Collision Course

The rise of the Internet and complex financial derivatives turned out to be a toxic combination.

NEWSWEEK

Published Oct 18, 2008

From the magazine issue dated Oct 27, 2008

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1982: Michael Bloomberg sells an electronic desktop terminal for trading in securities. Merrill Lynch, his first customer, buys 20.

1983:Fannie Mae issues the first collateralized mortgage obligation, making the secondary mortgage market much more attractive to investors and lenders.

1988: MCI Mail gets hitched to the Internet, the first commercial inroad into the government-run research network.

1989:Tim Berners-Lee, a physicist, creates the World Wide Web, which uses hypertext, or links, to connect electronic documents.

1993: The first Web browser, Mosaic, makes navigating the Internet as easy as pointing and clicking. Al Gore pushed through the financing.

1994:Charles Bowsher, the U.S. comptroller, warns that derivatives trading needs oversight; the Fed's Greenspan disagrees. 1995: Blythe Masters of J.P. Morgan invents credit default swaps, a method of insuring against loan defaults.