on the financial crisis with President Bush, congressional leaders, and presidential nominees. Negotiators from the Republican and Democratic parties claim to have reached an agreement on basic principles governing the massive financial bailout, but top Republicans later deny the reports. Federal regulators seize troubled mortgage lender Washington Mutual in the largest bank failure in US history, then immediately sell a large portion of the company to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks soar despite weak economic data, as hopeful investors are encouraged by news reports that the financial rescue plan is making its way through Congress. The chairman of the Federal Housing Finance Agency, James B. Lockhart III, tells the House Financial Services Committee that the new CEOs of Fannie Mae and Freddie Mac will be paid $900,000. Date: 2008-09-26, Update: Mitch McConnell, R-Ky., and Gregg Judd, R-NH, hold a press conference on Capitol Hill to discuss negotiations for a bailout bill to solve the nation's financial crisis. The Dow begins the day down by triple digits but recovers the majority of its losses during morning trading. President Bush makes a brief national television address in which he announces that key negotiators will pass a bailout bill. John McCain has stated that he will attend Barack Obama's debate in Mississippi. Democrats claim to be "back on track" after hitting a stumbling block yesterday, but no agreement on the $700 billion plan has been reached. Date: 2008-09-29, Update: President Bush urges lawmakers to pass the $700 billion bailout bill hammered out over the weekend as soon as possible, but the House rejects the bill by a vote of 228-205. The Dow falls nearly 800 points. Citigroup has agreed to buy Wachovia's banking operations for $2.16 billion in a deal backed by taxpayers and mediated by the Federal Deposit Insurance Corporation. In response to a drop in overseas financial markets caused by a wave of new bank problems in Europe, the Federal Reserve injects hundreds of billions of dollars into the global financial system. Financial authorities in the United Kingdom seize control of one of the country's largest mortgage lenders, Bradford & Bingley, and begin selling it off in pieces. It is the second bank nationalization in the United Kingdom this year, following the failure of Northern Rock due to a depositor run. Belgium, the Netherlands, and Luxembourg agreed late Sunday to invest $11.2 billion in Fortis, a major Belgian financial services conglomerate, in exchange for a 49 percent stake in several Fortis subsidiaries. The Department of Justice and the Securities and Exchange Commission open investigations into Fannie Mae and Freddie Mac concerning accounting, disclosure, and corporate governance issues relating to events from January 1, 2007, to the present. Date: 2008-09-30, Update: The SEC and the Financial Accounting Standards Board have clarified their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corporation has asked Congress to temporarily raise the $100,000 limit on government-guaranteed bank deposits. Libor, the rate at which banks around the world charge one another for short-term loans, rises by more than four percentage points to 6.9 percent, its highest level ever. The Dow rises nearly 500 points as bargain hunters and investors who believe lawmakers will eventually pass a bailout package flood back into the market. President Bush delivers another nationally televised address, saying that failure to pass a $700 billion bailout bill would be "painful and lasting" for the country. Japan's Nikkei stock index falls 4.1 percent as new data show that the country's economy has almost certainly entered a recession. Dexia, another failing European bank, is rescued by the governments of France and Belgium. Date: 2008-10-01, Update: Senator Barack Obama urges other senators to support the bailout bill. By a vote of 74 to 25, the Senate approves a revised $700 billion bailout bill, which is then sent to the House for consideration. Auto sales fell 27% year-on-year in September as credit tightened, with General Motors, Ford, Toyota, and Chrysler all reporting double-digit sales drops. Customers who are concerned about the failure of two of the country's largest banks, Wachovia and Washington Mutual, continue to restructure their investments. Date: 2008-10-02, Update: Markets are digesting the Senate's approval of the bailout bill and anticipating the House vote on Friday. US stocks, as well as oil and commodities, fall on fears that the economy will not improve following the release of two bleak economic reports showing that jobless claims had reached seven-year highs and August factory orders had fallen by the most in two years. In its investigations into the market crisis, the Justice Department says it will seek criminal charges against individual brokers and bankers rather than entire companies. Marriott International says its third-quarter profit fell 28 percent and that it may have to lay off thousands of workers if the economy does not improve. Date: 2008-10-03, Update: The $700 billion economic rescue package is approved by the House of Representatives by a vote of 263 to 171, and President Bush signs it into law. Wachovia rejects Citigroup in favor of being acquired by Wells Fargo for $15.1 billion in stock. Citigroup had proposed purchasing only Wachovia's banking division for $2.2 billion. Employers in the United States shed 159,000 jobs in September, the most in more than five years, but the unemployment rate remained unchanged at 6.1 percent. Governor Arnold Schwarzenegger writes to Treasury Secretary Henry Paulson, warning that California is running low on cash and may require an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: President Bush says the financial rescue plan will take time to boost the economy. The Dow drops nearly 800 points before rallying late in the day to close down 370 points, dropping below 10,000 for the first time in four years. Citigroup files suit against Wachovia and Wells Fargo for $60 billion. Later that day, the three companies reach an agreement to cease all formal litigation until noon on Wednesday. Bank of America has agreed to rework the mortgage terms of up to 400,000 distressed borrowers in order to settle lawsuits against Countrywide Financial, the defunct mortgage lender it bought in July. The Federal Reserve moves to inject more money into the banking system, while the US Treasury announces an increase in bond sales to fund the $700 billion rescue plan. Global markets have plummeted in response to new concerns about the health of Europe's banking system. The Treasury Department announced on Sunday that it will appoint Neel Kashkari, a former Goldman Sachs banker and assistant secretary of international affairs, to oversee the government's $700 billion financial rescue program. Germany announced over the weekend that it will guarantee all private bank accounts following the failure of a $50 billion rescue plan for Hypo Real Estate. Date: 2008-10-07, Update: Federal Reserve Chairman Ben Bernanke says there is more economic pain in the future. The Dow drops more than 500 points as investors fear a global recession. The Federal Reserve has announced that it will purchase short-term debt used to fund the daily operations of banks and ordinary businesses. Federal Reserve Chairman Ben Bernanke has stated that he is willing to lower interest rates at the Federal Reserve's next meeting on October 28. European finance ministers increased the deposit guarantee to 50,000 euros. Date: 2008-10-08, Update: According to Treasury Secretary Henry Paulson, global markets remain strained. As global markets continue to fall, Treasury Secretary Henry Paulson urges patience. One day after it was revealed that AIG had paid $440,000 for a spa vacation for its executives after receiving an $84 billion bailout from the government, the government lends AIG an additional $38 billion. Early in the morning, the Federal Reserve and the European Central Banks both order emergency rate cuts of half a percentage point. The International Monetary Fund anticipates a significant global economic downturn. Japan's Nikkei index falls 9.4 percent in a single day, the most since 1987. Following two days of dramatic stock market losses, the British government promises to inject tens of billions of dollars in capital into UK banks. The debt clock in New York Times Square runs out of room to calculate the national debt. Date: 2008-10-09, Update: The Dow closes below 9,000 for the first time since 2003, down 39% from its peak of 14,164.53 one year ago. According to the Treasury Department, the government would be able to purchase stakes in banks. General Motors shares fell 31% to $4.76 after J.D. Power predicted that the auto industry would fail in 2009. GM issues a statement in which it declares that bankruptcy is "not an option." Citigroup abandons its takeover bid for Wachovia, allowing Wells Fargo to complete its $15 billion purchase of the troubled bank, but says it will continue to pursue a $60 billion lawsuit against the two companies. AIG has canceled its second luxury retreat. Iceland seizes Kaupthing Bank, the country's largest bank, and suspends stock market trading. Asian markets have recovered after interest rate cuts across the region assuaged worries. Date: 2008-10-10, Update: On Wall Street, stock prices swung wildly as the Dow fluctuated wildly throughout the day, falling nearly 700 points before recovering late in the day to close down 128 points. European and Asian stock markets continue to fall. Japan's stock market has finished its worst week in history, losing 10%. President Bush advises the financial markets and the American people to remain calm. Date: 2008-10-13, Update: Yesterday, Morgan Stanley CEO John Mack and Citigroup CEO Vikram Pandit leave a meeting at the Treasury Department. The Dow soars 936 points after its worst week in history, its largest one-day gain ever. Executives from the nation's largest banks have agreed to accept direct taxpayer investments, giving the government a stake in a variety of financial institutions worth up to $250 billion. European governments have invested hundreds of billions of dollars in their banking systems, and the US Federal Reserve has stated that it will support this effort by making US currency available in unlimited amounts. President Bush and Italian Prime Minister Silvio Berlusconi remains confident that aggressive moves by Europe and the US will restore confidence in international financial markets. Date: 2008-10-14, Update: Treasury Secretary Paulson outlines steps to strengthen the nation's banking system, including the government purchasing stock in major banks. Despite gaining more than 4%, or 400 points, in early trading, the Dow drops 76 points due to earnings concerns. Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson discuss the Federal Reserve's plan to strengthen the country's banking system. President Bush reveals additional details about the government's $700 billion bailout plan, infuriating community banking executives. The Bank of New York Mellon has been chosen as the government's lead contractor in its efforts to acquire toxic securities. Date: 2008-10-15, Update: September retail sales fell by the most in three years as Americans avoided shopping malls and postponed purchases of new cars. Fears of an impending recession cause the Dow to fall 733 points. New York Attorney General Andrew Cuomo has threatened AIG with legal action if it does not stop spending money on lavish bonuses and trips while being bailed out by federal taxpayers. The Group of Eight major industrialized nations announces plans to hold a summit to discuss changes to the global financial industry's regulation and structure. As consumer credit card default rates rise, banks hoard cash and restrict lending. Date: 2008-10-16, Update: Fears of a recession have sent Asian markets plummeting yet again. The Swiss National Bank has stated that it will purchase "illiquid securities" from UBS using up to $54 billion in Federal Government funds. After dropping nearly 400 points earlier in the day, the Dow rallies late in the day to close up 401 points at 8,979. Merrill Lynch reports a $7.5 billion third-quarter loss due to write-downs and credit losses. Citigroup says it lost $2.8 billion in the third quarter but remains interested in acquiring a bank after its bid to acquire Wachovia fell through. Due to rising food and energy prices, the government announces a 5.8% increase in Social Security benefits for 2009, the largest increase since 1982. Simpson, Thacher, and Bartlett are hired by the Treasury Department for six months at a fee of $300,000 to serve as legal advisers on the $700 billion Wall Street bailout. Date: 2008-10-17, Update: The Treasury Department, led by Henry Paulson, stated that its investments in banks would be considered "Tier 1" capital. Banking regulators are working to resolve accounting rules that prevent banks from counting government investments as core capital. The Dow continues its volatile swings, closing down 127 points. The city of Chicago is considering limiting the pay of bank executives who receive bailout funds. Ukraine has asked the IMF for a multibillion-dollar loan to help stabilize its financial system. In October, consumer confidence fell by the greatest amount ever recorded. Date: 2008-10-20, Update: Ben Bernanke, Chairman of the Federal Reserve, testifies before the House Budget Committee, saying Congress should consider implementing a second economic stimulus package. China's growth rate unexpectedly slows to 9% in the third quarter, raising fears that the global financial crisis will push one of the world's fastest-growing economies into recession. According to reports, the International Monetary Fund, or IMF, has agreed to lead a $6 billion bailout of Iceland, which suffered a nationwide banking collapse earlier this month. South Korea announced on Sunday that it will guarantee $100 billion in foreign debt and provide $30 billion in cash to banks and exporters in need. Date: 2008-10-21, Update: At the Treasury Department, Treasury Secretary Henry Paulson holds a news conference. The federal government has announced that it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from running out of cash. Major banks such as J.P. Morgan Chase, BB&T, and Zions Bancorporation have stated that they are considering using some of their federal funds to buy other banks rather than making new loans. Treasury announces that PricewaterhouseCoopers and Ernst & Young have been hired as the auditors for the $700 billion Wall Street bailout plan. Date: 2008-10-22, Update: Wachovia has reported a record-breaking third-quarter loss of $23.7 billion. In the face of the nation's economic crisis, employers begin to aggressively cut jobs and cut costs, preparing for what many fear will be a long and painful recession. Treasury names James H. Lambright as the $700 billion Wall Street bailout plan's chief investment officer. The House Oversight and Government Reform Committee interrogates executives from the country's leading credit-rating firms, who have privately admitted for more than a year that conflicts of interest contributed to the industry's failures. