Did you know? You can go to any day’s “This Day in History” page by simply entering the month and date after www.begintoinvest.com/
For example: www.begintoinvest.com/May-9
Or follow Begin To Invest on Twitter or Facebook for daily posts!
Prefer video? These are posted daily on our YouTube Channel (and embedded below)
Quote of the Day
“What we all learned in that particular panic is that we’re all dominoes. And we’re all very close together”
– Warren Buffett, on the 2008 financial crisis. On this day in 2007, one of the first dominos would fall in the UK and exactly one year later, one of the largest – Lehman Brothers – would fall in the U.S.
September 13, 2007 – Northern Rock Bank Run in UK
On September 13, 2007, the first signs of the worldwide housing crisis that was to come were emerging. On this day Northern Rock, a major UK mortgage lender, sought an emergency loan from the Bank of England.
News broke that evening that Northern Rock was facing a severe liquidity crunch – essentially unable to fund its operations amid the tightening credit market. This revelation made Northern Rock the first high-profile casualty of the global credit crisis that had been brewing.
The very next morning, scenes unfolded that hadn’t been witnessed in the UK since the 19th century – a bank run. Panicked depositors lined up outside Northern Rock branches to withdraw their savings en masse. The company’s stock plunged over 31% in one day, its largest-ever drop.
U.S Stock markets would be unphased initially, but would catch on to the impending crisis soon after. Stocks would continue to rise until October 9th, 2007 when the Dow reached it’s pre-crisis peak of 14,164. It would fall 57% over the next year and a half.
Despite assurances that Northern Rock was solvent but illiquid, public trust evaporated. After several attempts at providing liquidity to the bank, the UK government had to step in to guarantee deposits and, by early 2008, nationalized Northern Rock to contain the damage.
September 13, 2008 – Lehman Weekend: The Brink of Collapse
This day in 2008 fell on a Saturday, but it marked one of the most fateful weekends in financial history.
By September 13, 2008, Lehman Brothers was teetering on the edge of insolvency. After markets closed on Friday, Lehman’s desperate search for a lifeline reached its climax. Top U.S. financial officials such as Treasury Secretary Hank Paulson and New York Fed President Tim Geithner convened emergency talks with Wall Street CEOs that evening and into the 13th, trying to broker a rescue for Lehman.
By the end of the weekend, no savior of Lehman emerged. In the early hours of Monday, September 15, Lehman Brothers filed for Chapter 11 bankruptcy – a $600+ billion failure, the largest in U.S. history.
When markets opened that Monday, the Dow Jones Industrial Average plunged 4.5% in one day, the biggest drop since September 17th, 2001 when the markets reopened for the first time after the 9/11 attacks. Panic rippled through the global financial system: credit markets froze, Merrill Lynch rushed into a sale to Bank of America, and authorities scrambled to prevent a broader meltdown.
Lehman’s fall not only obliterated its shareholders and creditors, but also shattered confidence in the banking system. The repercussions would lead to the $700 billion TARP bailout and a worldwide recession.
September 13, 2022 – Inflation Shock Triggers Market Plunge
On this date, an elevated inflation report caught investors off guard and sparked the worst U.S. market drop in over two years.
The August Core Consumer Price Index (CPI) came in at 6.3% rise in year over year prices, higher than expected, dashing hopes that inflation was starting to be controlled. The surprise sent shockwaves through equity markets. In a single session, the Dow Jones Industrial Average sank 3.94%, the S&P 500 fell 4.32%, and the Nasdaq plummeted 5.16%.
It was the sharpest one-day decline since the COVID panic in June 2020. The optimism of the preceding weeks evaporated, as a hotter CPI meant the Fed was likely to “stay higher for longer” on interest rates, anathema to lofty stock valuations.
Reads of the Day
Bank runs are one of the most feared events for central bankers. Concerns about the strength of individual banks, and the entire banking system can quickly spread. Recent bank failures during 2022–23 saw deposit runs unfold faster and on a larger scale than in past crises, driven not just by digital banking but by tight depositor networks and concentrated uninsured accounts.
This article looks into why bank runs are occurring faster than ever before.
Stress Test: Reflections on Financial Crises – by Tim Geithner (Secretary of the Treasury in 2008)
I have found this book to be the best detailed review of what happened in 2008. We recommend this book on several of our ‘This Day in Stock Market History’ pages, but if you have not read Geithner’s account of the crisis, this is a must read.
<— Go to Previous Day: September 12th (2013 – Twitter announces IPO with a tweet)
Go to Next Day: September 14th (1901 – President McKinley’s Death Sparks Market Panic) —>