The bursting of the levees in August 2007 was followed by a flood of credit-related losses and write-downs, continuing throughout the rest of 2007 and during 2008. Banks and other financial institutions reported lower earnings for the third quarter of 2007, but this was only a taste of what was to come. There were much larger losses and write-downs in the following four quarters. By December 2008 total credit-related losses and write-downs by the world's largest banks and insurance companies rose to well over $900 billion, or around 2 per cent of their total assets.
The biggest bank credit losses and write-downs by far were in four major institutions – the Swiss investment bank and asset manager UBS, the US investment bank Merrill Lynch, the US banking conglomerate Citigroup and the internationally active UK bank HSBC. The biggest of all those was reported by Citigroup, once the world's largest bank by market value, which by the end of 2008 had acknowledged some $104 billion of loan losses and credit-related write-downs. With losses and write-downs of $63 billion, $56 billion and $54 billion respectively, Merrill Lynch, UBS and HSBC were not so far behind in this race to the bottom. There were some even redder faces outside the banking industry. The insurance giant AIG and the two US government-sponsored mortgage intermediaries Fannie Mae and Freddie Mac also posted huge losses – of $146 billion, $64 billion and $65 billion respectively. By the end of 2008 the total losses and writedowns recorded by these seven institutions climbed to an astounding $550 billion, close to half the credit losses and write-downs announced by the financial services industry worldwide.