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan testifies before the House Oversight and Government Reform Committee, saying the crisis has shaken his understanding of how markets work and that he has shifted his views about restricting certain financial derivatives. The Treasury Department plans to announce that a group of large regional banks has agreed to accept government investments, joining nine of the largest American banks that were forced to accept $125 billion in funding last week. A month after the government stepped in to save the troubled insurance giant AIG from bankruptcy, it has already consumed three-quarters of its $123 billion rescue loan. To cut costs, General Motors suspends a number of benefit programs for its white-collar workers and reduce additional positions. Date: 2008-10-24, Update: In September, existing home sales increased 5.5%. According to the Treasury Department, work is being done to expand its $700 billion bank rescue program to assist insurance companies, which are a critical backstop to a wide range of transactions. PNC Financial Services Group has announced the acquisition of National City, a struggling Cleveland-based bank, in order to create the country's fifth-largest bank by deposits. Chrysler plans to reduce its white-collar workforce by 25% by the end of the year. Tumbling corporate profit reports and bad economic news spark a wave of selling that decimates Asian and European markets, sending major exchanges into double-digit losses. Date: 2008-10-27, Update: In September, new home sales increased 2.7%, but home values continued to fall. The Federal Reserve begins purchasing short-term debt from banks and corporations in order to make it easier for corporations to borrow money for day-to-day operations. General Electric is one of the first companies to avail itself of the new short-term funding facility. Fear of a global recession has once again punished international stock markets. According to the White House, financing companies owned by Detroit automakers may be eligible for assistance under the $700 billion financial bailout package. Fifteen banks have agreed to accept government investments, joining the nine largest banks that were forced to do so. Date: 2008-10-28, Update: In October, consumer confidence in the US economy reaches an all-time low. According to the S&P Case Shiller Index, home prices fell a record 17.7% in the year ending in August. After central bankers cut interest rates, global stocks recover from a string of losses, and the Dow soars nearly 900 points in midafternoon trading on investor hopes of a Federal Reserve rate cut. Date: 2008-10-29, Update: The Federal Reserve lowers the key Federal Funds rate by half a percentage point to 1%, matching its lowest level in decades. According to the Treasury and FDIC, they are working on a plan in which the government would guarantee the mortgages of up to 3 million homeowners who are currently facing foreclosure. To avoid a global dollar shortage, the Federal Reserve says it will lend money for the first time to central banks in several emerging economies. GMAC, General Motors' financing arm, says it is in talks to become a bank holding company, allowing it to benefit from the government's $700 billion financial rescue package. Date: 2008-10-30, Update: Previously announced Government data showed the US economy shrank by 0.3 % in the third quarter, confirming an economic slowdown that was already showing itself through steady job losses and declining consumer sales. Japan announces a $275 billion stimulus package that would give large tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls, and give loans to small businesses. The Post reports that US banks getting more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Date: 2008-10-31, Update: In Washington, Ben Bernanke addresses the National Association for Business Economics. Federal Reserve Chairman Ben Bernanke supports some government backing of home loans in a speech at a housing finance forum. The operator of a central registry for credit default swaps has announced that it will begin posting weekly data on the amount of protection purchased and sold on the market's biggest names. J.P. Morgan Chase has announced the launch of a mortgage modification program that could keep 400,000 families in their homes. Date: 2008-11-03, Update: In October, Ford's sales fell 30%. US automakers report massive drops in third-quarter sales. Circuit City, an electronics retailer, has announced the closure of 155 stores and the layoff of 17% of its workforce due to declining sales caused by a drop in consumer spending and a tightening credit market. According to the Institute for Supply Management, US manufacturing is at a 26-year low. According to the Commerce Department, construction spending fell by 0.3% in September, less than the 0.8% predicted. According to the National Association of Business Economists, 102 top economists believe the recession will last the entire year. Date: 2008-11-04, Update: In a landslide victory over Republican opponent John McCain, Democratic candidate Barack Obama is elected the 44th President of the United States. According to the Commerce Department, US factory orders were down 2.5% in September compared to September 2007, a larger-than-expected drop. Date: 2008-11-05, Update: As investors lock in profits from Tuesday's rally and digest worse economic news, US stocks fall. According to the Institute for Supply Management, the service sector shrank more than expected in October. House Speaker Nancy Pelosi, D-Calif., has called for another lame-duck session of Congress to approve a second economic stimulus package aimed at consumers. According to the Center for Automotive Research, if Detroit automakers GM, Ford, and Chrysler fail, 3 million jobs will be lost across the entire auto sector in the first year of collapse. Date: 2008-11-06, Update: The Dow drops 443 points after falling 500 points on November 5, the largest two-day percentage drop since 1987. The Bank of England reduces its key interest rate to 3%, the lowest level since 1955. The European Central Bank, the Swiss National Bank, and the Czech Central Bank all reduced interest rates. Mattel says it will eliminate 1,000 jobs, or about 3% of its workforce, through a combination of layoffs, attrition, and retirements. Fidelity Investments says it will cut about 1,300 jobs, or 3% of its workforce, in November, with more layoffs planned for next year. Senator Chris Dodd, chairman of the Senate Banking Committee, makes it clear in remarks to the media that the financial industry will face increased regulation. According to the Labor Department, the number of Americans receiving long-term unemployment benefits increased by 122,000 in late October to 3.84 million, the highest level in 25 years. The International Monetary Fund today reduced its global growth forecast by 0.75 percentage point predicting that global GDP will grow by only 2.2 percent in 2009. Date: 2008-11-07, Update: After the US economy sheds 240,000 jobs in October, the unemployment rate rises to 6.5%, a 14-year high. Ford and General Motors report poor third-quarter results, heightening the urgency of the Big Three automakers' request for an additional $25 billion in federal assistance. President-elect Barack Obama has promised a swift response to the country's economic crisis. According to Dennis Lockhart, president of the Atlanta Fed, the US economy will not recover until at least the second half of 2009. Date: 2008-11-10, Update: China announces a $586 billion stimulus package, the country's largest in history, to ease credit restrictions, expand social welfare services, and build new railways, roads, and airports. The US government increases the bailout package for troubled insurer AIG from $123 billion to $150 billion, restructuring the plan to include significantly less debt and allowing for direct government investment in the company. Circuit City, an electronics retailer, files for Chapter 11 bankruptcy protection in response to the ongoing economic downturn. Fannie Mae reports a $29 billion third-quarter loss and says it may need to draw on the government's $100 billion bailout fund. DHL says it will cut 9,500 jobs and reduce its air and ground operations in the United States. Citigroup has announced that it will modify mortgages for 500,000 at-risk borrowers. Starbucks' fiscal fourth-quarter profit dropped 97 percent, owing to the costs of closing 600 US stores and 61 stores in Australia, as well as lower same-store sales. Date: 2008-11-11, Update: Neel Kashkari, Assistant Secretary of the Treasury for Financial Stability, and James B. Lockhart III, Director of the Federal Housing Finance Agency, announced a new program to assist at-risk homeowners by modifying mortgages for hundreds of thousands of borrowers to help them avoid foreclosure. House Speaker Nancy Pelosi has announced that the House will meet next week to vote on a plan to provide emergency funds to the nation's battered auto industry. Oil falls below $59 per barrel, reaching a 19-month low. Date: 2008-11-12, Update: Treasury Secretary Henry Paulson has stated that the $700 billion government bailout program will not be used to purchase troubled assets as originally planned, and that the primary goal of the bailout program will be to strengthen banks and consumer lenders. The Dow falls more than 400 points as evidence of a severe slump in consumer spending unfolds. Senator Barbara Mikulski of Maryland unveiled a proposal to allow car buyers to deduct the interest on car loans and sales tax from their income taxes in order to assist the struggling US auto industry. Morgan Stanley, the former investment bank, has announced that it will lay off 10% of its institutional securities group and 9% of its asset-management professionals. The Wall Street Journal reports that credit card issuer American Express is seeking $3.5 billion from the US government. Date: 2008-11-13, Update: After three days of losses, the Dow rallies 552 points in the late afternoon. President Bush vigorously defends Western capitalism ahead of Saturday's global financial summit. Germany says its economy has contracted for six months in a row, and the Organization for Economic Cooperation and Development predicts a contraction throughout its membership. The Senate Banking Committee holds hearings on the use of TARP funds by financial institutions. A hearing is held by the House Oversight Committee on hedge fund regulations and their role in the financial crisis. According to the Wall Street Journal, Citigroup may acquire Chevy Chase Bank. When compared to October 2007, home foreclosures increased by 25%, and jobless claims increased by 32,000 to 516,000, the second-highest total since 1992. Date: 2008-11-14, Update: Freddie Mac reports a $25 billion loss from July to September as a result of falling mortgage securities values and an increase in reserves to cover future losses. The government is expected to inject $14 billion into the company in order to bring it back into the black. Retail sales fell 2.8 percent in October compared to the previous month, the fourth consecutive month of decline. Sun Microsystems plans to cut 5,000 to 6,000 jobs, or 15 to 18 percent of its workforce, as the economic downturn reduces demand for its high-end business computers. President Bush appoints Neil Barofsky, a former federal prosecutor in New York, as a Treasury-based special inspector general to oversee the massive $700 billion