David Fiderer's thoughts on the fate of GSEs and other financial phenomena.
Below URL gives the full time line of 2008 crisis.https://www.stlouisfed.org/financial-crisis/full-timeline( Federal Reserve Bank of St. Louis)Looks at the events immediately after Seizure and conservatorship of FnF.All can clearly see the cascading catastrophic fallout resulting from seizure and conservatorship of FnF. Within few days of seizure and conservatorship of FnF the whole financial system goes into uncontrolled meltdown.Takeaway summary:--------------------------Seizure and conservatorship of FnF triggered 2008 uncontrolled meltdown instead of intended stabilization of the financial system,It was the worst thing that was done during that time.--------------------------------------------------------------------------------------Extract of Jul 2008 to Nov 2008 eventsJuly 13, 2008 | Federal Reserve Press ReleaseThe Federal Reserve Board authorizes the Federal Reserve Bank of New York to lend to the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), should such lending prove necessary.July 13, 2008 | Treasury Department Press ReleaseThe U.S. Treasury Department announces a temporary increase in the credit lines of Fannie Mae and Freddie Mac and a temporary authorization for the Treasury to purchase equity in either GSE if needed.July 15, 2008 | SEC Press ReleaseThe Securities Exchange Commission (SEC) issues an emergency order temporarily prohibiting naked short selling in the securities of Fannie Mae, Freddie Mac, and primary dealers at commercial and investment banks.July 30, 2008 | Public Law 110-289President Bush signs into law the Housing and Economic Recovery Act of 2008 (Public Law 110-289), which, among other provisions, authorizes the Treasury to purchase GSE obligations and reforms the regulatory supervision of the GSEs under a new Federal Housing Finance Agency.September 7, 2008 | Treasury Department Press ReleaseThe Federal Housing Finance Agency (FHFA) places Fannie Mae and Freddie Mac in government conservatorship. The U.S. Treasury Department announces three additional measures to complement the FHFA’s decision: 1) Preferred stock purchase agreements between the Treasury/FHFA and Fannie Mae and Freddie Mac to ensure the GSEs positive net worth; 2) a new secured lending facility which will be available to Fannie Mae, Freddie Mac, and the Federal Home Loan Banks; and 3) a temporary program to purchase GSE MBS.September 15, 2008 | Bank of America Press ReleaseBank of America announces its intent to purchase Merrill Lynch & Co. for $50 billion.September 15, 2008 | SEC FilingLehman Brothers Holdings Incorporated files for Chapter 11 bankruptcy protection.September 16, 2008 | Federal Reserve Press ReleaseThe Federal Reserve Board authorizes the Federal Reserve Bank of New York to lend up to $85 billion to the American International Group (AIG) under Section 13(3) of the Federal Reserve Act.September 16, 2008 | Federal Reserve Press ReleaseThe FOMC votes to maintain its target for the federal funds rate at 2.00 percent.September 16, 2008 | Reserve Funds Press ReleaseThe net asset value of shares in the Reserve Primary Money Fund falls below $1, primarily due to losses on Lehman Brothers commercial paper and medium-term notes.September 17, 2008 | SEC Press ReleaseThe SEC announces a temporary emergency ban on short selling in the stocks of all companies in the financial sector.September 20, 2008 | Treasury Department Press Release | Draft LegislationThe U.S. Treasury Department submits draft legislation to Congress for authority to purchase troubled assets.September 21, 2008 | Federal Reserve Press ReleaseThe Federal Reserve Board approves applications of investment banking companies Goldman Sachs and Morgan Stanley to become bank holding companies
September 25, 2008 | Office of Thrift Supervision Press ReleaseThe Office of Thrift Supervision closes Washington Mutual Bank. JPMorgan Chase acquires the banking operations of Washington Mutual in a transaction facilitated by the FDIC.September 29, 2008 | Treasury Department Press ReleaseThe U.S. Treasury Department opens its Temporary Guarantee Program for Money Market Funds [see note for September 19]. The temporary guarantee program provides coverage to shareholders for amounts that they held in participating money market funds as of the close of business on September 19, 2008.September 29, 2008 | FDIC Press ReleaseThe FDIC announces that Citigroup will purchase the banking operations of Wachovia Corporation. The FDIC agrees to enter into a loss-sharing arrangement with Citigroup on a $312 billion pool of loans, with Citigroup absorbing the first $42 billion of losses and the FDIC absorbing losses beyond that. In return, Citigroup would grant the FDIC $12 billion in preferred stock and warrants. October 12, 2008 | Federal Reserve Press ReleaseThe Federal Reserve Board announces its approval of an application by Wells Fargo & Co. to acquire Wachovia Corporation.October 24, 2008 | PNC Press ReleasePNC Financial Services Group Inc. purchases National City Corporation, creating the fifth largest U.S. bank.October 28, 2008 | Treasury Department CPP Transaction ReportThe U.S. Treasury Department purchases a total of $125 billion in preferred stock in nine U.S. banks under the Capital Purchase Program.November 10, 2008 | Federal Reserve Press ReleaseThe Federal Reserve Board approves the applications of American Express and American Express Travel Related Services to become bank holding companies.November 10, 2008 | Federal Reserve Press Release | Treasury Department Press ReleaseThe Federal Reserve Board and the U.S. Treasury Department announce a restructuring of the government’s financial support of AIG. The Treasury will purchase $40 billion of AIG preferred shares under the TARP program, a portion of which will be used to reduce the Federal Reserve’s loan to AIG from $85 billion to $60 billion. The terms of the loan are modified to reduce the interest rate to the three-month LIBOR plus 300 basis points and lengthen the term of the loan from two to five years. The Federal Reserve Board also authorizes the Federal Reserve Bank of New York to establish two new lending facilities for AIG: The Residential Mortgage- Backed Securities Facility will lend up to $22.5 billion to a newly formed limited liability company (LLC) to purchase residential MBS from AIG; the Collateralized Debt Obligations Facility will lend up to $30 billion to a newly formed LLC to purchase CDOs from AIG (Maiden Lane III LLC).