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The financial crisis of 2007–2009 began in July 2007 when a loss of confidence byinvestors in the value of securitized mortgages in the United States resulted in aliquidity crisis that prompted a substantial injection of capital into financialmarkets by the United States Federal Reserve, Bank of England and the EuropeanCentral Bank. The TED spread, an indicator of perceived credit risk in the generaleconomy, spiked up in July 2007, remained volatile for a year, then spiked evenhigher in September 2008, reaching a record 4.65% on October 10, 2008. InSeptember 2008, the crisis deepened, as stock markets worldwide crashed andentered a period of high volatility, and a considerable number of banks, mortgagelenders and insurance companies failed in the following weeks .The subprime mortgage crisis is an ongoing financial crisis triggered by adramatic rise in mortgage delinquencies and foreclosures in the United States,with major adverse consequences for banks and financial markets around the globe.The crisis, which has its roots in the closing years of the 20th century, becameapparent in 2007 and has exposed pervasive weaknesses in financial industryregulation and the global financial system.Many U.S. mortgages issued in recent years were made to subprime borrowers,defined as those with lesser ability to repay the loan based on various criteria.When U.S. house prices began to decline in 2006-07, mortgage delinquencies soared,and securities backed with subprime mortgages, widely held by financial firms,lost most of their value. The result has been a large decline in the capital ofmany banks and USA government sponsored enterprises, tightening credit around theworldThe crisis began with the bursting of the United States housing bubbleand highdefault rates on "subprime" and adjustable rate mortgages (ARM) .Financial products called mortgage-backed securities (MBS), which derive theirvalue from mortgage payments and housing prices, had enabled financialinstitutions and investors around the world to invest in the U.S. housing market.Major banks and financial institutions had borrowed and invested heavily in MBSand reported losses of approximately US$435 billion as of 17 July 2008. Impact in the U.S.Between June 2007 and November 2008, Americans lost more than a quarter of theirnet worth. By early November 2008, a broad U.S. stock index, the S&P 500, was down45 percent from its 2007 high. Housing prices had dropped 20% from their 2006peak, with futures markets signaling a 30-35% potential drop. Total home equity inthe United States, which was valued at $13 trillion at its peak in 2006, haddropped to $8.8 trillion by mid-2008 and was still falling in late 2008. Totalretirement assets, Americans' second-largest household asset, dropped by 22percent, from $10.3 trillion in 2006 to $8 trillion in mid-2008. During the sameperiod, savings and investment assets (apart from retirement savings) lost $1.2trillion and pension assets lost $1.3 trillion. Taken together, these losses totala staggering $8.3 trillion .In 2008, Lehman faced an unprecedented loss due to the continuing subprimemortgage crisis. Lehman's loss was apparently a result of having held on to large

positions in subprime and other lower-rated mortgage tranches when securitizingthe underlying mortgages; whether Lehman did this because it was simply unable tosell the lower-rated bonds, or made a conscious decision to hold them, is unclear.In any event, huge losses accrued in lower-rated mortgage-backed securitiesthroughout 2008. In the second fiscal quarter, Lehman reported losses of $2.8billion and was forced to sell off $6 billion in assets.[ In the first half of2008 alone, Lehman stock lost 73% of its value as the credit market continued totighten. In August 2008, Lehman reported that it intended to release 6% of itswork force, 1,500 people, just ahead of its third-quarter-reporting deadline inSeptember.Bankruptcy filingLehman Brothers filed for Chapter 11 bankruptcy protection on September 15, 2008.According to Bloomberg, reports filed with the U.S. Bankruptcy Court, SouthernDistrict of New York (Manhattan)on September 16th indicated that J.P. Morganprovided Lehman Brothers with a total of $138 billion dollars in "Federal Reserve-backed advances." The cash-advances by JPMorgan Chase were repaid by the FederalReserve Bank of New York for $87 billion on September 15th and $51 billion onSeptember 16th.THE UNITED STATES OF AMERICA BAILOUT.In economics, a bailout is an act of loaning or giving capital to a failingbusiness in order to save it from bankruptcy, insolvency, or total liquidation andruin .Once The U.S faced the crisis , The federal Reserve started putting in cashflow to bail out major Multi National Companies (M.N.C ) to avoid fallingcountry’s Economy .Thus deciding the companies The Federal Bailed out a Few Gigantic Companies ,they are as follows :-CITIGROUP .AIG .GENERAL MOTORS .CHRYSLER .FORD MOTORS .

CitigroupCitigroup Inc., doing business as Citi, is a major American financial servicescompany based in New York, NY. Citigroup was formed from one of the world'slargest mergers in history by combining the banking giant Citicorp and financialconglomerate Travelers Group on April 7, 1998 Citigroup Inc. has the world'slargest financial services network, spanning 107 countries with approximately12,000 offices worldwide. The company employs approximately 300,000 staff aroundthe world, and holds over 200 million customer accounts in more than 100countries. It is the world's largest bank by revenues as of 2008.Federal bailout 2008 .On 24 November 2008 the U.S. government announced a massive bailout of Citigroup,designed to rescue the company from bankruptcy while giving the government a majorsay in its operations. The Treasury will provide another $20 billion in TARP fundsin addition to $25 billion given in October. The Treasury Department, the FederalReserve and the FDIC will cover 90% of the losses on its $335-billion portfolioafter Citigroup absorbs the first $29 billion in losses. In return the bank willgive Washington $27 billion of preferred shares and warrants to acquire stock. Thegovernment will obtain wide powers over banking operations. Citigroup has agreedto try to modify mortgages, using standards set up by the FDIC after the collapseof IndyMac Bank, with the goal of keeping as many homeowners as possible in theirhouses. Executive salaries will be capped.As a condition of the bailout, Citigroup's dividend payment has been reduced to amere 1 cent a share .As the subprime mortgage crisis began to unfold, heavy exposure to toxic mortgagesin the forms of Collateralized debt obligation (CDOs), compounded by poor riskmanagement led the company into serious trouble. In early 2007 Citigroup beganeliminating about 5 percent of its workforce, in a broad restructuring designed tocut costs and bolster its long underperforming stock .Its stock market value dropped to $6 billion, down from $244 billion two yearsprior. As a result, Citigroup and Federal regulators negotiated a plan tostabilize the company .AMERICA INVESTMENT GROUPAmerican International Group, Inc. (AIG) is a major American insurance corporationbased at the American International Building in New York City.On September 16, 2008, AIG suffered a liquidity crisis following the downgrade ofits credit rating. Industry practice permits firms with high credit ratings toenter swaps with limited margin. When its credit rating was downgraded, thecompany was required to post collateral with its trading counter-parties, and this