How the Journal covered the day the mortgage crisis spread

In the early hours of August 9, 2007, the fallout from defaulting subprime mortgages forced BNP Paribas to freeze three of its funds, which at one point were worth more than $ 2 billion.

It kicked off a day that for many signaled some big trouble ahead. It would take more than a year for the credit crunch to come to a head with the bankruptcy of Lehman Brothers in September of the following year. But already problems were brewing as defaults on subprime home loans increased, spilling over into markets.

The losses had stung two Bear Stearns hedge funds, which suffered heavy losses in June and July, forcing the bank to lend them more than $ 3 billion. This led to a reshuffle in the top ranks of the bank. The housing market had continued to tumble over the summer. Stocks were volatile as investors worried about whether the subprime mortgage crisis was contained.

Front page of the Wall Street Journal, August 6, 2007.

But even as things heated up, August 9 was an unusual day. After BNP said it was stopping trading in those funds, apartment builder Tarragon Corp. said it may find it difficult to stay in business, and news has surfaced that several hedge funds have suffered losses and have to sell assets.

[RELATED: Aug. 9, 2007: The Day the Mortgage Crisis Went Global]

The surge in short-term rates forced central banks in Europe, the United States and Japan to inject liquidity into the money markets. The Dow Jones fell 2.8% that day, its second worst day of 2007 at that time.

After the market closed, mortgage lender Countrywide Financial said “unprecedented disruption” could affect its financial position.

The world was realizing that the problems in the housing market were not as contained as they once thought. The next day, the Wall Street Journal led the way with the headline “Impact of Mortgage Crisis Spreads”.

Front page of the Wall Street Journal, August 10, 2007.

A decade after the financial crisis, we’ll look back at some of his greatest moments and how The Journal covered them.

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