- 2005:
- c. 2005-2006: Head CDO trader at Deutsche Bank, Greg Lippman, calls the CDO market a 'ponzi scheme'. With knowledge of management, he bets $5 billion against the housing market, while other desks at Deutsche Bank continue to sell mortgage securities to investors.
- The Securities and Exchange Commission ceases an investigation of Bear Stearns "pricing, valuation, and analysis" of mortgage-backed collateralized debt obligations. No action is taken against Bear.
- Robert Shiller gives talks warning about a housing bubble to the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. He is ignored, and would later call it an incidence of Groupthink. That same year, his second edition of Irrational Exuberance warns that the housing bubble might lead to a worldwide recession.
- January:
- Federal Reserve Governor Edward Gramlich raises concerns over subprime lending practices, says mortgage brokers might not have incentives for careful underwriting and that that portion of the subprime industry was veering close to a breakdown, that it's possible that it is a bubble but that the housing market did not qualify for specific monetary policy treatment at this point.
- The Bank of International Settlements warns about the problems with structured financial products, and points out the conflict of interest of credit rating agencies - that they are being paid by the same companies they are supposed to be objectively evaluating.
- February: The Office of Thrift Supervision implements new rules that allow savings and loans with over $1 billion in assets to meet their CRA obligations without investing in local communities, cutting availability of subprime loans.
- June: At Lehman Brothers, Mike Gelband & friends make a push to get out of the mortgage market and start shorting it. They are ignored and later fired. Dr Madelyn Antoncic, '2006 risk manager of the year', is shut out of meetings by CEO Dick Fuld and Joe Gregory; she is fired in 2007.
- June: The International Swaps and Derivatives Association smooths the process of creating credit default swaps against ABS CDOs; a boon for hedge funds.
- August: Raghuram Rajan delivers his paper "Has Financial Development Made the World Riskier?", warning about credit default swaps, at the Jackson Hole Economic Symposium. His arguments are rejected by attendees, including Alan Greenspan, Donald Kohn, and Lawrence Summers.
- September: The Mortgage Insurance Companies of America send a letter to the Federal Reserve, warning about 'risky lending practices' in US real estate.
- Fall 2005: Booming housing market halts abruptly; from the fourth quarter of 2005 to the first quarter of 2006, median prices nationwide drop 3.3 percent.
Read more about this topic: Subprime Crisis Impact Timeline