Introduction

What follows is a timeline of the global financial crisis 2007– 2008.

• • 9 August 2007: French International Banking Group BNP (Banque Nationale de Paris) Paribas becomes the first major bank to acknowledge the risk of exposure to sub-prime mortgage (issued at high interest rates to borrowers with low credit ratings) markets.

• • 14 September 2007: Having borrowed large sums of money to fund customers’ mortgages, British bank, Northern Rock, needs to pay off its debt by reselling those mortgages in the international capital markets. But, given that the demand had fallen, it faces a liquidity (cash flow) crisis and needs a Government loan, sparking fears that it would soon go bankrupt. Customers queue round the block to withdraw their savings, the first run on a British bank for 150 years. Adam Applegarth, Northern Rock's chief executive, later said that it was ‘the day the world changed’.

• • 17 February 2008: After the failure of two private takeover bids, Labour Chancellor of the Exchequer in the Gordon Brown Government, Alistair Darling, nationalizes Northern Rock, claiming it to be a temporary measure. It was nearly four years before it returned to the private sector.

• • 7 September 2008: The US Government bails out Fannie Mae and Freddie Mac – two huge firms that had guaranteed thousands of sub-prime mortgages.

• • 15 September 2008: Heavily exposed to the sub-prime mortgage market, the American bank Lehman Brothers files for bankruptcy, prompting worldwide financial panic.