financial rescue plan. Metro has reached an agreement with a Belgian bank seeking to collect $43 million from the transit agency. The specifics have not been revealed. In Europe, Federal Reserve Chairman Ben Bernanke pledges to work closely with other central banks to solve global financial problems, while also leaving the door open for another interest rate cut to help shore up the US economy. Philadelphia, Atlanta, and Phoenix have asked Treasury for a portion of the $700 billion bailout/rescue to assist them in paying bills and financing construction projects. Date: 2008-11-17, Update: Senate Majority Leader Harry Reid announced this week that a test vote on a broad economic aid plan would be held. Citigroup says it will cut 50,000 jobs globally after four consecutive quarters of losses totaling about $20 billion. The lame-duck Congress reconvenes, and Democrats push for an auto bailout. Target's third-quarter earnings fell nearly 24% as shoppers cut back on spending and its credit card division continued to lose money. According to a poll of 50 forecasters conducted by the National Association of Business Economists, the US unemployment rate will peak at 7.5 percent in the third quarter of 2009. Date: 2008-11-18, Update: Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and FDIC Chairwoman Sheila Bair all testify on Capitol Hill. On Capitol Hill, the CEOs of the big three Detroit automakers, GM, Ford, and Chrysler, beg for help. Treasury Secretary Henry Paulson defends his decisions on how to use the $700 billion financial rescue package in a hearing before the House Financial Services Committee. According to the National Association of Realtors, median home prices fell in 79 percent of the 152 US cities surveyed in the third quarter, and the national median home price is $200,500, a 9 percent decrease from a year ago. According to the National Association of Home Builders, homebuilder confidence is at an all-time low. Date: 2008-11-19, Update: Chrysler CEO Robert Nardelli and General Motors CEO Richard Wagoner both told Congress that they urgently need federal assistance. In the final hour of trading, stocks fell below 8,000 for the first time in the bear market. The CEOs of the "Big Three" automakers appear on Capitol Hill to request $25 billion in federal assistance. Housing fell to its lowest level since at least October 1959, and the consumer price index fell by the most in its history. Federal Reserve officials issue projections indicating that the economy will deteriorate significantly in the coming year and that the unemployment rate will rise to 8% by the end of 2009. Date: 2008-11-20, Update: Democrats oppose the proposed auto bailout package. Stocks are falling for the second day in a row as hopes for a bailout of the US auto industry fade. Lawmakers failed to reach an agreement on a proposal to provide $25 billion in emergency aid to the struggling auto industry, but they say they will try again after Thanksgiving. GMAC Financial Services, General Motors' financial arm, has applied to become a bank holding company, which could allow it to participate in the Treasury Department's $700 billion bailout package. China has stated that job stability is a top priority. Crude oil prices are close to $50 per barrel, at $49.62, the lowest since May 2005. Date: 2008-11-21, Update: President-elect Barack Obama names Timothy F. Geithner, President of the New York Federal Reserve Bank, as Treasury Secretary. The FDIC seizes three banks, including Downey Savings and Loan Association, a major mortgage lender in California. President-elect Barack Obama names Timothy Geithner, 47, of the New York Federal Reserve Bank, as Treasury Secretary. Despite a 60% drop in its share price in one week, Citigroup insists it is in good health. General Motors says it will temporarily suspend five manufacturing plants over the next two months to save money. House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., send a letter to the CEOs of General Motors, Ford, and Chrysler outlining the conditions that the troubled automakers must meet before Congress will consider a multibillion-dollar loan to keep them in business. Date: 2008-11-24, Update: President Bush claims that the government's dramatic rescue of Citigroup was necessary to "protect the financial system" and aid the economy's recovery. On Sunday evening, reports surfaced that President-elect Barack Obama and other Democrats are rapidly ramping up plans for a massive fiscal stimulus program worth up to $700 billion over the next two years. President-elect Barack Obama unveils his economic team for the first time. Also on Sunday, the government announced that it will provide Citigroup with a multibillion-dollar backstop, including a $20 billion investment and guarantees against losses on $306 billion in troubled securities. The Treasury has extended its guarantee on deposits in money-market funds, which was put in place on September 19, until April 30, 2009. Date: 2008-11-25, Update: The Federal Reserve and Treasury committed up to $800 billion on Tuesday to make it easier for households to borrow money for cars, tuition bills, and new homes, which Treasury Secretary Henry Paulson describes as critical to supporting the economy. According to the Case-Shiller home price index, home prices in the United States have dropped by a record 16.6 percent. The number of "problem" banks and thrifts increased from 117 at the end of the second quarter to 171 at the end of the third quarter, the highest level since 1995, according to FDIC Chairwoman Sheila Bair. AIG, the troubled insurer, has drastically reduced executive compensation. Date: 2008-11-26, Update: Former Federal Reserve Chairman Paul Volcker was named chairman of the Economic Recovery Advisory Board by President-elect Barack Obama. The People's Bank of China has lowered its key one-year lending and deposit rates by 108 basis points, to 5.58 percent and 2.52 percent, respectively. It is the bank's fourth rate cut since September and the largest in 11 years. Following the government's decision to loosen consumer lending, prospective mortgage borrowers rush to refinance their loans. In October, consumer spending fell by 1%, and consumer confidence fell to a 28-year low in November. Former Federal Reserve Chairman Paul Volcker has been appointed to chair a new economic advisory panel by President-elect Barack Obama. Date: 2008-11-28, Update: On Black Friday, the day after Thanksgiving, shoppers begin the holiday shopping season by looking for bargains. The British government takes over Royal Bank of Scotland Group with a nearly 60 percent stake in a $31 billion rescue after shareholders of the country's second-largest bank rejected an emergency share issue. Wall Street's holiday rally continues, with the Dow Jones Industrial Average up 9.7 percent for the week. Retailers successfully rouse many bargain-hungry shoppers out of bed with aggressive discounts on electronics, toys, and clothing, but consumers keep a close eye on their own bottom lines. Date: 2008-12-01, Update: While speaking at the Fortune 500 Forum in Washington, Treasury Secretary Henry Paulson provides an update on the Federal bailout. The nonprofit National Bureau of Economic Research announced in December 2007 that the US economy had entered a recession. In response, stock prices plummet. Treasury Secretary Henry Paulson says the administration is looking for new ways to tap a $700 billion financial rescue fund, while Federal Reserve Chairman Ben Bernanke says he is willing to keep cutting interest rates in order to limit the damage caused by the downturn. The Big Three automakers are rushing to create new business plans to present to Congress in their bid for $25 billion in federal assistance. Gas prices have dropped for the 75th consecutive day, to a national average of $1.82 per gallon, the biggest drop since January 2005. Date: 2008-12-02, Update: The Big Three automakers unveil their new business plans to Congress in a bid for $25 billion in federal aid to help them survive and thrive. Major automakers report declining sales in November: Ford sales fell 31 percent, Toyota sales dropped 34 percent, General Motors sales were down 41.3 percent, Chrysler sales fell 47 percent and Honda sales fell 32 percent. President-elect Barack Obama meets with US state governors, who urge him to use a stimulus plan to build out infrastructure and support the poor as state budgets are pummeled by the economic downturn. Date: 2008-12-03, Update: Alan Mulally, CEO of Ford, met with Post editors and reporters to discuss the auto bailout. The Treasury Department is considering a plan to intervene directly in the mortgage industry in order to significantly lower interest rates and stimulate the housing market. Capital One intends to acquire Chevy Chase Bank. According to reports in The Federal Government's Beige Book, business conditions in the United States have weakened as private employers cut jobs and the nation's service sector contracted. The UAW says it will allow automakers to postpone payments to a healthcare fund for retired workers and suspend a program that pays laid-off workers for up to two years in two new concessions. Date: 2008-12-04, Update: Embattled auto executives scored points with Congress by driving rather than flying to hearings on a potential US government assistance package. The Big Three auto executives return to Capitol Hill to answer senators' skeptical questions about federal aid. AT&T, Dupont, and Credit Suisse all announce layoffs. Ben Bernanke, chairman of the Federal Reserve, believes the government should do more to reduce foreclosures and keep troubled homeowners in their homes. November sales at major retailers were dismal. European central banks are lowering interest rates. Date: 2008-12-05, Update: President George W. Bush demanded on Friday that any auto industry bailout legislation passed by Congress require car companies to repay taxpayers. Automakers seek bailout funds from the House Financial Services Committee, but are met with skepticism. Employers in the United States shed more than 500,000 jobs in November, the worst monthly showing in 34 years. The transition team of President-elect Barack Obama has agreed to accompany Treasury Department officials to meet with Capitol Hill leaders in order to assist the Bush administration in gaining access to the second half of the $700 billion financial rescue package. According to data, 7% of homeowners were delinquent on their mortgages and 3% were in the foreclosure process during the third quarter, a record high. Date: 2008-12-08, Update: House Speaker Nancy Pelosi says: “We call this a barbershop. Everyone is getting haircuts.” Rep. Barny Frank says a bill is likely to pass this week. Congressional Democrats and the White House propose a $15 billion emergency loan to cash-strapped Detroit automakers. Industrial companies Dow Chemical and 3M announce layoffs and factory closings. The Senate confirms Neil M. Barofsky as special inspector general for the bailout. Internal Freddie Mac documents show that senior executives at the company were warned years ago that they were offering mortgages that could pose dangers to the firm. The Tribune Co. files for Chapter 11 bankruptcy protection. Date: 2008-12-09, Update: Former executives from Fannie Mae and Freddie Mac appear before the House Oversight and Government Reform Committee to answer questions about why the companies rushed into buying and guaranteeing risky mortgages despite warnings. "In perfect hindsight, I think we always wish we hadn't bought them," former Freddie Mac CEO said. Sony plans to cut 5% of its workforce and close a dozen manufacturing plants. Danaher expands its layoffs. According to the World Bank, global growth in 2009 will be the slowest since records began in 1970. For the first time ever, the yield on three-month Treasury bills falls into negative territory. The National Credit Union Administration says that it will offer credit unions $2.5 billion in low-interest loans to support new lending. Date: 2008-12-10, Update: Detroit's auto industry has struggled to persuade congressional opponents of a taxpayer bailout. The House approves an emergency plan to prevent the collapse of the nation's domestic automobile industry, but Republican opposition in the Senate is concerned about the effectiveness of the rescue package. GMAC says its investors are refusing to participate in a plan to save the company by transitioning it into a bank holding company. Recessions in the United States, Europe, and Japan reduce consumer spending significantly and slow the global economy. Yahoo and NPR have both announced layoffs. Date: 2008-12-11, Update: At the Senate a $14 billion bailout for Detroit's struggling Big Three was killed. The collapse occurred after bipartisan talks on the auto rescue fell through due to Republican demands that the labor union agree to steep wage cuts. The auto bailout talks have collapsed due to a stalemate in the Senate between Republicans and Democrats over the timing of deep wage cuts for union workers. The number of people filing for unemployment for the first time has reached a 26-year high. According to a new Fed report, Americans have reduced their debt levels for the first time on record, while falling home values and tightening credit standards have reduced the net worth of American households by nearly 5%.
