July 24, 2007
A security guard stands outside the Countrywide Financial Corp. headquarters in Calabasas, California on Wednesday, October 20, 2004.
Trouble bubbles across the housing market. In its second-quarter report, mortgage giant Countrywide Financial says "softening home prices continued to affect many areas of the country and delinquencies and defaults continued to rise across all mortgage product categories as a result." The troubled company is sold to Bank of America six months later. Mortgage lenders New Century Financial and American Home Mortgage Investment Corp. filed for bankruptcy during 2007.
Dec. 19, 2007
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The downgrade storm begins for the municipal bond insurance business. Following its industry review, Standard & Poor's cut ACA Financial Guaranty to CCC from A; assigned a negative outlook to AAA-rated Ambac Assurance Corp., MBIA Insurance Corp., and XL Capital Assurance Inc.; and placed AAA-rated Financial Guaranty Insurance Co. on negative credit watch.
January 18, 2008
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The first brick falls from the wall of triple-A monoline bond insurance, as Fitch Ratings downgrades the Ambac Financial Group insurance financial strength rating to AA from AAA. For many years through 2007, about 50% of municipal bond volume had come with an insurance wrap, but with only one exception the insurers were undone by exposure to the mortgage market.
February 2008
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The auction-rate securities market collapsed, with the rate of auction failures suddenly hitting 85%, according to a later Federal Reserve study. Until then, ARS auctions had rarely failed. This left issuers to pay high penalty rates while investors were unable to redeem instruments they had thought to be liquid.
March 24, 2008
Pedestrians walk by the headquarters of Bear Stearns Friday January 6, 2006 in New York.
The Federal Reserve Bank of New York agrees to finance JPMorgan Chase & Co.'s buyout of shaky Bear Stearns, "to bolster market liquidity and promote orderly market functioning." The deal brings an end to a major player in municipal bond underwriting.
May 6, 2008
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UBS, cutting costs after reporting first-quarter losses of $11 billion, announces that it will exit the institutional municipal securities business. It returned to the muni market in 2017.
May 6, 2008
A Vallejo, California, ferry with the city's Mare Island in the background.
The city council in Vallejo, California, votes to file for Chapter 9 bankruptcy. "I've turned over every rock I could find," said Mayor Osby Davis. "We don't have the ability to pay our debts as they come due." The city would not emerge from bankruptcy until Aug. 2011, and was followed there in 2012 by the California cities of Stockton and San Bernardino.
June 5, 2018
An MBIA sign is positioned outside the MBIA Inc. headquarters in Armonk, New York, U.S., on Monday, Dec. 10, 2007
Rating trouble finds bond insurer MBIA, as S&P Global Ratings downgrades it to AA from AAA, while also cutting Ambac to AA from AAA, citing the insurers' lack of new business prospects, poor financial flexibility, and the further decline of the residential mortgage market. All insurers but one eventually were dropped to junk.
Sept. 7, 2008
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The Federal Housing Finance Agency places Fannie Mae and Freddie Mac in government conservatorship.
Sept. 15, 2008
Exterior of Bank of America Merrill Lynch building.
Bank of America announces that it will buy Merrill Lynch in a crisis-driven deal that combines two of the major players in municipal bond underwriting.
Sept. 15, 2008
An employee inside Lehman Brothers headquarters in New York on Sept. 15, 2008, the date the firm filed the largest bankruptcy in U.S. history.
Lehman Brothers files for Chapter 11 bankruptcy.
Sept. 18, 2008
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British banking giant Barclays PLC buys Lehman's broker-dealer unit, effectively taking over Lehman's place in municipal bond underwriting.
Sept. 21, 2008
Federal Reserve building in Washington, D.C.
The Federal Reserve Board approved the applications of Goldman Sachs and Morgan Stanley to become bank holding companies.
Sept. 29, 2008
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The U.S. Treasury Department opened its Temporary Guarantee Program for Money Market Funds, after a panic when a money-market mutual fund called the Reserve Primary Fund "broke the buck," falling below $1 a share in net asset value amid losses on Lehman Brothers debt.
Nov. 21, 2008
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Moody's Investors Service downgraded to Aa3 from Aaa the insurance financial strength rating of Financial Security Assurance. FSA went on to be acquired by Assured Guaranty, one of two bond insurers writing new business today and the only one that predates the financial crisis.
Oct. 14, 2008
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Treasury announced the Troubled Asset Relief Program, to encourage financial institutions to build capital to increase the flow of financing to U.S. businesses and consumers and support the economy.
Feb. 17, 2009
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President Obama signs the American Recovery and Reinvestment Act, which eased a number of tax law restrictions for munis and created a new subsidized municipal taxable bond category, called Build America Bonds. BABs were popular with issuers but were not renewed when ARRA expired at the end of 2010.
July 21, 2010
Representative Barney Frank, a Democrat from Massachusetts and House Financial Services Committee Chairman, left and Senator Christopher "Chris" Dodd, a Democrat from Connecticut and Senate Banking Committee Chairman, arrive to speak at a news conference at the White House in Washington, D.C., U.S., on Wednesday, March 24, 2010
President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act. The law brought non-dealer, non-bank municipal advisors under a federal regulatory regime, subjected all MAs, including those at banks and dealers, to a fiduciary duty, and expanded the role of the Municipal Securities Rulemaking Board.