Knol is google wiki platform for electronic publishing.
I initiated an effort to develop a management encyclopedia on it.
The articles on behavioral science is started with an article on leadership theories.
http://knol.google.com/k/narayana-rao-kvss/theories-of-leadership/2utb2lsm2k7a/25#
Sunday, August 24, 2008
Sunday, August 17, 2008
Auction Rate Securities - The Instrument
Auction rate securities is a financial innovation or a security market innovation that seems to be failed one at the moment. We need to understand how it was developed and made to be a sufficiently big market. Then we need to understand what factors led to its failure. The security market intermediaries gained some money from the instrument. But now they are losing some money from it.
We need to understand the security first
What is an Auction Rate Security?
Auction Rate Securities (ARS) are securities with long-term maturities that are structured with the possibility of short-term holding periods, this is attempted by use of a Dutch Auction. A Dutch Auction takes place at the beginning of each holding period, which determines the coupon/dividend. At the end of each holding period, a new Dutch Auction is held, determining the coupon/dividend for the next holding period. Investors can sell, buy (if available) or continue to hold their Auction Rate Security at each auction. The length of each holding period is determined at the time of the security’s original issuance. Typical holding periods are 7, 28 and 35 days.
Overview of Morgan Keegan’s Auction Rate Program
Morgan Keegan’s Auction Rate Program will use long- dated bonds that provide short-term interest rates and liquidity determined through the Dutch Auction process. Morgan Keegan will be using either a 7, 28 or 35-day auction rate period. The coupon/dividend is paid to the ARS holder the day after the 7, 28 or 35-day holding period. The majority of ARS bonds that Morgan Keegan offers have an investment grade underlying rating. An investor looking for competitive tax-free returns may want to consider ARS. Major features of Municipal Auction Rate Securities include:
• Investment grade rating (most, but not all)
• Dividends paid after 7, 28 or 35 days
• Rates reset every 7, 28 or 35 days
There are important distinctions between ARS and short term investments. ARS provide (but do not guarantee) liquidity at par through 7, 28 and 35-day auctions. By contrast, tax-exempt money market funds provide daily liquidity at net asset value. Commercial paper is an unsecured promissory note, and does not offer guaranteed liquidity. Treasury bills are backed by the full faith and credit of the U.S. government and provide ready liquidity.
Objectives of Auction Rate Securities
• Competitive yields versus traditional money market instruments
• Liquidity based on Auction
• Preservation of principal
• No fees or expenses
Principal and Dividend Safety
Bond Insurance
Bond Insurance will guarantee the regularly scheduled payment of interest on the insured bonds on the scheduled interest payment dates and principal at the stated maturity.
If the auction is not successful (failed auction) the issuer is still responsible for paying the bond holder interest. The bond insurer is only responsible for paying interest and principal in case if issuer default. However, not all auction rate securities offered by Morgan Keegan carry insurance and not all insurers are rated the same. Principal will be paid to the investor immediately following the first successful auction, as a secondary market develops, or at the stated maturity.
Auction and Market Liquidity
ARS holders may instruct their advisors to offer their shares for sale at the next 7, 28 or 35-day auction. If there is a lack of buyers for all available shares, then the auction will be postponed (failed auction). All holders will be awarded a tax-free dividend based on current taxable market rates or in cases of a failed rate, until the next successful auction date. The $25,000 share price remains constant, providing a “$1 in, $1 out” feature that means the principal received upon sale will always equal the amount invested, but could change with market demand.
Money Fund Eligibility
ARS are not eligible for sale to Money Market funds subject to rule 2(a)7 governing money fund investment guidelines.
Purchase Facts
Minimum Purchase:
One share minimum, $25,000 per share.
No Load:
There is no load to shares of ARS purchased or sold at auction.
To Purchase at Auction
To buy ARS at auction, advisors and investors should first discuss the lowest acceptable yield level and the possibility of a failed auction. All buy orders must specify:
• The number of shares desired ($25,000 per share)
• The desired yield
Purchases are submitted through Morgan Keegan’s Retail Fixed Income Trading Desk. If the desired rate is accepted at auction, investors will receive either that rate or a higher rate. Settlement is the next business day. If the desired rate is higher than the rate derived through the auction process, the order will not be filled.
Subsequent Auctions
At subsequent auctions, shareholders may submit one of two orders:
• Sell shares
• Hold shares, accepting the new rate established by the auction.
For additional information, please contact your financial advisor for a copy of the Morgan Keegan Auction Rate Securities Practices and Procedures.
Auction Rate Risks
Investors should be aware that investing in auction rate securities involves certain risks that differentiate such securities from money market investment instruments.
• Liquidity Risk — The ability of an investor to dispose of a share of an auction rate security may be largely dependent on the success of the auction.
There is no assurance that any particular auction will be successful, and neither the issuer nor any broker dealer is obligated to take any action to ensure that an auction will be successful. In the absence of successful auctions, there is no assurance that a secondary market for the auction will develop, or if such a market does develop, that shares will trade at or close to par.
• Purchase or sale through Dutch Auction process — A Dutch Auction is a competitive bidding process designed to determine a rate for the next term, such that all sellers sell at par and all buyers buy at par. A Dutch Auction is designed to set the “equilibrium” rate at which supply equals demand.
• The dealer may bid in the auction and the issuer may purchase in the auction.
Taxation
In general, dividends on shares of municipal auction rate securities are exempt from regular federal income tax, but may be subject to the application of the federal alternative minimum tax.
Tax-Exemption
Municipal bonds used in Morgan Keegan’s Auction Rate Program will provide federal tax exemption on the coupon/dividend payment and can provide state tax exemption. This formula:
Coupon
1.00 – Federal Tax Rate
will provide an approximate taxable equivalent yield and allows investors to compare tax-exempt yields to taxable yields.
The Tax-Free Advantage
Investors would have to earn considerably more from a taxable investment to achieve the same after-tax income as from tax-free ARS.
The securities and other investment products described herein are: 1) Not insured by the FDIC, 2) Subject to investment risks, including possible loss of principal amount invested, 3) Not deposits or other obligations of, nor guaranteed by Morgan Keegan & Company, Inc., Regions Financial Corporation or any other affiliates.
Copyright © 2008 Morgan Keegan & Co., Inc. All rights reserved. Last posted on Aug 15, 2008
http://www.morgankeegan.com/MK/Investing/IProducts/FixedIncome/auction.htm
accessed on 17th August 2008
read
http://www.sifma.org/capital_markets/auction-rate-securities.shtml
We need to understand the security first
What is an Auction Rate Security?
Auction Rate Securities (ARS) are securities with long-term maturities that are structured with the possibility of short-term holding periods, this is attempted by use of a Dutch Auction. A Dutch Auction takes place at the beginning of each holding period, which determines the coupon/dividend. At the end of each holding period, a new Dutch Auction is held, determining the coupon/dividend for the next holding period. Investors can sell, buy (if available) or continue to hold their Auction Rate Security at each auction. The length of each holding period is determined at the time of the security’s original issuance. Typical holding periods are 7, 28 and 35 days.
Overview of Morgan Keegan’s Auction Rate Program
Morgan Keegan’s Auction Rate Program will use long- dated bonds that provide short-term interest rates and liquidity determined through the Dutch Auction process. Morgan Keegan will be using either a 7, 28 or 35-day auction rate period. The coupon/dividend is paid to the ARS holder the day after the 7, 28 or 35-day holding period. The majority of ARS bonds that Morgan Keegan offers have an investment grade underlying rating. An investor looking for competitive tax-free returns may want to consider ARS. Major features of Municipal Auction Rate Securities include:
• Investment grade rating (most, but not all)
• Dividends paid after 7, 28 or 35 days
• Rates reset every 7, 28 or 35 days
There are important distinctions between ARS and short term investments. ARS provide (but do not guarantee) liquidity at par through 7, 28 and 35-day auctions. By contrast, tax-exempt money market funds provide daily liquidity at net asset value. Commercial paper is an unsecured promissory note, and does not offer guaranteed liquidity. Treasury bills are backed by the full faith and credit of the U.S. government and provide ready liquidity.