When finance giants financially collapsed, it gave way to the start of a global financial crisis in US history. Stocks had plunged, the nation’s automobile industry was battered, and employers in the US began to aggressively cut jobs. Hundreds of thousands of jobs were cut and consumer confidence had fallen to a 28-year low. Recessions in the United States, Europe, and Japan sharply lowered consumer spending and slowed the global economy. The US had approved a $700 billion bailout plan to solve the nation’s financial crisis. Democrats were in plans for an $800 billion fiscal stimulus program to boost consumer spending. Across the globe, governments had been making attempts at avoiding a global financial crisis and recession by cutting interest rates and providing bailouts. Automakers made their pleas for a massive bid in a federal bailout, but the bailout was not approved by Senate.
Date: 2008-12-12, Update: The White House has stated that it will consider using TARP funds to assist automakers. In November, retail sales fell 1.8 percent from the previous month. GM says it will reduce first-quarter 2009 production by 250,000 vehicles by temporarily shutting down 21 plants. United Auto Workers President Ron Gettelfinger warns of the Big Three automakers' impending demise, claiming that lawmakers are asking the union for too much and everyone else for too little.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. Treasury Secretary Henry Paulson said the government would start buying securities backed by mortgages.
Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. The growing economic crisis saw Lehman Brothers file for bankruptcy. Meanwhile, New York State permitted AIG to use $20 billion form its own insurance subsidiaries to ease a financial crunch. Oil prices dropped to below $100 a barrel on 15th September.
Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. Lehman Brothers were also in trouble, filing for bankruptcy and aiming to sell parts of the business to ease the process. The Dow Jones reacted positively to news that the Fed had agreed to assist the beleaguered insurance giant AIG.
Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. Banks stopped lending to each other, driving up the cost of capital, and Morgan Stanley and Goldman Sachs shares dropped 24 and 14 percent respectively. The SEC adopted new rules banning abusive "naked short-selling".
Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. Banks stopped lending to each other, driving up the cost of capital. The SEC adopted new rules banning abusive "naked short-selling". The Bush administration prepared a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions, as the Fed and central banks in Europe, Japan and Canada strove to ease the cash crunch by injecting as much as $180 billion into global markets.
Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. Banks stopped lending to each other, driving up the cost of capital, and Morgan Stanley and Goldman Sachs shares dropped 24 and 14 percent respectively. The SEC adopted new rules banning abusive "naked short-selling". The Bush administration prepared a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions, as the Fed and central banks in Europe, Japan and Canada strove to ease the cash crunch by injecting as much as $180 billion into global markets. Oil prices had dropped to well below $100 a barrel in September, continuing a two-month decline.
Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. Lehman Brothers were also in trouble, filing for bankruptcy and aiming to sell parts of the business to ease the process. Banks stopped lending to each other, driving up the cost of capital, and Morgan Stanley and Goldman Sachs shares dropped 24 and 14 percent respectively. The SEC adopted new rules banning abusive "naked short-selling". The Bush administration prepared a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions, as the Fed and central banks in Europe, Japan and Canada strove to ease the cash crunch by injecting as much as $180 billion into global markets. Oil prices had dropped to well below $100 a barrel in September, continuing a two-month decline.
Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. With the financial system in crisis, the US government announced that it was putting together a rescue plan under which it would purchase bad debts. As part of the plan, the Treasury Department offered to protect investments in money market funds. House Republicans were skeptical about the effectiveness of such a plan.
Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. With the financial system in crisis, the US government announced that it was putting together a rescue plan under which it would purchase bad debts. As part of the plan, the Treasury Department offered to protect investments in money market funds. House Republicans were skeptical about the effectiveness of such a plan.
Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. With the financial system in crisis, the US government announced that it was putting together a rescue plan under which it would purchase bad debts. As part of the plan, the Treasury Department offered to protect investments in money market funds. House Republicans were skeptical about the effectiveness of such a plan. Meanwhile, the seizure of Washington Mutual by federal regulators represented the largest bank failure in U.S. history. The subsequent sale of most of the company to J.P. Morgan Chase created the US's largest bank.
Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. With the financial system in crisis, the US government announced that it was putting together a rescue plan under which it would purchase bad debts. As part of the plan, the Treasury Department offered to protect investments in money market funds. House Republicans were skeptical about the effectiveness of the proposed $700 billion plan but negotiations continued. Meanwhile, the seizure of Washington Mutual by federal regulators represented the largest bank failure in U.S. history. The subsequent sale of most of the company to J.P. Morgan Chase created the US's largest bank.
Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months and soon came under investigation by the Department of Justice and SEC over accounting, disclosure and corporate governance issues. Banks stopped lending to each other, driving up the cost of capital. With the financial system in crisis, the US government announced that it was putting together a rescue plan under which it would purchase bad debts. As part of the plan, the Treasury Department offered to protect investments in money market funds. House Republicans were skeptical about the effectiveness of the proposed $700 billion plan but negotiations continued. The Federal Reserve injected hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe.
Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months and soon came under investigation by the Department of Justice and SEC over accounting, disclosure and corporate governance issues. Banks stopped lending to each other, driving up the cost of capital. With the financial system in crisis, the US government announced that it was putting together a rescue plan under which it would purchase bad debts. As part of the plan, the Treasury Department offered to protect investments in money market funds. House Republicans were initially skeptical about the effectiveness of the proposed $700 billion plan but President Bush warned that there would be lasting economic impact if Congress failed to pass the bill.
Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months and soon came under investigation by the Department of Justice and SEC over accounting, disclosure and corporate governance issues. With the financial system in crisis, the US government put together a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. President Bush warned that there would be lasting economic impact if Congress failed to pass the bill, with the failures of the banking system filtering through to major industries, including the auto industry.
Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months and soon came under investigation by the Department of Justice and SEC over accounting, disclosure and corporate governance issues. With the financial system in crisis, the US government put together a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. President Bush warned that there would be lasting economic impact if Congress failed to pass the bill. Citigroup had agreed to purchase the banking operations of Wachovia for $2.16 billion on 29 September.
Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. With the financial system in crisis, the US government put together a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. The bill was passed by the House on 3 October following warnings from President Bush about the dire economic consequences if the legislation did not pass. Citigroup had agreed to purchase the banking operations of Wachovia for $2.16 billion on 29 September, but was snubbed by Wachovia who instead sold to Wells Fargo for $15.1 billion in stock.
Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. With the financial system in crisis, the US government put together a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. The bill was passed by the House on 3 October following warnings from President Bush about the dire economic consequences if the legislation did not pass. Citigroup had agreed to purchase the banking operations of Wachovia for $2.16 billion on 29 September, but was snubbed by Wachovia who instead sold to Wells Fargo for $15.1 billion in stock.
Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, the Fed said that it will buy up the short-term debt that funds the daily operations of banks and ordinary businesses. Previously, the Fed had loaned insurance giant AIG $85 billion in exchange for nearly 80 percent of its stock. In the UK, the government took over one of the country's major mortgage lenders, Bradford & Bingley, in September. This followed the nationalization of Northern Rock earlier in the year.
Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. Citigroup had agreed to purchase the banking operations of Wachovia for $2.16 billion on 29 September, but was snubbed by Wachovia who instead sold to Wells Fargo for $15.1 billion in stock. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. The auto industry was in crisis, as General Motors, Ford, Toyota and Chrysler all reported double-digit sales drops on 1 October. In Japan, the Nikkei index fell 9.4 percent on 8 October, which was its largest one-day drop since 1987.
Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. The Dow had fluctuated since the financial crisis began in September, with investors responding to weakening consumer demand and financial uncertainties. In Japan, the Nikkei index fell 9.4 percent on 8 October, which was its largest one-day drop since 1987.
Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. The Dow had fluctuated since the financial crisis began in September, with investors responding to weakening consumer demand and financial uncertainties. In Japan, the Nikkei index fell 9.4 percent on 8 October, which was its largest one-day drop since 1987.
Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, the Fed said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. The Dow had fluctuated since the financial crisis began in September, with investors responding to weakening consumer demand and financial uncertainties.
Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. The Dow had fluctuated since the financial crisis began in September, with investors responding to weakening consumer demand and financial uncertainties. The Fed's original $85 billion bailout of insurance giant AIG proved controversial after it was found that the company had paid $440,000 for a spa vacation for its executives.
Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. Citigroup previously attempted to purchase Wachovia, but they sold to Wells Fargo instead.
Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. The Treasury Department confirmed on 9 October that it would permit the government to buy stakes in banks.
Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS. Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. Previously, the Fed and central banks in Europe, Japan and Canada had teamed up to inject as much as $180 billion into global markets to ease the cash crunch.
Date: 2008-10-20, Update: Federal Reserve Chairman Ben Bernanke calls on Congress to implement a second economic stimulus package. Fears of recession increase in China as growth drops to 9 percent in the third quarter. Meanwhile, South Korea says that it will guarantee $100 billion in foreign debt and provide $30 billion to banks and exporters in need of cash. The International Monetary Fund will help Iceland with a $6 billion bailout of Iceland, whose banding system collapsed earlier in the month. The Dow closed 413.21 points up.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS. Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system. Date: 2008-10-20, Update: Federal Reserve Chairman Ben Bernanke calls on Congress to implement a second economic stimulus package. Fears of recession increase in China as growth drops to 9 percent in the third quarter. Meanwhile, South Korea says that it will guarantee $100 billion in foreign debt and provide $30 billion to banks and exporters in need of cash. The International Monetary Fund will help Iceland with a $6 billion bailout of Iceland, whose banding system collapsed earlier in the month. The Dow closed 413.21 points up.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. The Treasury Department confirmed on 9 October that it would permit the government to buy stakes in banks.
