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Quote of the Day
“At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”
-Ben Bernanke, former chairman of the Federal Reserve in testimony before U.S. Congress on March 28th, 2007. 1 year later the U.S. economy would be in turmoil, primarily due to the impact of subprime mortgages.
March 28th – This Day in Stock Market History
March 28th , 1969 – Former president Dwight “Ike” Eisenhower dies. Markets close for his funeral on Monday March 31st.
Eisenhower is one of the most admired presidents in history. His heroic military service not withstanding, as president he was responsible for a continuation of new deal policies, a build-out of America’s interstate system, expanding social security, and enforcing civil rights.
His 8 years as president also saw very strong stock market performance:
March 28th, 1979 – Three Mile Island nuclear plant in Pennsylvania melts down.
It would be the worst nuclear accident in America’s history. However, would lead to very little long term impact for the surrounding area. Whether it was related or not, the stock market declined about 0.6% on the day, and saw the highest volume of the year.
March 28th, 2007 – Ben Bernanke gives his now famous “housing crisis is likely to be contained” speech to Congress.
His line is now famous, as it turned out the crisis was anything but contained. But Bernanke and the Fed did understand it to be a problem:
“Developments in subprime mortgage markets raise some additional questions about the housing sector. Delinquency rates on variable-interest-rate loans to subprime borrowers, which account for a bit less than 10 percent of all mortgages outstanding, have climbed sharply in recent months. The flattening in home prices has contributed to the increase in delinquencies by making refinancing more difficult for borrowers with little home equity. In addition, a large increase in early defaults on recently originated subprime variable-rate mortgages casts serious doubt on the adequacy of the underwriting standards for these products, especially those originated over the past year or so. As a result of this deterioration in loan performance, investors have increased their scrutiny of the credit quality of securitized mortgages, and lenders in turn are evidently tightening the terms and standards applied in the subprime mortgage market.
Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear. The ongoing tightening of lending standards, although an appropriate market response, will reduce somewhat the effective demand for housing, and foreclosed properties will add to the inventories of unsold homes. At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency. We will continue to monitor this situation closely.”
The entire speech can be found here: The economic outlook – Ben Bernanke
March 28th, 2013 – The S&P 500 hits new high for the first time since October 9th 2007, finally recovering from the financial crisis.
The index would close the day at 1569.19, the index’s first all time high in 5 and a half years.
Best March 28th in Dow Jones Industrial Average History
1898 – Up 5.56%, 1.75 points.
Worst March 28th in Dow Jones Industrial Average History
1974 – Down 1.93%, 16.82 points.
Read of the Day
<– Go To Previous Day: March 27th: 1980 – “Silver Thursday” as the price of silver falls 33% in one day
Go To Next Day: March 29th: 1999 – The Dow closes above 10,000 for the first time –>