Objectives of Auction Rate Securities
• Competitive yields versus traditional money market instruments
• Liquidity based on Auction
• Preservation of principal
• No fees or expenses
Principal and Dividend Safety
Bond Insurance
Bond Insurance will guarantee the regularly scheduled payment of interest on the insured bonds on the scheduled interest payment dates and principal at the stated maturity.
If the auction is not successful (failed auction) the issuer is still responsible for paying the bond holder interest. The bond insurer is only responsible for paying interest and principal in case if issuer default. However, not all auction rate securities offered by Morgan Keegan carry insurance and not all insurers are rated the same. Principal will be paid to the investor immediately following the first successful auction, as a secondary market develops, or at the stated maturity.
Auction and Market Liquidity
ARS holders may instruct their advisors to offer their shares for sale at the next 7, 28 or 35-day auction. If there is a lack of buyers for all available shares, then the auction will be postponed (failed auction). All holders will be awarded a tax-free dividend based on current taxable market rates or in cases of a failed rate, until the next successful auction date. The $25,000 share price remains constant, providing a “$1 in, $1 out” feature that means the principal received upon sale will always equal the amount invested, but could change with market demand.
Money Fund Eligibility
ARS are not eligible for sale to Money Market funds subject to rule 2(a)7 governing money fund investment guidelines.
Purchase Facts
Minimum Purchase:
One share minimum, $25,000 per share.
No Load:
There is no load to shares of ARS purchased or sold at auction.
To Purchase at Auction
To buy ARS at auction, advisors and investors should first discuss the lowest acceptable yield level and the possibility of a failed auction. All buy orders must specify:
• The number of shares desired ($25,000 per share)
• The desired yield
Purchases are submitted through Morgan Keegan’s Retail Fixed Income Trading Desk. If the desired rate is accepted at auction, investors will receive either that rate or a higher rate. Settlement is the next business day. If the desired rate is higher than the rate derived through the auction process, the order will not be filled.
Subsequent Auctions
At subsequent auctions, shareholders may submit one of two orders:
• Sell shares
• Hold shares, accepting the new rate established by the auction.
For additional information, please contact your financial advisor for a copy of the Morgan Keegan Auction Rate Securities Practices and Procedures.
Auction Rate Risks
Investors should be aware that investing in auction rate securities involves certain risks that differentiate such securities from money market investment instruments.
• Liquidity Risk — The ability of an investor to dispose of a share of an auction rate security may be largely dependent on the success of the auction.
There is no assurance that any particular auction will be successful, and neither the issuer nor any broker dealer is obligated to take any action to ensure that an auction will be successful. In the absence of successful auctions, there is no assurance that a secondary market for the auction will develop, or if such a market does develop, that shares will trade at or close to par.
• Purchase or sale through Dutch Auction process — A Dutch Auction is a competitive bidding process designed to determine a rate for the next term, such that all sellers sell at par and all buyers buy at par. A Dutch Auction is designed to set the “equilibrium” rate at which supply equals demand.
• The dealer may bid in the auction and the issuer may purchase in the auction.
Taxation
In general, dividends on shares of municipal auction rate securities are exempt from regular federal income tax, but may be subject to the application of the federal alternative minimum tax.
Tax-Exemption
Municipal bonds used in Morgan Keegan’s Auction Rate Program will provide federal tax exemption on the coupon/dividend payment and can provide state tax exemption. This formula:
Coupon
1.00 – Federal Tax Rate
will provide an approximate taxable equivalent yield and allows investors to compare tax-exempt yields to taxable yields.
The Tax-Free Advantage
Investors would have to earn considerably more from a taxable investment to achieve the same after-tax income as from tax-free ARS.
The securities and other investment products described herein are: 1) Not insured by the FDIC, 2) Subject to investment risks, including possible loss of principal amount invested, 3) Not deposits or other obligations of, nor guaranteed by Morgan Keegan & Company, Inc., Regions Financial Corporation or any other affiliates.
Copyright © 2008 Morgan Keegan & Co., Inc. All rights reserved. Last posted on Aug 15, 2008
http://www.morgankeegan.com/MK/Investing/IProducts/FixedIncome/auction.htm
accessed on 17th August 2008
read
http://www.sifma.org/capital_markets/auction-rate-securities.shtml
Tuesday, August 5, 2008
Moral Common Sense for Executives
Moral Common Sense
A. Avoid harming others
B. Respect the rights of others
C. Do not lie or cheat
D. Keep promises and contracts
E. Obey the law
F. Prevent harm to others
g. Help those in need
H. Be fair
I. Reinforce these imperatives in others
K.E. Goodpaster
Ethics in Management
Harvard Business School Press
1984
P.6
A. Avoid harming others
B. Respect the rights of others
C. Do not lie or cheat
D. Keep promises and contracts
E. Obey the law
F. Prevent harm to others
g. Help those in need
H. Be fair
I. Reinforce these imperatives in others
K.E. Goodpaster
Ethics in Management
Harvard Business School Press
1984
P.6
Saturday, August 2, 2008
IMF Global Financial Stability Report Update July 2008
Losses of the Financial system due to Subprime troube $1 trillion
In April, the IMF said that banks and other financial institutions could lose $1 trillion from the credit crisis as mortgage-backed assets lost most of their value - and it is still sticking to that estimate.
The current report says that that the banks have now acknowledged these risks and written off nearly $500bn worth of assets.
http://www.imf.org/external/pubs/ft/gfsr/2008/01/index.htm
http://www.imf.org/external/np/tr/2008/tr080728.htm
IMF Global Financial Stability Report Quarterly Update July 2008
At the moment however with delinquencies and foreclosures raising rapidly and house prices continuing to fall, a bottom for the housing market in the United States is not yet visible and the credit deterioration is spreading to even prime mortgage loans. Housing prices are also softening in a number of European economies, prompting concerns over future loan losses in the mortgage, construction, and commercial property sectors in those countries.
On the positive side, despite banks' write-downs now exceeding $400 billion in aggregate, banks have generally been successful in raising capital and balance sheets of the banks are adjusting. In fact, the equity raised covers upwards of three-fourths of the write-downs to date . Regarding the estimate of total mark-to-market losses that we published in our April GFSR, market prices of asset-backed securities and the ongoing delinquency experience give us little reason to change these estimates, so we have not revised the estimates on this occasion.
A question and clarification in the press conference by IMF July 2008
QUESTION: I just wanted one quick point of clarification. The loss that you were talking about that you haven't adjusted is the $1 trillion one.
MR. CARUANA: Yes, the figure that I was referring to in terms of losses was the calculation that we presented in our April GFSR of nearly $1 trillion in losses. We think that this figure is probably right and we have not changed it.
In April, the IMF said that banks and other financial institutions could lose $1 trillion from the credit crisis as mortgage-backed assets lost most of their value - and it is still sticking to that estimate.
