How did a growing number of defaults on subprime mortgages — home loans to borrowers with weak credit histories — lead to a global financial crisis? Here is a chronology events that predated the market volatility of August. September 2001: The Federal Reserve cut borrowing costs by half a percentage point to soften the impact of the terrorist attacks on the U.S. and keep the economy from toppling into recession Jan-December 2001: The Fed slashes the benchmark interest rate 11 times, dropping the key lending rate from 6.5 percent to 1.75 percent by December. 2002: Low interest rates spark demand for homes. Prices rise rapidly and demand for homes in hot spots like Las Vegas, California, Florida and New York soar. June 2004-June 2006: Seventeen interest rate hikes start to take their toll. The higher rates affect a variety of American borrowers, including those with adjustable rate mortgages, or ARMs. October 2006: Volatility in the ABX indices signal more trouble in the home financing arena. The indices, which are based on subprime home equity loans, showed investors predicting a sharp deceleration in home prices. Feb 2007: Countrywide shares drop as Fremont General Corp., one of the largest providers of subprime loans, says it has stopped offering some second mortgages. Feb 2007: Europe’s biggest bank HSBC Holdings blamed soured U.S. subprime loans for its first-ever profit warning April 2007: Subprime lender New Century Financial Corp. files for bankruptcy. June 2007: Two funds of the Bear Stearns Cos. which invest in collateralized debt obligations — bonds comprising repackaged mortgages — try to sell about $4 billion in bonds to raise cash for redemptions. Parent Bear Stearns eventually bails out one of the funds and lets the other one fail. In late July, Bear Stearns halts redemptions at a third hedge fund. July 2007: Home foreclosures rose 9 percent in July from June and soared 93 percent from a year ago, according to RealtyTrac, an online marketplace for foreclosure properties. Five states — California, Florida, Ohio, Michigan and Georgia — accounted for more than half of the foreclosure activity in the month. August 9: French bank BNP Paribas bars investors from redeeming cash in $2.2 billion worth of funds, telling the markets it is unable to calculate the value of the three funds due to turmoil in the subprime market. August 10: Central banks pump billions of dollars into banking systems in a concerted effort to beat back a credit crisis. The European Central Bank injects 61.05 billion euros ($83.61 billion) to steady euro-zone credit markets. August 13: Central banks in the world’s leading economies pump extra money into the financial system on a third straight trading day. The European Central Bank (ECB) lends out an extra 47.67 billion euros ($65.29 billion) in overnight funds and the U.S. Federal Reserve injects $2 billion in extra cash. August 14: In its regular weekly auction, the ECB allotted 310 billion euros, 74 billion euros more than its benchmark estimate of liquidity needs. August 16: European shares suffer their largest one-day fall in over four years. Financial stocks dropped as concerns grew that the worsening credit environment could be a drag on economic growth. August 17: In a surprise move, the Fed cuts by a half point the primary discount rate, in a move to keep credit flowing. The discount rate is the interest rate at which the Fed lends to banks.