Date: 2008-10-21, Update: The Treasury has hired PricewaterhouseCoopers and Ernst & Young to be the accountants for the $700 billion Wall Street bailout plan. The Fed says it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from experiencing cash crunches. Major banks, such as J.P. Morgan Chase and BB&T, are considering using some of their federal money to buy other banks instead of issuing new loans. The Dow closed 231.77 points down.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS. Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system. Date: 2008-10-20, Update: Federal Reserve Chairman Ben Bernanke calls on Congress to implement a second economic stimulus package. Fears of recession increase in China as growth drops to 9 percent in the third quarter. Meanwhile, South Korea says that it will guarantee $100 billion in foreign debt and provide $30 billion to banks and exporters in need of cash. The International Monetary Fund will help Iceland with a $6 billion bailout of Iceland, whose banding system collapsed earlier in the month. The Dow closed 413.21 points up. Date: 2008-10-21, Update: The Treasury has hired PricewaterhouseCoopers and Ernst & Young to be the accountants for the $700 billion Wall Street bailout plan. The Fed says it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from experiencing cash crunches. Major banks, such as J.P. Morgan Chase and BB&T, are considering using some of their federal money to buy other banks instead of issuing new loans. The Dow closed 231.77 points down.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. The Treasury Department confirmed on 9 October that it would permit the government to buy stakes in banks. Wachovia was recently purchased by Wells Fargo for $15 billion
Date: 2008-10-22, Update: Wachovia reports a historic third quarter loss of $23.7 billion. With fears of a long recession, employers aggressively cut jobs and reduce costs. The Treasury hires James H. Lambright to be the chief investment officer of the $700 billion Wall Street bailout plan. The House Oversight and Government Reform Committee questions executives from the country's leading credit-rating companies, who had advance understanding of the conflicts of interest contributed to the industry's failures. The Dow closes 514.45 down.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS. Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system. Date: 2008-10-20, Update: Federal Reserve Chairman Ben Bernanke calls on Congress to implement a second economic stimulus package. Fears of recession increase in China as growth drops to 9 percent in the third quarter. Meanwhile, South Korea says that it will guarantee $100 billion in foreign debt and provide $30 billion to banks and exporters in need of cash. The International Monetary Fund will help Iceland with a $6 billion bailout of Iceland, whose banding system collapsed earlier in the month. The Dow closed 413.21 points up. Date: 2008-10-21, Update: The Treasury has hired PricewaterhouseCoopers and Ernst & Young to be the accountants for the $700 billion Wall Street bailout plan. The Fed says it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from experiencing cash crunches. Major banks, such as J.P. Morgan Chase and BB&T, are considering using some of their federal money to buy other banks instead of issuing new loans. The Dow closed 231.77 points down. Date: 2008-10-22, Update: Wachovia reports a historic third quarter loss of $23.7 billion. With fears of a long recession, employers aggressively cut jobs and reduce costs. The Treasury hires James H. Lambright to be the chief investment officer of the $700 billion Wall Street bailout plan. The House Oversight and Government Reform Committee questions executives from the country's leading credit-rating companies, who had advance understanding of the conflicts of interest contributed to the industry's failures. The Dow closes 514.45 down.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. The Treasury Department confirmed on 9 October that it would permit the government to buy stakes in banks. Wachovia was recently purchased by Wells Fargo for $15 billion. The auto industry was in crisis, as General Motors, Ford, Toyota and Chrysler all reported double-digit sales drops on 1 October.
Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan tells the House Oversight and Government Reform Committee that the financial crisis has removed his opposition to the regulation of certain financial derivatives. The Treasury Department reports that a group of large regional banks will accept investments from the government. They join nine of the nation's largest banks who were forced to accept $125 billion in funding last week. Insurance giant AIG has already consumed three-quarters of its $123 billion rescue loan. General Motors cuts costs by suspending a number of benefit programs for its white-collar workers and slashing jobs. The Dow closes 172.04 up.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS. Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system. Date: 2008-10-20, Update: Federal Reserve Chairman Ben Bernanke calls on Congress to implement a second economic stimulus package. Fears of recession increase in China as growth drops to 9 percent in the third quarter. Meanwhile, South Korea says that it will guarantee $100 billion in foreign debt and provide $30 billion to banks and exporters in need of cash. The International Monetary Fund will help Iceland with a $6 billion bailout of Iceland, whose banding system collapsed earlier in the month. The Dow closed 413.21 points up. Date: 2008-10-21, Update: The Treasury has hired PricewaterhouseCoopers and Ernst & Young to be the accountants for the $700 billion Wall Street bailout plan. The Fed says it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from experiencing cash crunches. Major banks, such as J.P. Morgan Chase and BB&T, are considering using some of their federal money to buy other banks instead of issuing new loans. The Dow closed 231.77 points down. Date: 2008-10-22, Update: Wachovia reports a historic third quarter loss of $23.7 billion. With fears of a long recession, employers aggressively cut jobs and reduce costs. The Treasury hires James H. Lambright to be the chief investment officer of the $700 billion Wall Street bailout plan. The House Oversight and Government Reform Committee questions executives from the country's leading credit-rating companies, who had advance understanding of the conflicts of interest contributed to the industry's failures. The Dow closes 514.45 down. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan tells the House Oversight and Government Reform Committee that the financial crisis has removed his opposition to the regulation of certain financial derivatives. The Treasury Department reports that a group of large regional banks will accept investments from the government. They join nine of the nation's largest banks who were forced to accept $125 billion in funding last week. Insurance giant AIG has already consumed three-quarters of its $123 billion rescue loan. General Motors cuts costs by suspending a number of benefit programs for its white-collar workers and slashing jobs. The Dow closes 172.04 up.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. The auto industry was in crisis, as General Motors, Ford, Toyota and Chrysler all reported double-digit sales drops on 1 October. Growth in China dropped to 9 percent in the third quarter.
Date: 2008-10-24, Update: Existing home sales increase 5.5% in September. The Treasury Department announces that it intends to broaden the $700 billion bank rescue program to assist insurance companies that are a critical backstop to a wide range of financial deals. PNC Financial Services Group announces that it is purchasing Cleveland-based bank, to create the fifth-largest bank in the country by deposits. Chrysler will cut 25 percent of its white-collar staff by the end of the year. Asian and European markets face substantial losses amid poor economic news and negative corporate profit reports. The Dow closes 312.30 down.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS. Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system. Date: 2008-10-20, Update: Federal Reserve Chairman Ben Bernanke calls on Congress to implement a second economic stimulus package. Fears of recession increase in China as growth drops to 9 percent in the third quarter. Meanwhile, South Korea says that it will guarantee $100 billion in foreign debt and provide $30 billion to banks and exporters in need of cash. The International Monetary Fund will help Iceland with a $6 billion bailout of Iceland, whose banding system collapsed earlier in the month. The Dow closed 413.21 points up. Date: 2008-10-21, Update: The Treasury has hired PricewaterhouseCoopers and Ernst & Young to be the accountants for the $700 billion Wall Street bailout plan. The Fed says it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from experiencing cash crunches. Major banks, such as J.P. Morgan Chase and BB&T, are considering using some of their federal money to buy other banks instead of issuing new loans. The Dow closed 231.77 points down. Date: 2008-10-22, Update: Wachovia reports a historic third quarter loss of $23.7 billion. With fears of a long recession, employers aggressively cut jobs and reduce costs. The Treasury hires James H. Lambright to be the chief investment officer of the $700 billion Wall Street bailout plan. The House Oversight and Government Reform Committee questions executives from the country's leading credit-rating companies, who had advance understanding of the conflicts of interest contributed to the industry's failures. The Dow closes 514.45 down. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan tells the House Oversight and Government Reform Committee that the financial crisis has removed his opposition to the regulation of certain financial derivatives. The Treasury Department reports that a group of large regional banks will accept investments from the government. They join nine of the nation's largest banks who were forced to accept $125 billion in funding last week. Insurance giant AIG has already consumed three-quarters of its $123 billion rescue loan. General Motors cuts costs by suspending a number of benefit programs for its white-collar workers and slashing jobs. The Dow closes 172.04 up. Date: 2008-10-24, Update: Existing home sales increase 5.5% in September. The Treasury Department announces that it intends to broaden the $700 billion bank rescue program to assist insurance companies that are a critical backstop to a wide range of financial deals. PNC Financial Services Group announces that it is purchasing Cleveland-based bank, to create the fifth-largest bank in the country by deposits. Chrysler will cut 25 percent of its white-collar staff by the end of the year. Asian and European markets face substantial losses amid poor economic news and negative corporate profit reports. The Dow closes 312.30 down.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. The Treasury Department confirmed on 9 October that it would permit the government to buy stakes in banks. The auto industry was in crisis, as General Motors, Ford, Toyota and Chrysler all reported double-digit sales drops on 1 October.
Date: 2008-10-27, Update: Although new home sales rose by 2.7% in September, home values continued to fall amid economic uncertainty. In a bid to make it easier for corporate America to borrow cash, the Federal Reserve begins buying short-term debt from banks and companies. General Electric is one of the first companies to make use of the short-term funding facility. Overseas stock markets continue to drop as fears of a global recession persist. In a boost for the auto industry, the White House says that financing companies owned by Detroit automakers could qualify for assistance under the $700 billion financial bailout package. Fifteen more banks agree to accept government investments. The Dow closes 203.18 down.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS. Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system. Date: 2008-10-20, Update: Federal Reserve Chairman Ben Bernanke calls on Congress to implement a second economic stimulus package. Fears of recession increase in China as growth drops to 9 percent in the third quarter. Meanwhile, South Korea says that it will guarantee $100 billion in foreign debt and provide $30 billion to banks and exporters in need of cash. The International Monetary Fund will help Iceland with a $6 billion bailout of Iceland, whose banding system collapsed earlier in the month. The Dow closed 413.21 points up. Date: 2008-10-21, Update: The Treasury has hired PricewaterhouseCoopers and Ernst & Young to be the accountants for the $700 billion Wall Street bailout plan. The Fed says it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from experiencing cash crunches. Major banks, such as J.P. Morgan Chase and BB&T, are considering using some of their federal money to buy other banks instead of issuing new loans. The Dow closed 231.77 points down. Date: 2008-10-22, Update: Wachovia reports a historic third quarter loss of $23.7 billion. With fears of a long recession, employers aggressively cut jobs and reduce costs. The Treasury hires James H. Lambright to be the chief investment officer of the $700 billion Wall Street bailout plan. The House Oversight and Government Reform Committee questions executives from the country's leading credit-rating companies, who had advance understanding of the conflicts of interest contributed to the industry's failures. The Dow closes 514.45 down. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan tells the House Oversight and Government Reform Committee that the financial crisis has removed his opposition to the regulation of certain financial derivatives. The Treasury Department reports that a group of large regional banks will accept investments from the government. They join nine of the nation's largest banks who were forced to accept $125 billion in funding last week. Insurance giant AIG has already consumed three-quarters of its $123 billion rescue loan. General Motors cuts costs by suspending a number of benefit programs for its white-collar workers and slashing jobs. The Dow closes 172.04 up. Date: 2008-10-24, Update: Existing home sales increase 5.5% in September. The Treasury Department announces that it intends to broaden the $700 billion bank rescue program to assist insurance companies that are a critical backstop to a wide range of financial deals. PNC Financial Services Group announces that it is purchasing Cleveland-based bank, to create the fifth-largest bank in the country by deposits. Chrysler will cut 25 percent of its white-collar staff by the end of the year. Asian and European markets face substantial losses amid poor economic news and negative corporate profit reports. The Dow closes 312.30 down. Date: 2008-10-27, Update: Although new home sales rose by 2.7% in September, home values continued to fall amid economic uncertainty. In a bid to make it easier for corporate America to borrow cash, the Federal Reserve begins buying short-term debt from banks and companies. General Electric is one of the first companies to make use of the short-term funding facility. Overseas stock markets continue to drop as fears of a global recession persist. In a boost for the auto industry, the White House says that financing companies owned by Detroit automakers could qualify for assistance under the $700 billion financial bailout package. Fifteen more banks agree to accept government investments. The Dow closes 203.18 down.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. Although new home sales rose by 2.7% in September, home values continued to fall amid economic uncertainty.
