The first notable event signaling a possible financial crisis occurred in the United Kingdom on August 9, 2007, when
BNP Paribas, citing "a complete evaporation of liquidity", blocked withdrawals from three hedge funds. The significance of this event was not immediately recognized but soon led to a panic as investors and savers attempted to liquidate assets deposited in highly leveraged financial institutions.
[22]
The International Monetary Fund estimated that large US and European banks lost more than $1 trillion on toxic assets and from bad loans from January 2007 to September 2009. These losses are expected to top $2.8 trillion from 2007 to 2010. US bank losses were forecast to hit $1 trillion and European bank losses will reach $1.6 trillion. The
International Monetary Fund (IMF) estimated in 2009 that US banks were about 60% through their losses, but British and eurozone banks only 40%.
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One of the first victims was
Northern Rock, a medium-sized British bank.
[208] The highly
leveraged nature of its business led the bank to request security from the
Bank of England. This in turn led to investor panic and a
bank run[209] in mid-September 2007. Calls by Liberal Democrat Treasury Spokesman
Vince Cable to
nationalise the institution were initially ignored; in February 2008, however, the
British government (having failed to find a private sector buyer) relented, and the bank was taken into public hands.
Northern Rock's problems proved to be an early indication of the troubles that would soon befall other banks and financial institutions.