September, 2008 -- the financial industries bills came due, with no cash to pay. "Liquidity" was the 2008 buzzword; September 2008 was the buzzword’s start date.
Here is a timeline for how the rest of September shook down.
September 10, 2008
Hammered by the losses of the sub prime mortgage crisis, the 100+ year old American financial icon Lehman Brothers announced a loss of $3.9 billion and their intent to sell off a majority stake of the company. The writing on the wall became bolder through news headlines: an economic storm about to hit America and the world was growing substantially larger.
September 15, 2008
Wall Street stumbles, falling 498 points amidst rumblings that the Americas fiscal system is days just short of calamity. Once one of Americas most renowned and respected financial firms, Lehman Brothers files bankruptcy.
After several months of oil commodity run ups and $5 a gallon gasoline prices at the pump in some places, the petroleum bubble begins to deflate.
September 16, 2008
AIG offers up 80% of its stock to taxpayers in return for an $85 billion government loan. Unprecedented loses mount on their underwriting credit default swaps and other risky investments.
Unease in the market has lawmakers in Washington seeking a panic button, as they become more aware of the consequences of inaction. Large-scale bailout plans are now in the works.
September 17, 2008
Liquidity in the banking system is just about to freeze up. Banks begin to halt borrowing with each other in order to preserve their own liquidity. SEC institutes the unprecedented step of temporarily halting short selling for over 800 financial companies as the DOW average dips almost 450 points.
The United States and the world’s fiscal situation officially descend into what will be the worst economic climate since the great depression.
September 18, 2008
The Fed, in conjunction with many Asian and European central banks, injects nearly 200 billion dollars into the financial system. This is done to prevent what would likely be a total freeze up for liquidity in the banking system.
September 19, 2008
Fannie Mae and Freddie Mac, now as government entities, will increase purchases of toxic mortgage backed securities from primary lending and investment institutions.
The Federal Reserve Board creates Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), as investors hoard to withdraw their from money market funds. These funds are backed by commercial paper loans. Liquidity dries up in commercial lending and many small business payrolls, and seasonal inventory purchases are highly dependent on business credit lines.
The lack of liquidity is freezing up credit lines, prompting government action for liquidity so loans can flow. Lehman Brothers was put before the bankruptcy court, and tendered with a $1.35 billion offer and plan for Barkley's to acquire Lehman Brothers. That offer included $960 million for its New York City Midtown Manhattan office building. This marks the end of the 100+ year old investment firm’s run.
September 23rd, 2008
The Bush administration, already under the struggle of declining of public support, attempts to introduce a mammoth sized bailout of the financial system. Seeing weakness in the President’s public support, some lawmakers balk at the idea of such a bill. However, as the markets descend further into chaos, pressure begins to mount that something must be done, and quickly.
September 24th, 2008
As near panic breaks out on Wall St. and unease on Main St. come to a head, President George W. Bush addresses a panicked nation on the unfolding financial crisis. The President unveils a 700 billion dollar plan to help save the American economy from certain disaster.
September 25th, 2008
Washington Mutual becomes the largest bank failure in American history as federal regulators move swiftly in arranging a sale. J.P. Morgan Chase acquires the institution for $1.9 billion, creating the largest bank in the country.
Treasury Secretary Henry Paulson announces the Bush Administrations $700 billion dollar bailout plan reached consensus amongst Republican and Democratic lawmakers in the House. Wall Street rallies almost 200 points on the news a lifeline would be thrown.
September 26, 2008
President Bush has a press briefing and addresses the nation on the bailouts progress in the House, stating the bailout package will be passed.
September 29, 2008
The 700 billion dollar bailout package fails to pass the House. Traders panic about a deteriorating economic situation, and begin a huge sell-off sending the Dow Average recklessly sailing down almost 800 points.
September 30, 2008
Fear grows in American households about their bank deposits, creating an emerging situation which may cause a consumer run on banks. The FDIC summons congress to act swiftly in increasing deposit insurance limit from $100,000 to $250,000.
President Bush addresses the nation for the 3rd time in just 7 days. On this day, he speaks on the failure of the bill’s passing and the urgency to take action swiftly. As the day unfolds, political drama plays out in a series of press conferences, with finger pointing becoming the weapon of choice.
Wall Street’s wild ride continues with the Dow Jones Industrial average rising nearly 500 points.
September's Staten Island’s Real Estate Market
September sales of one and two family homes reach 228 units, which is down a little over 36% from 2006 and 17% from just a year prior. However, September’s median home sale price was only down a little over 6 ½ percent from September 2007.
Home prices were buoyed by an uptick in activity in third quarter of 2008 after a fairly dismal first 2 quarters of the year. Most homes were in contract way before September’s sales numbers actually closed.
Consequently, the month’s events would not likely effect most home closings. Rumors also begin to spread amongst local realtors that banks would not close on many mortgages due to the crisis, which would later prove untrue.