Date: 2008-10-28, Update: The Dow closes 889.35 up as investors hope for a Federal Reserve rate cut. Global stocks also rebound as interest rates are cut. Consumer confidence in the U.S. economy hits an all-time low in October. Meanwhile, the S&P Case Shiller Index shows a 17.7 percent drop in houses prices in the year ending in August.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS. Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system. Date: 2008-10-20, Update: Federal Reserve Chairman Ben Bernanke calls on Congress to implement a second economic stimulus package. Fears of recession increase in China as growth drops to 9 percent in the third quarter. Meanwhile, South Korea says that it will guarantee $100 billion in foreign debt and provide $30 billion to banks and exporters in need of cash. The International Monetary Fund will help Iceland with a $6 billion bailout of Iceland, whose banding system collapsed earlier in the month. The Dow closed 413.21 points up. Date: 2008-10-21, Update: The Treasury has hired PricewaterhouseCoopers and Ernst & Young to be the accountants for the $700 billion Wall Street bailout plan. The Fed says it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from experiencing cash crunches. Major banks, such as J.P. Morgan Chase and BB&T, are considering using some of their federal money to buy other banks instead of issuing new loans. The Dow closed 231.77 points down. Date: 2008-10-22, Update: Wachovia reports a historic third quarter loss of $23.7 billion. With fears of a long recession, employers aggressively cut jobs and reduce costs. The Treasury hires James H. Lambright to be the chief investment officer of the $700 billion Wall Street bailout plan. The House Oversight and Government Reform Committee questions executives from the country's leading credit-rating companies, who had advance understanding of the conflicts of interest contributed to the industry's failures. The Dow closes 514.45 down. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan tells the House Oversight and Government Reform Committee that the financial crisis has removed his opposition to the regulation of certain financial derivatives. The Treasury Department reports that a group of large regional banks will accept investments from the government. They join nine of the nation's largest banks who were forced to accept $125 billion in funding last week. Insurance giant AIG has already consumed three-quarters of its $123 billion rescue loan. General Motors cuts costs by suspending a number of benefit programs for its white-collar workers and slashing jobs. The Dow closes 172.04 up. Date: 2008-10-24, Update: Existing home sales increase 5.5% in September. The Treasury Department announces that it intends to broaden the $700 billion bank rescue program to assist insurance companies that are a critical backstop to a wide range of financial deals. PNC Financial Services Group announces that it is purchasing Cleveland-based bank, to create the fifth-largest bank in the country by deposits. Chrysler will cut 25 percent of its white-collar staff by the end of the year. Asian and European markets face substantial losses amid poor economic news and negative corporate profit reports. The Dow closes 312.30 down. Date: 2008-10-27, Update: Although new home sales rose by 2.7% in September, home values continued to fall amid economic uncertainty. In a bid to make it easier for corporate America to borrow cash, the Federal Reserve begins buying short-term debt from banks and companies. General Electric is one of the first companies to make use of the short-term funding facility. Overseas stock markets continue to drop as fears of a global recession persist. In a boost for the auto industry, the White House says that financing companies owned by Detroit automakers could qualify for assistance under the $700 billion financial bailout package. Fifteen more banks agree to accept government investments. The Dow closes 203.18 down. Date: 2008-10-28, Update: The Dow closes 889.35 up as investors hope for a Federal Reserve rate cut. Global stocks also rebound as interest rates are cut. Consumer confidence in the U.S. economy hits an all-time low in October. Meanwhile, the S&P Case Shiller Index shows a 17.7 percent drop in houses prices in the year ending in August.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. Although new home sales rose by 2.7% in September, home values continued to fall amid economic uncertainty.
Date: 2008-10-29, Update: The Federal Reserve's half a point cut to the key Federal Funds rate drops it to its lowest level in decades. Meanwhile, the Federal Reserve says it will lend money for the first time to central banks in emerging nations in order to prevent a global shortage of dollars. The Treasury and FDIC are developing a plan which would see the government guarantee the mortgages of as many as 3 million homeowners who are at risk of foreclosure. GMAC, the financing arm of General Motors, is in negotiations to become a bank holding company, which would allow it to take advantage of the government's $700 billion financial rescue package. The Dow closed 74.16 down.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS. Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system. Date: 2008-10-20, Update: Federal Reserve Chairman Ben Bernanke calls on Congress to implement a second economic stimulus package. Fears of recession increase in China as growth drops to 9 percent in the third quarter. Meanwhile, South Korea says that it will guarantee $100 billion in foreign debt and provide $30 billion to banks and exporters in need of cash. The International Monetary Fund will help Iceland with a $6 billion bailout of Iceland, whose banding system collapsed earlier in the month. The Dow closed 413.21 points up. Date: 2008-10-21, Update: The Treasury has hired PricewaterhouseCoopers and Ernst & Young to be the accountants for the $700 billion Wall Street bailout plan. The Fed says it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from experiencing cash crunches. Major banks, such as J.P. Morgan Chase and BB&T, are considering using some of their federal money to buy other banks instead of issuing new loans. The Dow closed 231.77 points down. Date: 2008-10-22, Update: Wachovia reports a historic third quarter loss of $23.7 billion. With fears of a long recession, employers aggressively cut jobs and reduce costs. The Treasury hires James H. Lambright to be the chief investment officer of the $700 billion Wall Street bailout plan. The House Oversight and Government Reform Committee questions executives from the country's leading credit-rating companies, who had advance understanding of the conflicts of interest contributed to the industry's failures. The Dow closes 514.45 down. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan tells the House Oversight and Government Reform Committee that the financial crisis has removed his opposition to the regulation of certain financial derivatives. The Treasury Department reports that a group of large regional banks will accept investments from the government. They join nine of the nation's largest banks who were forced to accept $125 billion in funding last week. Insurance giant AIG has already consumed three-quarters of its $123 billion rescue loan. General Motors cuts costs by suspending a number of benefit programs for its white-collar workers and slashing jobs. The Dow closes 172.04 up. Date: 2008-10-24, Update: Existing home sales increase 5.5% in September. The Treasury Department announces that it intends to broaden the $700 billion bank rescue program to assist insurance companies that are a critical backstop to a wide range of financial deals. PNC Financial Services Group announces that it is purchasing Cleveland-based bank, to create the fifth-largest bank in the country by deposits. Chrysler will cut 25 percent of its white-collar staff by the end of the year. Asian and European markets face substantial losses amid poor economic news and negative corporate profit reports. The Dow closes 312.30 down. Date: 2008-10-27, Update: Although new home sales rose by 2.7% in September, home values continued to fall amid economic uncertainty. In a bid to make it easier for corporate America to borrow cash, the Federal Reserve begins buying short-term debt from banks and companies. General Electric is one of the first companies to make use of the short-term funding facility. Overseas stock markets continue to drop as fears of a global recession persist. In a boost for the auto industry, the White House says that financing companies owned by Detroit automakers could qualify for assistance under the $700 billion financial bailout package. Fifteen more banks agree to accept government investments. The Dow closes 203.18 down. Date: 2008-10-28, Update: The Dow closes 889.35 up as investors hope for a Federal Reserve rate cut. Global stocks also rebound as interest rates are cut. Consumer confidence in the U.S. economy hits an all-time low in October. Meanwhile, the S&P Case Shiller Index shows a 17.7 percent drop in houses prices in the year ending in August. Date: 2008-10-29, Update: The Federal Reserve's half a point cut to the key Federal Funds rate drops it to its lowest level in decades. Meanwhile, the Federal Reserve says it will lend money for the first time to central banks in emerging nations in order to prevent a global shortage of dollars. The Treasury and FDIC are developing a plan which would see the government guarantee the mortgages of as many as 3 million homeowners who are at risk of foreclosure. GMAC, the financing arm of General Motors, is in negotiations to become a bank holding company, which would allow it to take advantage of the government's $700 billion financial rescue package. The Dow closed 74.16 down.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. Although new home sales rose by 2.7% in September, home values continued to fall amid economic uncertainty.