The current report says that that the banks have now acknowledged these risks and written off nearly $500bn worth of assets.
http://www.imf.org/external/pubs/ft/gfsr/2008/01/index.htm
http://www.imf.org/external/np/tr/2008/tr080728.htm
IMF Global Financial Stability Report Quarterly Update July 2008
At the moment however with delinquencies and foreclosures raising rapidly and house prices continuing to fall, a bottom for the housing market in the United States is not yet visible and the credit deterioration is spreading to even prime mortgage loans. Housing prices are also softening in a number of European economies, prompting concerns over future loan losses in the mortgage, construction, and commercial property sectors in those countries.
On the positive side, despite banks' write-downs now exceeding $400 billion in aggregate, banks have generally been successful in raising capital and balance sheets of the banks are adjusting. In fact, the equity raised covers upwards of three-fourths of the write-downs to date . Regarding the estimate of total mark-to-market losses that we published in our April GFSR, market prices of asset-backed securities and the ongoing delinquency experience give us little reason to change these estimates, so we have not revised the estimates on this occasion.
A question and clarification in the press conference by IMF July 2008
QUESTION: I just wanted one quick point of clarification. The loss that you were talking about that you haven't adjusted is the $1 trillion one.
MR. CARUANA: Yes, the figure that I was referring to in terms of losses was the calculation that we presented in our April GFSR of nearly $1 trillion in losses. We think that this figure is probably right and we have not changed it.
Subprime Security and Credit Losses
Citigroup: $40.7bn
UBS: $38bn
Merrill Lynch: $31.7bn
HSBC: $15.6bn
Bank of America: $14.9bn
Morgan Stanley $12.6bn
Royal Bank of Scotland: $12bn
JP Morgan Chase: $9.7bn
Washington Mutual: $8.3bn
Deutsche Bank: $7.5bn
Wachovia: $7.3bn
Credit Agricole: $6.6bn
Credit Suisse: $6.3bn
Mizuho Financial $5.5bn
Bear Stearns: $3.2bn
Barclays: $3.2bn
UBS: $38bn
Merrill Lynch: $31.7bn
HSBC: $15.6bn
Bank of America: $14.9bn
Morgan Stanley $12.6bn
Royal Bank of Scotland: $12bn
JP Morgan Chase: $9.7bn
Washington Mutual: $8.3bn
Deutsche Bank: $7.5bn
Wachovia: $7.3bn
Credit Agricole: $6.6bn
Credit Suisse: $6.3bn
Mizuho Financial $5.5bn
Bear Stearns: $3.2bn
Barclays: $3.2bn
Subprime Stories
MAY 2008
15 May
Barclays takes a further £1bn writedown on assets.
12 May
HSBC reveals a further $3.2bn of losses linked to the US sub-prime market.
APRIL 2008
22 April
The UK's second largest bank, RBS, reveals £5.9bn in writedowns from the credit crunch, and asks its shareholders for an additional £12bn to rebuild its capital base.
18 April
Citigroup reveals another $12bn in sub-prime losses, bringing its total to $40bn, the most of any bank. It cuts 9000 jobs amid a quarterly loss of $5bn, down from $9.8bn in the previous quarter.
17April
US investment bank Merrill Lynch reveals an additional $4.5bn in credit writedowns and a loss of nearly $2bn in the first quarter of the year.
1 April
Swiss bank UBS reveals a further $19bn of asset writedowns. This came on top of the $18.4bn which it announced for 2007.
1 April
Germany's Deutsche Bank warns of credit losses of $3.9bn in the first three months of 2008.
Read the full story
MARCH 2008
31 March
US Treasury announces major package to reform regulation of US financial markets and prevent future financial crises. The plans are criticised by consumer groups but generally praised on Wall Street.
18 March
Wall Street investment banks Goldman Sachs and Lehman Brothers reveal that their first quarter profits have been halved by the credit crunch.
But stocks rise on the news that their results have not been as bad as expected.
17 March
Wall Street investment bank Bear Stearns is acquired by JPMorgan Chase for $240m, a fraction of its share price, in deal backed by $30bn in Fed loans.
The bank got into trouble over its huge exposure to sub-prime mortgage-backed securities.
14 March
Bear Stearns receives emergency funding, after its exposure to mortgage-backed investments undermined confidence in the bank.
14 March
Investment fund Carlyle Capital fails as the credit crisis spreads from sub-prime related products to other mortgage-backed investments.
11 March
Central banks make another coordinated attempt to ease conditions in the credit markets, by announcing $200bn of new emergency lending for banks.
7 March
The former bosses of Merrill Lynch and Citigroup are questioned by a Congressional panel over their bumper pay - despite huge, sub-prime related bosses at their banks.
6 March
A £1bn hedge fund run by Peloton Partners collapsed, after it struggled to meet interest payments due to the credit crisis.
5 March
France's biggest retail bank Credit Agricole announced a fourth quarter loss hit by a 3.3bn euro charge at its investment banking boss, Calyon.
3 March
HSBC announced a $17.2bn (£8.7bn) loss after the decline in the US housing market hit the value of its loans.
FEBRUARY 2008
14 February
Commerzbank, Germany's second-biggest bank, cuts $1.1bn off the value of investments linked to the sub-prime mortgage crisis and warns its losses could worsen.
Swiss investment bank UBS confirms it has made a loss of $4bn in 2007 after cutting the value of investments by $18.4bn.
13 February
Britain's Bradford & Bingley cuts the value of its sub-prime mortgage-related investments by £144.4m ($284.5m). A few weeks earlier it had said it did not expect to suffer any write-downs.
Japan's financial watchdog says Japanese banks suffered losses of $5.6bn by the end of 2007. These have more than doubled in the last three months of the year.
12 February
Swiss bank Credit Suisse says losses on sub-prime investments were $1.8bn, less than originally expected.
10 February
Leaders from the G7 group of industrialised nations say worldwide losses from the US mortgage crisis could reach $400bn.
8 February
Deutsche Bank announces $3.2bn of sub-prime write-downs in the third quarter of the financial year and predicts there is not much more to come.
7 February
US Federal Reserve boss Ben Bernanke expresses concern about bond insurers that guarantee against defaults on mortgage loans.
6 February
Wall Street sees its worst share losses in almost a year, amid fears that the worst US housing slump in 25 years is crippling the wider economy.
5 February
US financial firm GMAC, which owns sub-prime lender Residential Capital, says it has made a $2.3bn loss in 2007, compared with a $2.1bn profit the year before.
JANUARY 2008
31 January
Bond insurer MBIA announces a $2.3bn loss, its biggest yet for a three-month period. It was hit by declines in the value of US mortgage-backed debt, which it guarantees against.
30 January
The US Federal Reserve cuts interest rates to 3% from 3.5%. It is the second cut in nine days. US economic growth slows.
29 January
The US Federal Bureau of Investigation launches an investigation into 14 companies involved in the sub-prime mortgage crisis.
Pub chain owner Mitchells & Butlers loses £274m when a property deal falls through due to the credit crisis.
28 January
Belgian bank Fortis warns its losses connected to bad US mortgage debt could be as high as $1.47bn.
25 January
Barclays Capital predicts banks will need to raise as much as $143bn to weather the credit crisis.
23 January
The Bank of China dismisses rumours it was about to unveil massive losses caused by its exposure to the US sub-prime mortgage market.
22 January
The US Federal Reserve cuts interest rates by half a percentage point to 3.5%, it's biggest cut in 25 years.
21 January
Global stock markets, including London's FTSE 100 index, suffer their biggest falls since 11 September 2001.
21 January
German Bank WestLB warns investors that it expects to write down $1.45bn of investments and make a net loss of a similar amount.
18 January
Scottish Equitable introduces delays for investors wanting to withdraw money from its commercial property funds, citing recession and sub-prime worries.
17 January
Merrill Lynch unveils a $14.1bn write-down of investments linked to sub-prime mortgages and posts a net loss of $7.8bn in 2007.
