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Battling The Credit Crunch

Battling the Credit Crunch

For more than a year now, the credit crunch has whipsawed financial markets, reshaped the financial services industry and taken a big bite out of US economic growth. The US government has taken a number of dramatic steps--both conventional and extraordinary -- to try to remedy the problem. Take a look at what was done.

For more than a year now, the credit crunch has whipsawed financial markets, reshaped the financial services industry and taken a big bite out of US economic growth. The US government has taken a number of dramatic steps—both conventional and extraordinary—to try to remedy the problem. Take a look at what's been done.

>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

Aug. 17, 2007: Fed's First Strike

Reacting to concerns about the subprime lending crisis, the Federal Reserve , to 5.75 percent. The Federal Reserve went on to cut interest rates through the end of 2007 and early 2008, eight more times, taking the federal funds rate down to 2.00 percent. 
Photo: absolutwade

Reacting to concerns about the subprime lending crisis, the Federal Reserve cut its discount rate half a percentage point to 5.75 percent. The Fed went on to cut interest rates through the end of 2007 and early 2008, eight more times, taking the federal funds rate down to 2.00 percent. 

>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

Jan. 11, 2008: Countrywide Sold

Bank of America buys the rapidly sinking mortgage lender Countrywide Financial for $4 billion in an all-stock deal.

Bank of America buys the rapidly sinking mortgage lender Countrywide Financial for $4 billion in an all-stock deal.

>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

Feb. 17, 2008: Northern Rock Nationalized

British bank Northern Rock is nationalized by the government, as customers made an unprecedented run on deposits. 
Photo: AP

British bank Northern Rock is nationalized by the government, as customers make an unprecedented run on deposits. 

>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

March 16/17, 2008: Bear Stearns Sold

In a quickly-arranged deal, Bear Stearns is sold to JPMorgan Chase for about $2 a share, but the price is later revised to $10 a share. The deal is backed by the Fed and the Treasury Dept., raising concerns about the role of the federal government.

In a quickly-arranged deal, Bear Stearns is sold to JPMorgan Chase for about $2 a share, but the price is later revised to $10 a share. The deal is backed by the Fed and the Treasury Dept., raising concerns about the role of the federal government.

>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

July 11, 2008: IndyMac Seized

After depositors withdraw more than $1.3 billion from IndyMac over an 11 - day period, the mortgage lender is taken over by the FDIC.  Though just one of the 12 institutions seized by the FDIC in 2008,  Indy Mac is the largest  with assets of $32 billion.

After depositors withdraw more than $1.3 billion from IndyMac over an 11-day period, the mortgage lender is taken over by the FDIC. Though just one of the 12 institutions seized by the FDIC in 2008, IndyMac is the largest, with assets of $32 billion.

>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

July 13, 2008: Fannie, Freddie Rescue

The Treasury and the Federal Reserve nationalize mortgage finance companies Fannie Mae and Freddie Mac in an effort to support the US housing market.

The Treasury and the Federal Reserve nationalize mortgage finance companies Fannie Mae and Freddie Mac in an effort to support the US housing market.

>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

Sept. 15, 2008: Lehman Bros. Bankruptcy

In the absence of a private-sector buyout deal or a government rescue package, Lehman files for chapter 11 bankruptcy protection. On the same day investment bank Merrill Lynch is taken over by Bank of America. 

In the absence of a private-sector buyout deal or a government rescue package, Lehman Brothers files for chapter 11 bankruptcy protection. On the same day investment bank Merrill Lynch is taken over by Bank of America. 

>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

Sept. 16, 2008: AIG Bailout

The Federal Reserve announces a plan for an $85 -billion loan package for insurer AIG in return for an 80-percent stake in the company, which was desperate for a capital infusion.
Photo: TheTruthAbout...

The Federal Reserve announces a plan for an $85 billion loan package for insurer AIG in return for an 80 percent stake in the company, which was desperate for a capital infusion.

>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

Sept. 20, 2008: Bailout Plan

Treasury Secretary Henry Paulson outlines details of a $700–billion-bailout plan for firms troubled by bad mortgage debt and calls for the swift creation of a legislative package. Details of a $700 billion bailout plan for firms troubled by bad mortgage debt are released.
Photo: AP

Treasury Secretary Henry Paulson outlines details of a $700 billion bailout plan for firms troubled by bad mortgage debt and calls for the swift creation of a legislative package.

>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

Sept. 21, 2008: Wall Street Era Ends

The Fed approves the requests of Goldman Sachs and Morgan Stanley to become bank holding companies, ending Wall Street's investment banking model.

The Fed approves the requests of Goldman Sachs and Morgan Stanley to become bank holding companies, essentially ending Wall Street's investment banking model.
>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

Sept. 23, 2008: Buffett Invests

Warren Buffett’s Berkshire Hathaway invests $5 billion in Goldman Sachs, citing the rescue plan as a contributing factor.

Warren Buffett’s Berkshire Hathaway invests $5 billion in Goldman Sachs, citing the rescue plan as a contributing factor.

>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis

Sept. 25, 2008: WaMu Seized

Washington Mutual is seized by the FDIC, making it by far the largest US bank failure ever, with $307 billion in assets. Washington Mutual's banking assets are sold to JPMorgan Chase for $1.9 billion.

Washington Mutual is seized by the FDIC, making it the largest US bank failure ever, with $307 billion in assets. Washington Mutual's banking assets are sold to JPMorgan Chase for $1.9 billion.

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>Slideshow: 2008 Bank Failures
>Slideshow: Largest US Bankruptcies
>Special Report: Wall Street in Crisis