The world before Lehman fell The seeds of the financial crisis were sown already in July 2007, when the rating agencies decided to downgrade bonds issued to finance sub-prime mortgages. This increased uncertainty in the markets. The effect soon spread to more creditworthy securities. In the money markets, the uncertainty was reflected in a widening spread between collateralised and uncollateralised money-market loans.
The confidence crisis developed in stages over the latter part of 2007 and up to September 2008. In August 2008, Danmarks Nationalbank with a government guarantee and the Danish Contingency Association acquired Roskilde Bank on the brink of collapse. This was an important medium-sized bank, with a significant funding in foreign currencies.