Investment bank Lehman Brothers cuts 1,300 jobs as it scales back its US mortgage lending business.
16 January
US bank JP Morgan Chase says it has cut the value of its mortgage-related investments by $1.3bn. Profits for the last three months of 2007 fall by a third.
15 January
Citigroup, the largest bank in the US, reports a $9.8bn loss for the fourth quarter and writes down $18bn in sub-prime losses. It also announces further investments in the group by Kuwait and Saudi Arabia.
UBS has said that the crisis had cost it about $13.5bn in total
11 January
Swiss investment bank UBS warns that is still does not know the scale of its total losses from the sub-prime crisis and says it might make a loss in 2007 when it reports its full results.
Federal Reserve boss Ben Bernanke says that the outlook for the US economy is deteriorating among continuing worries about the sub-prime crisis.
The largest mortgage lender in the US, Countrywide, which pioneered sub-prime mortgages, is bought by Bank of America for $4bn after its shares plunge 48%.
9 January
Bear Stearns boss James Cayne steps down after the firm reveals $1.9bn in sub-prime losses, the largest in its history.
World Bank says that world economic growth will slow in 2008 due to credit crunch, but strong performance in China and India will cushion impact.
7 January
President George W Bush admits that the credit crunch could slow the US economy in 2008, but says it is still fundamentally strong.
US economists urge government action to ease looming US economic slowdown as a result of credit crunch.
4 January
US unemployment rises sharply as job report sparks fall in stock market
DECEMBER 2007
19 December
Morgan Stanley writes off $9.4bn in sub-prime losses and sells a 9.9% stake in the company to the Chinese state investment company CIC for $5bn to rebuild its capital.
18 December
The US Federal Reserve Bank tightens rules on sub-prime lending, requiring mortgage companies to check more carefully on customers' income and give full disclosure of the cost of the loan.
ECB lends European commercial banks $500bn over the Christmas period to help ease the credit crisis.
Bank of England makes £10bn available to UK banks to ease credit crunch.
17 December
US central bank, the Federal Reserve, makes $20bn available to commercial banks at auction to help ease the credit crunch.
Former Fed chairman Alan Greenspan urges the US government to give direct aid to homeowners hit by the sub-prime crisis.
14 December
Citigroup takes $49bn worth of sub-prime debts back on its balance sheets, effectively closing seven structured investment vehicles (SIVs) which had relied on money market funding.
13 December
World central banks agree coordinated action to inject at least $100bn into short-term inter-bank credit markets to restore confidence.
11 December
US central bank, the Federal Reserve, cuts interest rates for a third time to 4.25% to ease the credit crunch.
10 December
Swiss bank UBS reports a further $10bn write-down caused by bad debts in the US housing market.
Lloyds TSB reveals that bad debt linked to the US sub-prime mortgage crisis will cost it £200m.
6 December
President George W Bush outlines plans to protect more than a million homeowners hit by the US housing slump.
Royal Bank of Scotland warns it will write off about £1.25bn because of exposure to the US sub-prime market.
The Bank of England cuts UK interest rates for the first time since 2005, amid signs that the economy is slowing.
The European Central Bank keeps interest rates in the eurozone at their current level of 4%.
4 December
US mortgage giant Fannie Mae is to issue $7bn of shares to cover losses linked to the housing market.
Canada cuts interest rates for the first time since April 2004 amid credit fears.
The future of the UK mortgage industry remains bright, despite the current funding crisis, say lenders.
UK mortgage lenders should prepare for the global credit crunch to get much worse, the City watchdog says.
3 December
Credit agency Moody's widens its debt review, having already earmarked $116bn of debt for downgrading.
November 2007
30 November
US construction spending falls sharply, led by a large fall in the building of private homes.
Morgan Stanley co-president Zoe Cruz is to retire, seen as the latest casualty of the US sub-prime crisis.
27 November
US mortgage guarantor Freddie Mac is selling $6bn of shares to cover further bad debt losses.
Citigroup agrees to sell shares worth $7.5bn to an investment fund owned by Abu Dhabi.
22 November
UK lender Kensington Mortgages withdraws its entire range of sub-prime mortgages because of market conditions.
The Nationwide, the UK's largest building society, benefits from being seen as a haven from troubled banks.
20 November
US mortgage guarantor Freddie Mac sets aside $1.2bn to cover bad loans and reports a $2bn loss.
UK buy-to-let mortgage lender Paragon sees its shares fall nearly 40% after revealing funding difficulties.
19 November
Northern Rock says bids to buy bank are "below current market value."
Swiss Re expects to lose $1bn on insurance a client took out against any fall in the value of its mortgage debt.
16 November
Goldman Sachs forecasts sub-prime losses for entire financial sector at $400bn (£200bn).
Northern Rock's boss resigns
15 November
Barclays says it had written down £1.3bn ($2.6bn) in sub-prime losses.
US House of Representatives passes Predatory Lending and Mortgage Protection Act by lopsided majority.
14 November
HSBC raised its sub-prime bad debt provision by $1.4bn (£670m) to $3.4bn.
Mizuho, Japan's second largest banking group, saw a 17% drop in first-half net profits and cut its full-year operating profit forecast by 13%, largely as a result of sub-prime-related losses at its securities arm.
13 November
Bank of America writes off $3bn in sub-prime losses.
12 November
The three biggest US banking groups - Citigroup, Bank of America and JPMorganChase - agree a $75bn superfund to restore confidence to credit markets.
9 November
US's fourth largest lender Wachovia revealed a $1.1bn loss due to decline in value of its mortgage debt plus $600m to cover loan losses (total $1.7bn, £829m).
8 November
Morgan Stanley unveiled a $3.7bn loss from its US sub-prime mortgage exposure.
BNP Paribas (after temporarily freezing hedge funds with $2.1bn in assets under management in August) revealed it had written down 301m euro ($439m, £214m) because of credit problems, including $197m related to US sub-prime and home builder lending.
5 November
Banking giant Citigroup announces fresh losses of between $8bn and $11bn because of exposure to the US sub-prime market. Chief executive and chairman Charles Prince resigns.
1 November
Credit Suisse revealed a $1bn write-down on bad debts.
October 2007
31 October
Federal Reserve delivers second rate cut to boost markets
Deutsche Bank revealed a 2.16bn euros ($3bn, £1.6bn) write-down on bad debts.
30 October
Merrill Lynch takes a $7.9bn hit following exposure to bad debt. Its chief executive, Stan O'Neal, resigns.
16 October
Northern Rock executives defend role at Treasury Select Committee
15 October
Citigroup writes down additional $5.9bn on exposure to the US sub-prime market.
Japanese bank Nomura announced the closure of its US mortgage-backed securities business and takes a $621m (£299m) hit.
14 October
US banks holding secret talks at US Treasury float idea of a new super-fund to revive the frozen credit markets.
5 October
Investment bank Merrill Lynch reveals $5.6bn sub-prime loss
1 October
Swiss bank UBS revealed losses of $3.4bn in its fixed income and rates division, and in its mortgage-backed securities business, while Citigroup admits $.31bn in losses.
September 2007
26 September
Commercial banks shun Bank of England rescue fund
22 September
UK Chancellor Alistair Darling suggests government will consider boosting deposit savings guarantee to £100,000.
20 September
Deutsche Bank boss Josef Ackermann warns of losses from sub-prime exposure.
Goldman Sachs makes a profit by betting that mortgage-backed securities will fall despite $1.5bn exposure.
18 September
The US Federal Reserve cuts interest rates to 4.75% from 5.25% to try to energise financial markets.
Savers return to Northern Rock after the government guarantees all savings.
