For more on the financial crisis, check out GlobeSt.com's Webinar , "Wall Street In a Freefall—The Winners and Losers."

NEW YORK CITY-Last year around this time, what began as a quiet downturn in a once booming US housing market, has now snowballed into what may be the biggest financial crisis since the Great Depression. In September 2007, the Federal Reserve first cut interest rates to 4.8%, and although the CMBS were slowing down radically, all and all, most felt pretty positive about the future, however the markets did not have a clue what was in store for them and indeed, we still do not know.

On Friday, after two weeks of debate, Congress has passed, and Pres. George W. Bush has signed a comprehensive financial rescue plan to save the financial industry and the economy at large from free fall. Now the industry is waiting to see if it will work. To understand how we got to this point, it is helpful to examine the path that took us here and where things now stand. Certainly the problem did not start when New Century Financial filed for bankruptcy in April 2007 or when the Fed began its program of reducing interest rates, however that was around the time when the most pessimistic parties began to worry that there might be a serious problem.

In March 2008, the slump claimed its first big Wall Street victim. If people weren't nervous before the sale of Bear Stearns to JP Morgan Chase, it got them worried. That deal closed this summer and recently completed internal restructuring related to the acquisition. In the near months that followed the Bear Stearns sale, the Fed, which is said to provide as much as $900 billion in cash loans to squeezed banks, bailed out mortgage giants Fannie Mae and Freddie Mac. Fannie and Freddie are now being investigated by the FBI for fraud, but are still lending money as usual. As reported, in the longer term, the GSEs will "modestly" increase their MBS portfolios through the end of 2009. And starting in 2010 their portfolios will begin to be gradually reduced at the rate of 10% per year to stabilize at a lower, less risky size.

On the brink of failure, American International Group Inc. was also bailed out when the government offered it an $85-billion loan. In return for the loan, the government received warrants to purchase up to 79.9% of AIG. The firm recently indicated that it "intends to refocus the company on its core property and casualty insurance businesses, generate sufficient liquidity to repay the outstanding balance of its loan from the Federal Reserve Bank of New York and address its capital structure." Last week, the firm revealed that it had drawn down $61 billion of the loan, and planned to sell off some of its business units to pay off the loan. AIG has not disclosed all the assets it would sell or the expected prices from the sales. The company says it continues to "explore divestiture opportunities for its remaining high-quality businesses and assets." AIG is also "actively at work on a number of alternatives for its Financial Products business and its securities lending program." An AIG spokesman tells GlobeSt.com that those new alternatives have no finite timeframe. In a recent AIG conference call, Edward Liddy, chairman and CEO of AIG, said that going forward, it also plans to sell a number of its businesses that are "already highly attractive to buyers," but he did not provide any timeline for such action.

The first to get the cold shoulder from the Feds was Lehman Brothers, which filed for Chapter 11 bankruptcy. UK based Barclays PLC then agreed to purchase the firm's North American investment banking, fixed income and equities sales, and trading and research operations, including approximately 10,000 employees. Barclays has fully relaunched Lehman Brothers' US equity trading and research under the Barclays Capital name. A Barclays' spokesman tells GlobeSt.com that "the deal has closed" and there are no loose ends to tie that he is aware of. Also, Tokyo-based investment bank, Nomura, has acquired Lehman Brothers' investment banking and equities businesses in Europe and the Middle East and plans to close the acquisition on Oct. 13. Bain Capital Partners LLC and Hellman & Friedman LLC will acquire Lehman's Neuberger Berman, the 69-year-old asset management firm, and the fixed-income and certain alternative asset management businesses of Lehman Brothers' Investment Management Division.

Merrill Lynch & Co. avoided Lehman's fate with a shotgun marriage with Bank of America in a $50 billion all-stock transaction. That deal is expected to close in first quarter 2009. It has been approved by directors of both companies and is subject to shareholder votes at both companies and standard regulatory approvals. Bank of America also agreed to buy home lender Countrywide Financial Corp. for $4 billion, as GlobeSt.com reported. The deal is expected to close in the third quarter, subject to approval of the companies' shareholders and customary regulatory approvals. After closing, Bank of America plans to operate Countrywide separately under the Countrywide brand with integration occurring no sooner than 2009.

As the domino effect continued, the Office of Thrift Supervision revealed that it had seized Washington Mutual Inc. and flipped it to JP Morgan Chase & Co. for $1.9 billion. A JPMorgan spokesman tells GlobeSt.com that "nothing too specific yet" has been laid out as far as the firm's plans for WaMu. "Our deal is complete and we're currently merging the management teams and business," he says. "It will be a couple of years though, before all systems and platforms are merged." Chase and WaMu customers, though, are continuing banking as usual and should be able to access the combined network of 14,000 ATMs without fees "in the coming months," according to a prepared statement.

More recently in financial news, Wachovia Corp. revealed it would merge with Citigroup, but then, only days later, we learned that it would be purchased by Wells Fargo & Co. Citigroup then cried foul on the Wells Fargo/Wachovia merger, and has a US District Court hearing scheduled for Tuesday to decide if Wachovia is allowed to pursue the Wells Fargo deal. GlobeSt.com will update more on that deal as details arise, however according to a recent Wells Fargo statement, the company "will continue working toward the completion of its firm, binding merger agreement with Wachovia Corp."

The financial crisis is spreading globally. As Marketwatch reported, the European crisis is deepening as bailouts continue. "The string of fresh problems for lenders came as politicians pledged to continue bailing out financial institutions but stopped short of a collective rescue fund of the type planned in the US," an article said. "They also sent a shockwave through European stock markets early Monday, with the Dow Jones Stoxx banking sector index down 6.5%." Also, as GlobeSt.com reported Monday, Germany has agreed to loan $68 billion to save Hypo Real Estate Holding AG, and the Dutch government, partnered with BNP Paribas, rescued Fortis Bank Nederland (Holding) NV and Fortis Insurance Belgium for $36.8 billion.

Although each day proves to be a different story as to what may happen next, with some saying there is no end in sight, it seems that Ohio-based National City Corp. may soon be up to the plate. The firm is reportedly looking to liquidate assets. On Monday, shares plunged more than 25% on the New York Stock Exchange. In a Fitch report on Friday, the rating agency downgraded National City's issuer default ratings. National City sources were unable to be reached for comment by GlobeSt.com deadline.

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