Summary
- Northern Rock, encountering difficulty obtaining the credit it required to remain in business, was nationalised on 17 February 2008. As of 8 October 2008, United Kingdom taxpayer liability arising from this takeover had risen to £87 billion ($150 billion).
- Bear Stearns was acquired by J.P. Morgan Chase in March 2008 for $1.2 billion. The sale was conditional on the Fed's lending Bear Sterns US$29 billion on a nonrecourse basis.
- IndyMac Bank, America's leading Alt-A originator in 2006 with approximately $32 billion in deposits was placed into conservatorship by the Federal Deposit Insurance Corporation (FDIC) on July 11, 2008, citing liquidity concerns. A bridge bank, IndyMac Federal Bank, FSB, was established under the control of the FDIC.
- The GSEs Fannie Mae and Freddie Mac were both placed in conservatorship in September 2008. The two GSE's guarantee or hold mortgage backed securities(MBS), mortgages and other debt with a Notional value of more than $5 trillion.
- Merrill Lynch was acquired by Bank of America in September 2008 for $50 billion.
- Scottish banking group HBOS agreed on 17 September 2008 to an emergency acquisition by its UK rival Lloyds TSB, after a major decline in HBOS's share price stemming from growing fears about its exposure to British and American MBSs. The UK government made this takeover possible by agreeing to waive its competition rules.
- Lehman Brothers declared bankruptcy on 15 September 2008, after the Secretary of the Treasury Henry Paulson, citing moral hazard, refused to bail it out.
- AIG received an $85 billion emergency loan in September 2008 from the Federal Reserve. which AIG is expected to repay by gradually selling off its assets. In exchange, the federal government acquired a 79.9% equity stake in AIG. AIG may eventually cost U.S. taxpayers nearly $250 billion, due to its critical position insuring the toxic assets of many large international financial institutions through credit default swaps.
- Washington Mutual (WaMu) was seized in September 2008 by the USA Office of Thrift Supervision (OTS). Most of WaMu's untroubled assets were to be sold to J.P. Morgan Chase.
- British bank Bradford & Bingley was nationalised on 29 September 2008 by the UK government. The government assumed control of the bank's £50 billion mortgage and loan portfolio, while its deposit and branch network are to be sold to Spain's Grupo Santander.
- In October 2008, the Australian government announced that it would make A$4 billion available to nonbank lenders unable to issue new loans. After discussion with the industry, this amount was increased to A$8 billion.
- In November 2008, the U.S. government announced it was purchasing $27 billion of preferred stock in Citigroup, a USA bank with over $2 trillion in assets, and warrants on 4.5% of its common stock. The preferred stock carries an 8% dividend. This purchase follows an earlier purchase of $25 billion of the same preferred stock using Troubled Asset Relief Program (TARP) funds.
Read more about this topic: Government Intervention During The Subprime Mortgage Crisis
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