15 September
Thousands of depositors queue outside Northern Rock branches to try and get their money out.
14 September
Shares in Northern Rock plummet after news of its Bank of England rescue is announced.
13 September
The BBC revealed that Northern Rock had asked for and been granted emergency financial support from the Bank of England, in the latter's role as lender of last resort.
11 September
ECB president Jean-Claude Trichet blames rating agencies for sub-prime crisis but says EU economy sound.
US Treasury Secretary Hank Paulson says mortgage lenders are to blame for sub-prime crisis.
6 September
ECB injects fresh cash into markets as credit fears intensify. Total intervention has now reached 250bn euros ($300bn, £150bn).
4 September
Bank of China reveals $9bn in sub-prime losses but Chinese government says its foreign exchange reserves will not be affected.
Overnight bank lending dries up as banks fear defaults from each other
3 September
German regional lender IKB recorded a $1bn loss as a result of exposure to the US sub-prime market.
August 2007
31 August
President Bush, flanked by Treasury Secretary Hank Paulson and Fed chief Ben Bernanke, pledges to ease sub-prime lending crisis.
30 August
German Chancellor Angela Merkel criticised credit ratings agencies for not spotting problems on the market.
28 August
The German regional bank Sachsen Landesbank is rapidly sold to Germany's biggest regional bank, Landesbank Baden-Wuerttemberg. It came close to collapsing under its exposure to sub-prime debt. It received a 17bn euro lifeline.
23 August
Leading sub-prime lender Countrywide gets $2bn cash injection from Bank of America.
Shares slump after Countrywide warns that mortgage slump is getting worse.
Leading US and European banks borrow $2bn from Federal Reserve
21 August
Sharp rise in US home repossessions as sub-prime borrowers default.
Capital One cuts jobs as sub-prime crisis bites.
20 August
Countrywide cuts jobs as sub-prime crisis hits.
US mortgage lender sells assets
UK sub-prime lenders tighten up lending terms.
17 August
The US Federal Reserve cut the interest rate at which it lends to banks (the discount rate) by half a percentage point to help banks deal with credit problems.
BNP Paribas says sub-prime losses in hedge funds will not impact on quarterly profits.
16 August
Countrywide draws on its entire $11.5bn credit line as liquidity crisis looms. Australian mortgage lender Rams also admits liquidity problems.
15 August
Shares plunge in largest mortgage lender Countrywide on fears it will go bankrupt
13 August
Wall Street giant Goldman Sachs said it would pump $3bn into a hedge fund hit by the credit crunch to help shore up its value.
The European Central Bank pumps 47.7bn euros into the money markets, its third cash injection in as many working days. Central banks in the US and Japan also topped up earlier injections.
10 August
Global stock markets stayed under intense pressure over sub-prime fears. London's FTSE 100 index had its worst day in more than four years, closing 3.7% lower.
The ECB provided an extra 61bn euros of funds for banks. The US Fed said it would provide as much overnight money as would be needed to combat the credit crunch.
9 August
Short-term credit markets freeze up after French bank BNP Paribas suspends three investment funds worth 2bn euros, citing problems in the US sub-prime mortgage sector. BNP said it could not value the assets in the fund, because the market had disappeared. The European Central Bank pumps 95bn euros into the eurozone banking system to ease the sub-prime credit crunch. The US Federal Reserve and the Bank of Japan take similar steps
6 August
American Home Mortgage, one of the largest US independent home loan providers, filed for bankruptcy after laying off the majority of its staff. The company said it was a victim of the slump in the US housing market that had caught out many sub-prime borrowers and lenders.
3 August
Shares fall heavily on fears of sub-prime losses and global credit crunch.
.
July 2007
31 July
Bear Stearns stopped clients from withdrawing cash from a third fund, saying it has been overwhelmed by redemption requests. The lender also filed for bankruptcy protection for the two funds it had to bail out earlier.
27 July
Worries about the sub-prime crisis hammered global stock markets and the main US Dow Jones stock index slipped.
26 July
Bear Stearns seized assets from one of its problem-hit hedge funds as it tried to stem losses. Shares fell 4.2% in five sessions, its worst weekly decline in almost five years.
24 July
Rising defaults on sub-prime loans hit profits at Countrywide, largest mortgage lender.
20 July
Federal Reserve chairman Ben Bernanke warned that the crisis in the US sub-prime lending market could cost up to $100bn.
19 July
Fed comments shake global shares
18 July
Bear Stearns told investors that they will get little, if any, money back from the two hedge funds that the lender was forced to rescue.
13 July
US industrial firm General Electric decided to sell the WMC Mortgage sub-prime lending business that it had bought in 2004. "The mortgage industry has greatly changed since the purchase of WMC," said its chief executive, Laurent Bossard.
10 July
Independent market analyst Datamonitor said UK sub-prime mortgages were set to grow faster than mainstream mortgages, with the market worth some £31.5bn by 2011.
4 July
The UK's Financial Services Authority (FSA) said it would take action against five brokers selling sub-prime mortgages, claiming they offered loans to people who should not be given them.
June 2007
29 June
Bear Stearns fires its head of asset management and hires Jeffrey Lane find out what went wrong at its hedge funds.
22 June
Bear Stearns revealed it had spent $3.2bn (£1.5bn) bailing out two of its funds exposed to the sub-prime market. The bailout of the fund was the largest by a bank in almost a decade.
14 June
Senior US legislator Barney Frank says Fed could lose its authority to regulate mortgage business.
May 2007
30 May
UK sub-prime lender Kensington agrees takeover
3 May
GM finance unit loses heavily on sub-prime mortgages
UBS closes its US sub-prime lending arm, Dillon Read Capital Management.
April 2007
17 April
US government-backed lenders try to tackle sub-prime crisis
2 April
US home sales fall sharply
New Century Financial filed for Chapter 11 bankruptcy protection after it was forced by its backers to repurchase billions of dollars worth of bad loans. The company said it would have to cut 3,200 jobs, more than half of its workforce, as a result of the move.
March 2007
16 March
US-based sub-prime firm Accredited Home Lenders Holding said it would sell $2.7bn of its sub-prime loan book - at a heavy discount - in order to generate some cash for its business.
13 March
Wall Street hit by sub-prime fears
12 March
Shares in New Century Financial, one of the biggest sub-prime lenders in the US, were suspended amid fears it might be heading for bankruptcy.
8 March
Biggest US house builder DR Horton warns of huge losses from sub-prime fall-out.
February 2007
22 February
HSBC fires head of its US mortgage lending business as losses reach $10.5bn.
15 May
Barclays takes a further £1bn writedown on assets.
12 May
HSBC reveals a further $3.2bn of losses linked to the US sub-prime market.
APRIL 2008
22 April
The UK's second largest bank, RBS, reveals £5.9bn in writedowns from the credit crunch, and asks its shareholders for an additional £12bn to rebuild its capital base.
18 April
Citigroup reveals another $12bn in sub-prime losses, bringing its total to $40bn, the most of any bank. It cuts 9000 jobs amid a quarterly loss of $5bn, down from $9.8bn in the previous quarter.
17April
US investment bank Merrill Lynch reveals an additional $4.5bn in credit writedowns and a loss of nearly $2bn in the first quarter of the year.
1 April
Swiss bank UBS reveals a further $19bn of asset writedowns. This came on top of the $18.4bn which it announced for 2007.
1 April
Germany's Deutsche Bank warns of credit losses of $3.9bn in the first three months of 2008.
Read the full story
MARCH 2008
31 March
US Treasury announces major package to reform regulation of US financial markets and prevent future financial crises. The plans are criticised by consumer groups but generally praised on Wall Street.
