April 2007 witnessed the collapse of sub-prime lender New Century Financial and this collapse was only the first of many casualties. The British government nationalized the mortgage lender Northern Rock and soon afterwards Bear Stearns collapse due to subprime loans. Fannie Mae and Freddie Mac were nationalized in September 2008 because of the great losses suffered due to mortgage defaults. Soon afterwards Lehman Brother, the United State's fourth largest investment bank collapse and this is stated to have "greatly intensified the financial crisis." (Jawai, 2008, p.2)
V. TIME SEQUENCE OF THE GLOBAL FINANCIAL CRISIS
Month
Year Event
July
2007
Financial crisis begins with the United States subprime mortgage crisis
August
2007
US financial crisis reaches global proportion due to interaction between the world banks and Hedge Funds with subprime mortgage backed securities.
August
2007
The European Central Bank injects 95 billion euros into...
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