Date: 2008-10-30, Update: The U.S. economy shrank by 0.3 percent in the third quarter. Meanwhile, The Post reports that U.S. banks receiving more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Japan's $275 billion stimulus package will give tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls and give loans to small businesses.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS. Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system. Date: 2008-10-20, Update: Federal Reserve Chairman Ben Bernanke calls on Congress to implement a second economic stimulus package. Fears of recession increase in China as growth drops to 9 percent in the third quarter. Meanwhile, South Korea says that it will guarantee $100 billion in foreign debt and provide $30 billion to banks and exporters in need of cash. The International Monetary Fund will help Iceland with a $6 billion bailout of Iceland, whose banding system collapsed earlier in the month. The Dow closed 413.21 points up. Date: 2008-10-21, Update: The Treasury has hired PricewaterhouseCoopers and Ernst & Young to be the accountants for the $700 billion Wall Street bailout plan. The Fed says it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from experiencing cash crunches. Major banks, such as J.P. Morgan Chase and BB&T, are considering using some of their federal money to buy other banks instead of issuing new loans. The Dow closed 231.77 points down. Date: 2008-10-22, Update: Wachovia reports a historic third quarter loss of $23.7 billion. With fears of a long recession, employers aggressively cut jobs and reduce costs. The Treasury hires James H. Lambright to be the chief investment officer of the $700 billion Wall Street bailout plan. The House Oversight and Government Reform Committee questions executives from the country's leading credit-rating companies, who had advance understanding of the conflicts of interest contributed to the industry's failures. The Dow closes 514.45 down. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan tells the House Oversight and Government Reform Committee that the financial crisis has removed his opposition to the regulation of certain financial derivatives. The Treasury Department reports that a group of large regional banks will accept investments from the government. They join nine of the nation's largest banks who were forced to accept $125 billion in funding last week. Insurance giant AIG has already consumed three-quarters of its $123 billion rescue loan. General Motors cuts costs by suspending a number of benefit programs for its white-collar workers and slashing jobs. The Dow closes 172.04 up. Date: 2008-10-24, Update: Existing home sales increase 5.5% in September. The Treasury Department announces that it intends to broaden the $700 billion bank rescue program to assist insurance companies that are a critical backstop to a wide range of financial deals. PNC Financial Services Group announces that it is purchasing Cleveland-based bank, to create the fifth-largest bank in the country by deposits. Chrysler will cut 25 percent of its white-collar staff by the end of the year. Asian and European markets face substantial losses amid poor economic news and negative corporate profit reports. The Dow closes 312.30 down. Date: 2008-10-27, Update: Although new home sales rose by 2.7% in September, home values continued to fall amid economic uncertainty. In a bid to make it easier for corporate America to borrow cash, the Federal Reserve begins buying short-term debt from banks and companies. General Electric is one of the first companies to make use of the short-term funding facility. Overseas stock markets continue to drop as fears of a global recession persist. In a boost for the auto industry, the White House says that financing companies owned by Detroit automakers could qualify for assistance under the $700 billion financial bailout package. Fifteen more banks agree to accept government investments. The Dow closes 203.18 down. Date: 2008-10-28, Update: The Dow closes 889.35 up as investors hope for a Federal Reserve rate cut. Global stocks also rebound as interest rates are cut. Consumer confidence in the U.S. economy hits an all-time low in October. Meanwhile, the S&P Case Shiller Index shows a 17.7 percent drop in houses prices in the year ending in August. Date: 2008-10-29, Update: The Federal Reserve's half a point cut to the key Federal Funds rate drops it to its lowest level in decades. Meanwhile, the Federal Reserve says it will lend money for the first time to central banks in emerging nations in order to prevent a global shortage of dollars. The Treasury and FDIC are developing a plan which would see the government guarantee the mortgages of as many as 3 million homeowners who are at risk of foreclosure. GMAC, the financing arm of General Motors, is in negotiations to become a bank holding company, which would allow it to take advantage of the government's $700 billion financial rescue package. The Dow closed 74.16 down. Date: 2008-10-30, Update: The U.S. economy shrank by 0.3 percent in the third quarter. Meanwhile, The Post reports that U.S. banks receiving more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Japan's $275 billion stimulus package will give tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls and give loans to small businesses.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. Although new home sales rose by 2.7% in September, home values continued to fall amid economic uncertainty.
Date: 2008-10-31, Update: Federal Reserve Chairman Ben Bernanke gives his support to some government backing of home loans during a speech to the National Association for Business Economics in Washington. The operator of a central registry for credit default swaps will begin publishing weekly data on the amount of protection bought and sold on the biggest names in the market. J.P. Morgan Chase plans to change mortgages under a program that aims to keep 400,000 families in their homes. The Dow closed 144.32 up.
Date: 2008-09-07, Update: The U.S. government takes control of mortgage giants Fannie Mae and Freddie Mac, with a promise to inject up to $100 billion for each company if they are insolvent. Together, the companies had funded more than two-thirds of U.S. home loans in recent months. Treasury Secretary Henry Paulson says that the government will start buying $5 billion of securities backed by mortgages. Date: 2008-09-15, Update: Lehman Brothers files for bankruptcy protection, as the Bank of America agrees to buy Merrill Lynch. The Federal Reserve rejects pleas from Wall Street to raise interest rates. Global stocks drop substantially and oil drops to below $100 a barrel. Meanwhile, New York state permits insurance giant AIG to use $20 billion from its own insurance subsidiaries to ease a financial crunch. The Dow closed 498.86 down. Date: 2008-09-16, Update: AIG stock price rises as the Fed lends the insurance giant $85 billion in exchange for nearly 80 percent of its stock. The Dow closed 153.40 up. Lehman Brothers aims to sell parts of its business in order to ease the bankruptcy process. Meanwhile, oil prices drop by almost $4.56 a barrel, continuing a two-month decline. Date: 2008-09-17, Update: Banks stop lending to each other, driving up the cost of capital, as the price of gold increases by 8 percent. Morgan Stanley and Goldman Sachs shares drop 24 and 14 percent respectively, and Morgan Stanley enters merger talks with Wachovia. The SEC adopted new rules banning abusive "naked short-selling". The Dow Jones Industrial Average drops 446.92 points. Date: 2008-09-18, Update: The Bush administration prepares a massive rescue plan to revive the U.S. financial system by buying up the bad debts that are choking the books of financial institutions. The Fed and central banks in Europe, Japan and Canada team up to inject as much as $180 billion into global markets to ease the cash crunch, as investors withdraw $80 billion from money market funds. Meanwhile, Putnam Investments closes a $12.3 billion money-market fund to limit losses to its investors. The US government is putting together a rescue plan to revive the U.S. financial system by purchasing bad debts. The news leads to a 410.68 increase in the Dow Jones Industrial Average. Date: 2008-09-19, Update: President Bush announces a plan to buy troubled assets from financial firms. As part of the US government's rescue plan, the Treasury Department offers to protect investments in money market funds. Meanwhile, Fannie Mae and Freddie Mac will increase their purchases of mortgage-backed securities. The Dow Jones Industrial Average increases by 360.93 as more details are provided of the government's rescue plan. Date: 2008-09-22, Update: Democrats want the government's bailout plan to include caps on executive compensation and aid for struggling homeowners. Meanwhile, those formulating the plan are trying to establish how to value troubled securities and how to auction them. Goldman Sachs and Morgan Stanley are converted into bank holding companies, which offers them broader government protection in exchange for tighter regulation. Meanwhile, Asian banks invest in Morgan Stanley and the remains of Lehman Brothers. The SEC's temporary ban on the short selling financial stocks is expanded to include 100 extra companies. In order to guard against large transfers from bank accounts to money market funds, the Treasury Department says that it will only guarantee existing investments in money market funds. Concerns over inflation lead to the largest one-day drop in the dollar in years, as gold prices rise sharply. Oil prices rise by more than $16 a barrel, which is the biggest ever single day rise. The Dow Jones Industrial Average drops 372.75 points. Date: 2008-09-23, Update: Lawmakers from both parties question policymakers in the first day of Capitol Hill hearings into the financial crisis. Federal Housing Finance Agency official, James B. Lockhart III, asserts that Fannie Mae and Freddie Mac could not continue to cover mortgage losses without government support. Meanwhile, the FBI launches an investigation into whether fraud played a role in the collapse of Fannie Mae, Freddie Mac, Lehman Brothers and AIG. Warren Buffet's company Berkshire Hathaway invests $5 billion in Goldman Sachs. Meanwhile, Japanese banks continue to purchase Wall Street holdings. Vice President Dick Cheney and Chief of Staff Joshua Bolten try to convince skeptical House The Dow closes at 161.52 down. Date: 2008-09-24, Update: President Bush urges Congress to support the proposed economic bailout, as Senator John McCain suspends his presidential campaign to focus on crafting the bailout package. Federal Reserve chairman Ben Bernanke warns Congress that the U.S. economy is faltering, as Peter R. Orszag, the director of the Congressional Budget Office, says that the proposed Wall Street bailout could worsen the current financial crisis. The Dow closes 28.28 down. Date: 2008-09-25, Update: Republican and Democratic negotiators say they agreed on basic principles governing the massive financial bailout, although top Republicans later deny that agreement has been reached. The seizure of Washington Mutual by federal regulators represents the largest bank failure in U.S. history. Much of the company is sold to J.P. Morgan Chase for $1.9 billion, creating the country's largest bank. Stocks rise sharply as investors are encouraged by news of the financial rescue plan. The Dow Jones Industrial Average is up 196.89 points. The new chiefs of Fannie Mae and Freddie Mac will receive salaries of $900,000, according to the chairman of the Federal Housing Finance Agency. Date: 2008-09-26, Update: President Bush delivers a television address confirming that negotiators are working out a bailout bill. Democrats claim that negotiations are back on track but no agreement has yet been reached on the $700 billion plan. Meanwhile, the Dow Jones Industrial Average is up 121.07 points. Date: 2008-09-29, Update: President Bush encourages Congress to pass the $700 billion bailout bill, but it is rejected in the House by a vote of 228-205. The Dow drops almost 800 points. Citigroup agrees to purchase the banking operations of Wachovia for $2.16 billion. The Federal Reserve injects hundreds of billions of dollars into the world financial system as a wave of new bank troubles hit Europe. Meanwhile, one of the UK's major mortgage lenders, Bradford & Bingley, is taken over by UK financial authorities, who begin to sell it off in pieces. This follows the nationalization of Northern Rock earlier in the year. Elsewhere in Europe, Fortis is rescued by an $11.2 billion cash injection by Belgium, the Netherlands and Luxembourg, in exchange for 49 percent ownership of several Fortis units. In the US, the Department of Justice and the SEC begin investigations into Fannie Mae and Freddie Mac over accounting, disclosure and corporate governance matters. Date: 2008-09-30, Update: The Dow rose 485.29 points amid speculation about the passing of a bailout package. The Securities and Exchange Commission and Financial Accounting Standards Board clarify their guidance on "mark-to-market" accounting rules. The Federal Deposit Insurance Corp. requests that Congress temporarily raise the ceiling on bank deposits guaranteed by government to $100,000. Libor, the rate that banks worldwide charge each other for short-term loans, reaches its highest level ever, with a four percentage point increase to 6.9 percent. President Bush warns that there will be lasting economic damage to the nation if Congress does not pass the $700 billion bailout bill. Meanwhile, data suggests that Japan has entered a recession and its Nikkei stock index falls 4.1 percent. In Europe, the French and Belgian governments rescue the failing bank, Dexia. Date: 2008-10-01, Update: The Senate approves