18 March
Wall Street investment banks Goldman Sachs and Lehman Brothers reveal that their first quarter profits have been halved by the credit crunch.
But stocks rise on the news that their results have not been as bad as expected.
17 March
Wall Street investment bank Bear Stearns is acquired by JPMorgan Chase for $240m, a fraction of its share price, in deal backed by $30bn in Fed loans.
The bank got into trouble over its huge exposure to sub-prime mortgage-backed securities.
14 March
Bear Stearns receives emergency funding, after its exposure to mortgage-backed investments undermined confidence in the bank.
14 March
Investment fund Carlyle Capital fails as the credit crisis spreads from sub-prime related products to other mortgage-backed investments.
11 March
Central banks make another coordinated attempt to ease conditions in the credit markets, by announcing $200bn of new emergency lending for banks.
7 March
The former bosses of Merrill Lynch and Citigroup are questioned by a Congressional panel over their bumper pay - despite huge, sub-prime related bosses at their banks.
6 March
A £1bn hedge fund run by Peloton Partners collapsed, after it struggled to meet interest payments due to the credit crisis.
5 March
France's biggest retail bank Credit Agricole announced a fourth quarter loss hit by a 3.3bn euro charge at its investment banking boss, Calyon.
3 March
HSBC announced a $17.2bn (£8.7bn) loss after the decline in the US housing market hit the value of its loans.
FEBRUARY 2008
14 February
Commerzbank, Germany's second-biggest bank, cuts $1.1bn off the value of investments linked to the sub-prime mortgage crisis and warns its losses could worsen.
Swiss investment bank UBS confirms it has made a loss of $4bn in 2007 after cutting the value of investments by $18.4bn.
13 February
Britain's Bradford & Bingley cuts the value of its sub-prime mortgage-related investments by £144.4m ($284.5m). A few weeks earlier it had said it did not expect to suffer any write-downs.
Japan's financial watchdog says Japanese banks suffered losses of $5.6bn by the end of 2007. These have more than doubled in the last three months of the year.
12 February
Swiss bank Credit Suisse says losses on sub-prime investments were $1.8bn, less than originally expected.
10 February
Leaders from the G7 group of industrialised nations say worldwide losses from the US mortgage crisis could reach $400bn.
8 February
Deutsche Bank announces $3.2bn of sub-prime write-downs in the third quarter of the financial year and predicts there is not much more to come.
7 February
US Federal Reserve boss Ben Bernanke expresses concern about bond insurers that guarantee against defaults on mortgage loans.
6 February
Wall Street sees its worst share losses in almost a year, amid fears that the worst US housing slump in 25 years is crippling the wider economy.
5 February
US financial firm GMAC, which owns sub-prime lender Residential Capital, says it has made a $2.3bn loss in 2007, compared with a $2.1bn profit the year before.
JANUARY 2008
31 January
Bond insurer MBIA announces a $2.3bn loss, its biggest yet for a three-month period. It was hit by declines in the value of US mortgage-backed debt, which it guarantees against.
30 January
The US Federal Reserve cuts interest rates to 3% from 3.5%. It is the second cut in nine days. US economic growth slows.
29 January
The US Federal Bureau of Investigation launches an investigation into 14 companies involved in the sub-prime mortgage crisis.
Pub chain owner Mitchells & Butlers loses £274m when a property deal falls through due to the credit crisis.
28 January
Belgian bank Fortis warns its losses connected to bad US mortgage debt could be as high as $1.47bn.
25 January
Barclays Capital predicts banks will need to raise as much as $143bn to weather the credit crisis.
23 January
The Bank of China dismisses rumours it was about to unveil massive losses caused by its exposure to the US sub-prime mortgage market.
22 January
The US Federal Reserve cuts interest rates by half a percentage point to 3.5%, it's biggest cut in 25 years.
21 January
Global stock markets, including London's FTSE 100 index, suffer their biggest falls since 11 September 2001.
21 January
German Bank WestLB warns investors that it expects to write down $1.45bn of investments and make a net loss of a similar amount.
18 January
Scottish Equitable introduces delays for investors wanting to withdraw money from its commercial property funds, citing recession and sub-prime worries.
17 January
Merrill Lynch unveils a $14.1bn write-down of investments linked to sub-prime mortgages and posts a net loss of $7.8bn in 2007.
Investment bank Lehman Brothers cuts 1,300 jobs as it scales back its US mortgage lending business.
16 January
US bank JP Morgan Chase says it has cut the value of its mortgage-related investments by $1.3bn. Profits for the last three months of 2007 fall by a third.
15 January
Citigroup, the largest bank in the US, reports a $9.8bn loss for the fourth quarter and writes down $18bn in sub-prime losses. It also announces further investments in the group by Kuwait and Saudi Arabia.
UBS has said that the crisis had cost it about $13.5bn in total
11 January
Swiss investment bank UBS warns that is still does not know the scale of its total losses from the sub-prime crisis and says it might make a loss in 2007 when it reports its full results.
Federal Reserve boss Ben Bernanke says that the outlook for the US economy is deteriorating among continuing worries about the sub-prime crisis.
The largest mortgage lender in the US, Countrywide, which pioneered sub-prime mortgages, is bought by Bank of America for $4bn after its shares plunge 48%.
9 January
Bear Stearns boss James Cayne steps down after the firm reveals $1.9bn in sub-prime losses, the largest in its history.
World Bank says that world economic growth will slow in 2008 due to credit crunch, but strong performance in China and India will cushion impact.
7 January
President George W Bush admits that the credit crunch could slow the US economy in 2008, but says it is still fundamentally strong.
US economists urge government action to ease looming US economic slowdown as a result of credit crunch.
4 January
US unemployment rises sharply as job report sparks fall in stock market
DECEMBER 2007
19 December
Morgan Stanley writes off $9.4bn in sub-prime losses and sells a 9.9% stake in the company to the Chinese state investment company CIC for $5bn to rebuild its capital.
18 December
The US Federal Reserve Bank tightens rules on sub-prime lending, requiring mortgage companies to check more carefully on customers' income and give full disclosure of the cost of the loan.
ECB lends European commercial banks $500bn over the Christmas period to help ease the credit crisis.
Bank of England makes £10bn available to UK banks to ease credit crunch.
17 December
US central bank, the Federal Reserve, makes $20bn available to commercial banks at auction to help ease the credit crunch.
Former Fed chairman Alan Greenspan urges the US government to give direct aid to homeowners hit by the sub-prime crisis.
14 December
Citigroup takes $49bn worth of sub-prime debts back on its balance sheets, effectively closing seven structured investment vehicles (SIVs) which had relied on money market funding.
13 December
World central banks agree coordinated action to inject at least $100bn into short-term inter-bank credit markets to restore confidence.
11 December
US central bank, the Federal Reserve, cuts interest rates for a third time to 4.25% to ease the credit crunch.
10 December
Swiss bank UBS reports a further $10bn write-down caused by bad debts in the US housing market.
Lloyds TSB reveals that bad debt linked to the US sub-prime mortgage crisis will cost it £200m.
6 December
President George W Bush outlines plans to protect more than a million homeowners hit by the US housing slump.
Royal Bank of Scotland warns it will write off about £1.25bn because of exposure to the US sub-prime market.
The Bank of England cuts UK interest rates for the first time since 2005, amid signs that the economy is slowing.
The European Central Bank keeps interest rates in the eurozone at their current level of 4%.
4 December
US mortgage giant Fannie Mae is to issue $7bn of shares to cover losses linked to the housing market.
Canada cuts interest rates for the first time since April 2004 amid credit fears.
