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- 2006: Commerzbank begins to stop building its massive subprime position
- Early: AIG gets scared and stops selling credit protection against CDOs. The Monolines (AMBAC, MBIA) continue to sell, though.
- May: The subprime lender Ameriquest announces it will cut 3,800 Jobs, close its 229 retail branches and rely instead on the Web
- May: Merit Financial Inc, based in Kirkland, Washington, files for bankruptcy and closes its doors, firing all but 80 of its 410 employees; Merit’s marketplace decline about 40% and sales are not bringing in enough revenue to support overhead.
- Mayish: Merrill Lynch fires Jeff Kronthal, who had formerly worked under Lew Ranieri at Salomon Brothers, and his team, because they made a presentation outlining the risks of the mortgage CDO market.
- Middle: Merrill Lynch CDO sales department has trouble selling the super senior tranche of its CDOs. Instead, it sets up a group within Merrill to buy the tranches, so that the sales group can keep making bonuses.
- Middle: Magnetar Capital starts creating CDOs to fail on purpose, so that it can profit from the insurance (credit default swaps) it has bought against their failure. Their program is so large that it helps extend the credit bubble into 2007, thus making the crash worse.
- August: U.S. Home Construction Index is down over 40% as of mid-August 2006 compared to a year earlier.
- September 7: Nouriel Roubini warns the International Monetary Fund about a coming US housing bust, mortgage-backed securities failures, bank failures, and a recession. His work was based partly on his study of recent economic crises in Russia (1998), Argentina (2000), Mexico (1994), and Asia (1997)
- Fall 2006 J.P. Morgan CEO Jamie Dimon directs the firm to reduce its exposure to subprime mortgages.
- December 2006 Goldman-Sachs claims after the fact that it began reducing its exposure to subprime mortgages at this point. It also begins betting against the housing market, while continuing to sell CDOs to its clients. Others claim these risk decisions were made in the spring and summer 2007.
Read more about this topic: Subprime Crisis Impact Timeline