NEW YORK -- The government's $85 billion rescue of American International Group Inc. announced late Tuesday is the latest event to rock the U.S. financial system as part of a widening crisis in credit markets that began 14 months ago. Other companies making economy-rattling headlines have included Bear Stearns Cos., IndyMac Bank, Fannie Mae, Freddie Mac, Lehman Brothers Holdings Inc. and Merrill Lynch & Co. (Watch a related CSPTV video to hear an industry expert 's take on how the financial crisis will affect the convenience store industry.)
According to the Associated Press, in mid-March, [image-nocss] Bear Stearns was bought by JPMorgan Chase & Co. in a deal orchestrated by and backed up by the government following a sharp decline in shares and a collapse in confidence in the company.
In mid-July, federal regulators seize IndyMac Bank after it succumbs to the pressures of tighter credit, tumbling home prices and rising foreclosures. IndyMac is the largest thrift ever to fail in the United States.
On September 7, in a bid to stabilize the nation's troubled housing market, the government seizes control of Fannie Mae and Freddie Mac, two publicly traded companies that together hold or guarantee about half the nation's mortgage loans.
On September 10, investment banking and financial services company Lehman Brothers puts itself up for sale after reporting a $4 billion loss and says it will spin off its troubled commercial real-estate assets.
On September 14, in a weekend of furious negotiations, U.S. regulators make it clear there will be no government bailout of Lehman Brothers. Fearful of the likely fallout from a Lehman Brothers failure, Merrill Lynch & Co. arranges a hasty deal to be bought by Bank of America Corp.
On September 15, Lehman Brothers declares bankruptcy, the largest ever in the United States. Investor concerns turn next to American International Group Inc., the nation's largest insurer, after a plunge in that company's stock and downgrades to its debt by all three credit ratings agencies, who said the deteriorating housing market could further undermine the company's finances.
On September 16, Barclays PLC said it had agreed to acquire Lehman's North American investment banking and capital markets businesses for $250 million in cash. The British bank will also purchase Lehman's New York headquarters and its two data centers in New Jersey for $1.5 billion. Lehman Brothers filed for Chapter 11 bankruptcy protection on Monday. Barclays withdrew from weekend talks to rescue Lehman through an outright acquisition.Also on September 16, the U.S. government announced an $85 billion emergency loan to rescue AIG, saying a disorderly failure of the company could hurt the already delicate financial markets and the economyMembers help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.