The future of the UK mortgage industry remains bright, despite the current funding crisis, say lenders.
UK mortgage lenders should prepare for the global credit crunch to get much worse, the City watchdog says.
3 December
Credit agency Moody's widens its debt review, having already earmarked $116bn of debt for downgrading.
November 2007
30 November
US construction spending falls sharply, led by a large fall in the building of private homes.
Morgan Stanley co-president Zoe Cruz is to retire, seen as the latest casualty of the US sub-prime crisis.
27 November
US mortgage guarantor Freddie Mac is selling $6bn of shares to cover further bad debt losses.
Citigroup agrees to sell shares worth $7.5bn to an investment fund owned by Abu Dhabi.
22 November
UK lender Kensington Mortgages withdraws its entire range of sub-prime mortgages because of market conditions.
The Nationwide, the UK's largest building society, benefits from being seen as a haven from troubled banks.
20 November
US mortgage guarantor Freddie Mac sets aside $1.2bn to cover bad loans and reports a $2bn loss.
UK buy-to-let mortgage lender Paragon sees its shares fall nearly 40% after revealing funding difficulties.
19 November
Northern Rock says bids to buy bank are "below current market value."
Swiss Re expects to lose $1bn on insurance a client took out against any fall in the value of its mortgage debt.
16 November
Goldman Sachs forecasts sub-prime losses for entire financial sector at $400bn (£200bn).
Northern Rock's boss resigns
15 November
Barclays says it had written down £1.3bn ($2.6bn) in sub-prime losses.
US House of Representatives passes Predatory Lending and Mortgage Protection Act by lopsided majority.
14 November
HSBC raised its sub-prime bad debt provision by $1.4bn (£670m) to $3.4bn.
Mizuho, Japan's second largest banking group, saw a 17% drop in first-half net profits and cut its full-year operating profit forecast by 13%, largely as a result of sub-prime-related losses at its securities arm.
13 November
Bank of America writes off $3bn in sub-prime losses.
12 November
The three biggest US banking groups - Citigroup, Bank of America and JPMorganChase - agree a $75bn superfund to restore confidence to credit markets.
9 November
US's fourth largest lender Wachovia revealed a $1.1bn loss due to decline in value of its mortgage debt plus $600m to cover loan losses (total $1.7bn, £829m).
8 November
Morgan Stanley unveiled a $3.7bn loss from its US sub-prime mortgage exposure.
BNP Paribas (after temporarily freezing hedge funds with $2.1bn in assets under management in August) revealed it had written down 301m euro ($439m, £214m) because of credit problems, including $197m related to US sub-prime and home builder lending.
5 November
Banking giant Citigroup announces fresh losses of between $8bn and $11bn because of exposure to the US sub-prime market. Chief executive and chairman Charles Prince resigns.
1 November
Credit Suisse revealed a $1bn write-down on bad debts.
October 2007
31 October
Federal Reserve delivers second rate cut to boost markets
Deutsche Bank revealed a 2.16bn euros ($3bn, £1.6bn) write-down on bad debts.
30 October
Merrill Lynch takes a $7.9bn hit following exposure to bad debt. Its chief executive, Stan O'Neal, resigns.
16 October
Northern Rock executives defend role at Treasury Select Committee
15 October
Citigroup writes down additional $5.9bn on exposure to the US sub-prime market.
Japanese bank Nomura announced the closure of its US mortgage-backed securities business and takes a $621m (£299m) hit.
14 October
US banks holding secret talks at US Treasury float idea of a new super-fund to revive the frozen credit markets.
5 October
Investment bank Merrill Lynch reveals $5.6bn sub-prime loss
1 October
Swiss bank UBS revealed losses of $3.4bn in its fixed income and rates division, and in its mortgage-backed securities business, while Citigroup admits $.31bn in losses.
September 2007
26 September
Commercial banks shun Bank of England rescue fund
22 September
UK Chancellor Alistair Darling suggests government will consider boosting deposit savings guarantee to £100,000.
20 September
Deutsche Bank boss Josef Ackermann warns of losses from sub-prime exposure.
Goldman Sachs makes a profit by betting that mortgage-backed securities will fall despite $1.5bn exposure.
18 September
The US Federal Reserve cuts interest rates to 4.75% from 5.25% to try to energise financial markets.
Savers return to Northern Rock after the government guarantees all savings.
15 September
Thousands of depositors queue outside Northern Rock branches to try and get their money out.
14 September
Shares in Northern Rock plummet after news of its Bank of England rescue is announced.
13 September
The BBC revealed that Northern Rock had asked for and been granted emergency financial support from the Bank of England, in the latter's role as lender of last resort.
11 September
ECB president Jean-Claude Trichet blames rating agencies for sub-prime crisis but says EU economy sound.
US Treasury Secretary Hank Paulson says mortgage lenders are to blame for sub-prime crisis.
6 September
ECB injects fresh cash into markets as credit fears intensify. Total intervention has now reached 250bn euros ($300bn, £150bn).
4 September
Bank of China reveals $9bn in sub-prime losses but Chinese government says its foreign exchange reserves will not be affected.
Overnight bank lending dries up as banks fear defaults from each other
3 September
German regional lender IKB recorded a $1bn loss as a result of exposure to the US sub-prime market.
August 2007
31 August
President Bush, flanked by Treasury Secretary Hank Paulson and Fed chief Ben Bernanke, pledges to ease sub-prime lending crisis.
30 August
German Chancellor Angela Merkel criticised credit ratings agencies for not spotting problems on the market.
28 August
The German regional bank Sachsen Landesbank is rapidly sold to Germany's biggest regional bank, Landesbank Baden-Wuerttemberg. It came close to collapsing under its exposure to sub-prime debt. It received a 17bn euro lifeline.
23 August
Leading sub-prime lender Countrywide gets $2bn cash injection from Bank of America.
Shares slump after Countrywide warns that mortgage slump is getting worse.
Leading US and European banks borrow $2bn from Federal Reserve
21 August
Sharp rise in US home repossessions as sub-prime borrowers default.
Capital One cuts jobs as sub-prime crisis bites.
20 August
Countrywide cuts jobs as sub-prime crisis hits.
US mortgage lender sells assets
UK sub-prime lenders tighten up lending terms.
17 August
The US Federal Reserve cut the interest rate at which it lends to banks (the discount rate) by half a percentage point to help banks deal with credit problems.
BNP Paribas says sub-prime losses in hedge funds will not impact on quarterly profits.
16 August
Countrywide draws on its entire $11.5bn credit line as liquidity crisis looms. Australian mortgage lender Rams also admits liquidity problems.
15 August
Shares plunge in largest mortgage lender Countrywide on fears it will go bankrupt
13 August
Wall Street giant Goldman Sachs said it would pump $3bn into a hedge fund hit by the credit crunch to help shore up its value.
The European Central Bank pumps 47.7bn euros into the money markets, its third cash injection in as many working days. Central banks in the US and Japan also topped up earlier injections.
10 August
Global stock markets stayed under intense pressure over sub-prime fears. London's FTSE 100 index had its worst day in more than four years, closing 3.7% lower.
The ECB provided an extra 61bn euros of funds for banks. The US Fed said it would provide as much overnight money as would be needed to combat the credit crunch.
9 August
Short-term credit markets freeze up after French bank BNP Paribas suspends three investment funds worth 2bn euros, citing problems in the US sub-prime mortgage sector. BNP said it could not value the assets in the fund, because the market had disappeared. The European Central Bank pumps 95bn euros into the eurozone banking system to ease the sub-prime credit crunch. The US Federal Reserve and the Bank of Japan take similar steps
6 August
American Home Mortgage, one of the largest US independent home loan providers, filed for bankruptcy after laying off the majority of its staff. The company said it was a victim of the slump in the US housing market that had caught out many sub-prime borrowers and lenders.
