Terms in this set (183)

* wall street dies, victim of its own greed, arrogance and stupidity
*JP morgan takes over Bear Stearns - orchestrated by US Treasury/Fed
* 2 large mortgage lenders (Fannie Mae and Freddy Mac) put into conservatorship and placed under control of US Treasury
*Private lenders such as IndyMac seized by FDIC
*FDIC increases deposit insurance from 100K$ to 250K$ to prevent total banking panic
* big killer: Lehman Brothers file for bankruptcy, causes chaos and panic
* CEO of Merrill Lynch sells company to Bank of America (last chance to cut a deal) same night
* markets cease to function, prices of stock/bonds plummet, feared there would be a run of $3 trillion money mkt industry. Treasury steps in to guarantee money mkt funds
* Goldman Sachs and Morgan Stanley are now the only 2 large investment banks left; stock prices plummet, rumors spread of their pending bankruptcy
- Fed says: convert to commercial banks and receive FDIC insurance. both, out of fear, apply to do so
* in span of 9 days, 4 large Wall street firms ceased to exist! they had all been buying risky, illiquid assets using too much debt. value of these assets dropped with markets, their equity was dropping! debt had exceeded equity
* after Bear Stearns, Treasury and Fed start pumping money into economy, shoring up credit markets and introducing new credit facilities
* Emergency Economic Stabilization Act of '08, US Treasury: bailout. authorized Treasury to create 700 billion dollar Troubled Asset relief Program (TARP) to purchase distressed mortgage backed assets/make capital injections
* treasury pumps money into and buys preferred stock in 9 biggest commercial banks
* By end of october, investors had lost $11 trillion+
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