a revised $700 billion bailout bill and it is sent to the House for approval. Auto sales plummet 27 % in September on a year-over-year basis as credit tightens. General Motors, Ford, Toyota and Chrysler all report double-digit sales drops, as auto sales fall by 27%. The Dow drops 19.59 point. Date: 2008-10-02, Update: The Dow drops 348.22 points as jobless claims reach a seven-year high, and factory orders had fallen by the largest amount in two years. Meanwhile, the Justice Department says it will take legal action against individual brokers and bankers, rather than entire companies, in its investigations into the market crisis. Marriott International reports a 28 percent drop in third quarter profits and says that thousands of jobs may be lost if conditions do not improve. Date: 2008-10-03, Update: The House of Representatives approves the $700 billion economic rescue package and President Bush signs the bill into law. In a snub to Citigroup, Wachovia agrees to be purchased by Wells Fargo for $15.1 billion in stock. Job losses in September hit 159,000, which was the highest for five years, as the Dow drops 157.47 points. Meanwhile, California Governor Arnold Schwarzenegger warns the Treasury that the state of California is running low on cash and may need an emergency $7 billion loan within weeks. Date: 2008-10-06, Update: The Dow finishes 370 points down, after dropping 800 points earlier in the day. President Bush warns that it will take time for the newly-passed rescue plan to boost the economy. Meanwhile, the U.S. Treasury says it will increase its bond sales to pay for the $700 billion rescue plan. It is also announced that the $700 billion rescue program will be overseen by Neel Kashkari, an assistant secretary of international affairs and former Goldman Sachs banker. Citigroup files a $60 billion lawsuit against Wachovia and Wells Fargo. Bank of America will rework the mortgage terms of up to 400,000 borrowers in order to settle lawsuits pending against defunct mortgage lender, Countrywide Financial, who it purchased in July. Meanwhile, the German government will guarantee all private bank accounts after the collapse of a $50 billion plan to rescue Hypo Real Estate. Date: 2008-10-07, Update: The Dow drops 369.88 points. The Federal Reserve will buy up the short-term debt that funds the daily operations of banks and ordinary businesses, and chairman Ben Bernanke confirms that he is open to cutting interest rates. Meanwhile, European finance ministers more than double the guarantee on bank deposits to 50,000 Euros. Date: 2008-10-08, Update: The US government loans AIG an additional $38 billion, a day after the controversial revelation that, after the earlier bailout, the company had paid $440,000 for a spa vacation for its executives. Interest rates are cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicts a major global economic downturn. In Japan, the Nikkei index falls 9.4 percent, which is its largest one-day drop since 1987. Following two days of huge stock market losses, the British government says that it will inject tens of billions of dollars in capital into UK banks. The Dow drops 189.96 points. Date: 2008-10-09, Update: The Dow drops below 9,000 for the first time since 2003 General Motors shares drop 31 percent following a warning from J.D. Power that the auto industry might collapse in 2009. Wells Fargo purchases Wachovia for $15 billion, after Citigroup pulls out of its takeover bid. Interest rate cuts lead to boosts in the Asian markets. Iceland's largest bank, Kaupthing Bank, is seized by the government. The Treasury Department confirms that it would permit the government to buy stakes in banks. Date: 2008-10-10, Update: The Dow closed 128 points down, after dropping 700 points earlier in the day. Stocks in Europe and Asia also continue to fall, with the Japanese stock market facing its work week in history. President Bush asks financial markets and the public to remain calm during this time of economic uncertainty. Date: 2008-10-13, Update: The Dow increases by 936 points, it's largest ever one-day rise. The nation's top banks agree to accept direct investments of taxpayer dollars, giving the government an ownership stake of up to $250 billion in a variety of financial institutions. As European governments put hundreds of billions of dollars into their banking systems, the U.S. Federal Reserve says it will support these moves by making U.S. currency available in unlimited amounts. Date: 2008-10-14, Update: Treasury Secretary Paulson sets out the plan to bolster the US banking system by permitting the government to buy shares in banks, as details of the government's $700 billion bailout plan anger community banking executive. The Dow closes down 76, after an earlier 400 point surge. The Bank of New York Mellon is selected as the lead contractor in the government's plan to purchase toxic securities. Date: 2008-10-15, Update: Amid fears of a recession, the Dow drops 733 points. Consumer spending in September dropped by the largest amount in three years. AIG is threatened with legal action by New York attorney general Andrew Cuomo if it does not stop spending money on extravagant bonuses while being bailed out by federal taxpayers. The Group of Eight major industrialized nations will meet to plan changes in the regulation and structure of the world financial industry. Date: 2008-10-16, Update: Recession fears cause Asian markets to drop, as the Dow rallies to finish 401 points up. Citigroup declares losses of $2.8 billion in the third quarter, but is still interested in purchasing a bank after the Wachovia purchase fell through. Meanwhile, Merrill Lynch posts a $7.5 billion third quarter loss on write-downs and credit losses. In response to rising food and energy prices, the government increases social Security benefits by 5.8%, which is the biggest hike since 1982. The Swiss National Bank announces that it will use up to $54 billion from the Fed to buy illiquid securities from UBS. Date: 2008-10-17, Update: Henry Paulson said the Treasury Department's investments in banks would count as "Tier 1" capital. Meanwhile, banking regulators work to resolve accounting rules that would prevent banks from counting investments from the government as part of their core capital. The Dow closes 127 points down, as consumer confidence drops by the largest amount on record in October. The Ukraine asks the IMF for a multi-billion dollar loan to boost its financial system. Date: 2008-10-20, Update: Federal Reserve Chairman Ben Bernanke calls on Congress to implement a second economic stimulus package. Fears of recession increase in China as growth drops to 9 percent in the third quarter. Meanwhile, South Korea says that it will guarantee $100 billion in foreign debt and provide $30 billion to banks and exporters in need of cash. The International Monetary Fund will help Iceland with a $6 billion bailout of Iceland, whose banding system collapsed earlier in the month. The Dow closed 413.21 points up. Date: 2008-10-21, Update: The Treasury has hired PricewaterhouseCoopers and Ernst & Young to be the accountants for the $700 billion Wall Street bailout plan. The Fed says it will make up to $540 billion available to buy assets from money-market mutual funds in order to keep the funds from experiencing cash crunches. Major banks, such as J.P. Morgan Chase and BB&T, are considering using some of their federal money to buy other banks instead of issuing new loans. The Dow closed 231.77 points down. Date: 2008-10-22, Update: Wachovia reports a historic third quarter loss of $23.7 billion. With fears of a long recession, employers aggressively cut jobs and reduce costs. The Treasury hires James H. Lambright to be the chief investment officer of the $700 billion Wall Street bailout plan. The House Oversight and Government Reform Committee questions executives from the country's leading credit-rating companies, who had advance understanding of the conflicts of interest contributed to the industry's failures. The Dow closes 514.45 down. Date: 2008-10-23, Update: Former Federal Reserve Chairman Alan Greenspan tells the House Oversight and Government Reform Committee that the financial crisis has removed his opposition to the regulation of certain financial derivatives. The Treasury Department reports that a group of large regional banks will accept investments from the government. They join nine of the nation's largest banks who were forced to accept $125 billion in funding last week. Insurance giant AIG has already consumed three-quarters of its $123 billion rescue loan. General Motors cuts costs by suspending a number of benefit programs for its white-collar workers and slashing jobs. The Dow closes 172.04 up. Date: 2008-10-24, Update: Existing home sales increase 5.5% in September. The Treasury Department announces that it intends to broaden the $700 billion bank rescue program to assist insurance companies that are a critical backstop to a wide range of financial deals. PNC Financial Services Group announces that it is purchasing Cleveland-based bank, to create the fifth-largest bank in the country by deposits. Chrysler will cut 25 percent of its white-collar staff by the end of the year. Asian and European markets face substantial losses amid poor economic news and negative corporate profit reports. The Dow closes 312.30 down. Date: 2008-10-27, Update: Although new home sales rose by 2.7% in September, home values continued to fall amid economic uncertainty. In a bid to make it easier for corporate America to borrow cash, the Federal Reserve begins buying short-term debt from banks and companies. General Electric is one of the first companies to make use of the short-term funding facility. Overseas stock markets continue to drop as fears of a global recession persist. In a boost for the auto industry, the White House says that financing companies owned by Detroit automakers could qualify for assistance under the $700 billion financial bailout package. Fifteen more banks agree to accept government investments. The Dow closes 203.18 down. Date: 2008-10-28, Update: The Dow closes 889.35 up as investors hope for a Federal Reserve rate cut. Global stocks also rebound as interest rates are cut. Consumer confidence in the U.S. economy hits an all-time low in October. Meanwhile, the S&P Case Shiller Index shows a 17.7 percent drop in houses prices in the year ending in August. Date: 2008-10-29, Update: The Federal Reserve's half a point cut to the key Federal Funds rate drops it to its lowest level in decades. Meanwhile, the Federal Reserve says it will lend money for the first time to central banks in emerging nations in order to prevent a global shortage of dollars. The Treasury and FDIC are developing a plan which would see the government guarantee the mortgages of as many as 3 million homeowners who are at risk of foreclosure. GMAC, the financing arm of General Motors, is in negotiations to become a bank holding company, which would allow it to take advantage of the government's $700 billion financial rescue package. The Dow closed 74.16 down. Date: 2008-10-30, Update: The U.S. economy shrank by 0.3 percent in the third quarter. Meanwhile, The Post reports that U.S. banks receiving more than $163 billion from the Treasury Department for new lending will pay more than half of that sum to their shareholders, with government permission, over the next three years. Japan's $275 billion stimulus package will give tax breaks to holders of home mortgages, extend tax cuts for capital gains, lower highway tolls and give loans to small businesses. Date: 2008-10-31, Update: Federal Reserve Chairman Ben Bernanke gives his support to some government backing of home loans during a speech to the National Association for Business Economics in Washington. The operator of a central registry for credit default swaps will begin publishing weekly data on the amount of protection bought and sold on the biggest names in the market. J.P. Morgan Chase plans to change mortgages under a program that aims to keep 400,000 families in their homes. The Dow closed 144.32 up.
Fearing a meltdown in the U.S. housing market, the government took control of failing mortgage giants Fannie Mae and Freddie Mac in September 2008, with a promise to inject up to $100 billion for each company if required. The companies had funded more than two-thirds of US home loans in recent months. On 3 October, with the financial system in crisis, Congress passed a $700 billion rescue plan under which it would purchase bad debt and bolster the economy. Several days later, interest rates were cut by half a percentage point by both the Federal Reserve and European Central banks, as the International Monetary Fund predicted a major global economic downturn. The Fed also said that it would buy up the short-term debt that funds the daily operations of banks and ordinary businesses. The auto industry was in crisis, as General Motors, Ford, Toyota and Chrysler all reported double-digit sales drops on 1 October.
Date: 2008-11-03, Update: U.S. automakers announce huge drops in third quarter sales figures, and the trend continues in the fourth quarter for Ford whose sales drop 30 percent in October. The news comes as the Institute for Supply Management report that U.S. manufacturing is at a 26-year low. Meanwhile, electronics retailer Circuit City announces that poor sales and a tightening credit market have prompted its decision to close 155 stores and lay off 17 percent of its employees. In slightly more positive news, the Commerce Department says that construction spending was down 0.3 percent in September, which was less than the predicted 0.8 percent. A recession is likely to continue through all next year, according to 102 top economists surveyed by the National Association of Business Economists. The Dow closed 5.18 down.