3 August
Shares fall heavily on fears of sub-prime losses and global credit crunch.
.
July 2007
31 July
Bear Stearns stopped clients from withdrawing cash from a third fund, saying it has been overwhelmed by redemption requests. The lender also filed for bankruptcy protection for the two funds it had to bail out earlier.
27 July
Worries about the sub-prime crisis hammered global stock markets and the main US Dow Jones stock index slipped.
26 July
Bear Stearns seized assets from one of its problem-hit hedge funds as it tried to stem losses. Shares fell 4.2% in five sessions, its worst weekly decline in almost five years.
24 July
Rising defaults on sub-prime loans hit profits at Countrywide, largest mortgage lender.
20 July
Federal Reserve chairman Ben Bernanke warned that the crisis in the US sub-prime lending market could cost up to $100bn.
19 July
Fed comments shake global shares
18 July
Bear Stearns told investors that they will get little, if any, money back from the two hedge funds that the lender was forced to rescue.
13 July
US industrial firm General Electric decided to sell the WMC Mortgage sub-prime lending business that it had bought in 2004. "The mortgage industry has greatly changed since the purchase of WMC," said its chief executive, Laurent Bossard.
10 July
Independent market analyst Datamonitor said UK sub-prime mortgages were set to grow faster than mainstream mortgages, with the market worth some £31.5bn by 2011.
4 July
The UK's Financial Services Authority (FSA) said it would take action against five brokers selling sub-prime mortgages, claiming they offered loans to people who should not be given them.
June 2007
29 June
Bear Stearns fires its head of asset management and hires Jeffrey Lane find out what went wrong at its hedge funds.
22 June
Bear Stearns revealed it had spent $3.2bn (£1.5bn) bailing out two of its funds exposed to the sub-prime market. The bailout of the fund was the largest by a bank in almost a decade.
14 June
Senior US legislator Barney Frank says Fed could lose its authority to regulate mortgage business.
May 2007
30 May
UK sub-prime lender Kensington agrees takeover
3 May
GM finance unit loses heavily on sub-prime mortgages
UBS closes its US sub-prime lending arm, Dillon Read Capital Management.
April 2007
17 April
US government-backed lenders try to tackle sub-prime crisis
2 April
US home sales fall sharply
New Century Financial filed for Chapter 11 bankruptcy protection after it was forced by its backers to repurchase billions of dollars worth of bad loans. The company said it would have to cut 3,200 jobs, more than half of its workforce, as a result of the move.
March 2007
16 March
US-based sub-prime firm Accredited Home Lenders Holding said it would sell $2.7bn of its sub-prime loan book - at a heavy discount - in order to generate some cash for its business.
13 March
Wall Street hit by sub-prime fears
12 March
Shares in New Century Financial, one of the biggest sub-prime lenders in the US, were suspended amid fears it might be heading for bankruptcy.
8 March
Biggest US house builder DR Horton warns of huge losses from sub-prime fall-out.
February 2007
22 February
HSBC fires head of its US mortgage lending business as losses reach $10.5bn.
Friday, August 1, 2008
Apology from CEO of TD Ameritrade - September 2007
Let me tell you why I am sending you this email. While investigating client reports about the industry-wide issue of investment-related SPAM, we recently discovered and eliminated unauthorized code from our systems. This code allowed certain client information stored in one of our databases, including email addresses, to be retrieved by an external source.
Please be assured that UserIDs and passwords are not included in this database, and we can confirm that your assets remain secure at TD AMERITRADE.
What we want you to know:
Once we discovered the unauthorized code, we took immediate action to eliminate it. We are confident that we have identified the means by which the information was accessed and have taken appropriate steps to prevent this from reoccurring.
You continue to be covered by our Asset Protection Guarantee, which protects you and your assets from any unauthorized activity that may occur in your account through no fault of your own. If you lose cash or securities as a result of such activity, we will reimburse you for the cash or shares of securities you lost.
While Social Security Numbers are stored in this particular database, we have no evidence to establish that they were retrieved or used to commit identity theft. To further protect you, we have hired ID Analytics, which specializes in identity risk, to investigate and monitor potential identity theft. ID Analytics provides identity risk services to many of the country’s largest banks and telecommunication companies, as well as government agencies. Following its initial evaluation, ID Analytics found no evidence of identity theft as a result of this data breach. We will retain its services on an ongoing basis to support your TD AMERITRADE accounts and to monitor for evidence of identity theft. We will alert and advise you if any is found. As always, we encourage you to remain alert in guarding your personal information, regularly review your account statements and monitor your credit activity from the major reporting agencies.
For more information on protecting yourself against the possibility of security threats, please visit our online Security Center.
We sincerely apologize to you for this situation and want to assure you that protecting the security and privacy of your assets and information remains a top priority. We have made and will continue to make significant investments in security software, systems and procedures, and we will remain vigilant about protecting you.
We want to answer any questions and address any concerns that you may have about this matter. For more information, including a list of Frequently Asked Questions (FAQs) and an additional message from me, please go to www.amtd.com or contact Client Services. Please note that we are anticipating increased call volume during this period, which may lead to long wait times. We encourage you to review the FAQs and, if you have a question, to log on to your account and send us a secure email. Once again, please be assured that your assets are secure at TD AMERITRADE.
Sincerely,
Joe Moglia
CEO
TD AMERITRADE
The incident was mentioned in an article in Knowledge@Wharton 2007
Can't Hide Can't Run.
Please be assured that UserIDs and passwords are not included in this database, and we can confirm that your assets remain secure at TD AMERITRADE.
What we want you to know:
Once we discovered the unauthorized code, we took immediate action to eliminate it. We are confident that we have identified the means by which the information was accessed and have taken appropriate steps to prevent this from reoccurring.
You continue to be covered by our Asset Protection Guarantee, which protects you and your assets from any unauthorized activity that may occur in your account through no fault of your own. If you lose cash or securities as a result of such activity, we will reimburse you for the cash or shares of securities you lost.
While Social Security Numbers are stored in this particular database, we have no evidence to establish that they were retrieved or used to commit identity theft. To further protect you, we have hired ID Analytics, which specializes in identity risk, to investigate and monitor potential identity theft. ID Analytics provides identity risk services to many of the country’s largest banks and telecommunication companies, as well as government agencies. Following its initial evaluation, ID Analytics found no evidence of identity theft as a result of this data breach. We will retain its services on an ongoing basis to support your TD AMERITRADE accounts and to monitor for evidence of identity theft. We will alert and advise you if any is found. As always, we encourage you to remain alert in guarding your personal information, regularly review your account statements and monitor your credit activity from the major reporting agencies.
For more information on protecting yourself against the possibility of security threats, please visit our online Security Center.
We sincerely apologize to you for this situation and want to assure you that protecting the security and privacy of your assets and information remains a top priority. We have made and will continue to make significant investments in security software, systems and procedures, and we will remain vigilant about protecting you.
We want to answer any questions and address any concerns that you may have about this matter. For more information, including a list of Frequently Asked Questions (FAQs) and an additional message from me, please go to www.amtd.com or contact Client Services. Please note that we are anticipating increased call volume during this period, which may lead to long wait times. We encourage you to review the FAQs and, if you have a question, to log on to your account and send us a secure email. Once again, please be assured that your assets are secure at TD AMERITRADE.
Sincerely,
Joe Moglia
CEO
TD AMERITRADE
The incident was mentioned in an article in Knowledge@Wharton 2007
Can't Hide Can't Run.
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