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Events, dear boy, events

June 25, 2009

Several blogs have pointed to a pair of fascinating timelines on the U.S. financial turmoil and on the international response to the crisis that were produced by the Federal Reserve Bank of New York.

In the case of the U.S. timeline, what’s also interesting is what has been left out. The timeline, not surprisingly, emphasizes actions by the Federal Reserve and the federal government and does not itemize every major event involving a financial firm. The mortgage-related write-downs, for example, are summed up with an Oct. 16, 2008 item: “Citigroup begins a string of major bank writedowns.”

There are some curious omissions. There is no mention of the implosion of the two Bear Stearns hedge funds in the summer of 2007 even though their collapse spooked the market and sowed the seeds of Bear’s downfall the following March.

And the biggest blow-up of the crisis, American International Group, does not get cited until September 2008 — when it was rescued. There’s nothing in the months prior about the questions over how A.I.G. was valuing its credit default swaps, its auditor finding “material weakness” in its controls, the ouster of Joseph Cassano as chief executive of A.I.G.-Financial Products. or the huge write-downs on its swaps portfolio.

Other events, like the freezing of the auction-rate securities market, which attracted much attention at the time, are ignored, perhaps rightfully.

The events of the financial crisis are still too close, too raw to get a proper historical perspective. Still, the New York Fed’s two timelines are worthy starting points.

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