Almost every big bank made headlines last year, and it looks like we can expect one bank to stand out as the bank to watch in 2009. You all voted Bank of America as the best commercial bank of 2008 and the experts seem to agree that it's number one. While the process of purchasing Merrill Lynch began in September, the transaction was made final on Thursday, making Bank of America the biggest bank in the US and ending 94 years of independence for Merrill.
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Nearly half of you voted that Lehman Brothers made the most shocking banking headlines this year, and I agree that the 158-year-old firm filing for bankruptcy was the news that really took me off guard in 2008. Lehman's failure is the biggest bankruptcy filing in US history, and the collapse of such a large and well-respected institution made everyone uneasy.
Some investors believe that we've seen the worst of the financial industry's problems, but the majority of you are skeptical.
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In a landslide win, you voted Bank of America as the best commercial bank of 2008. My bank account isn't with B of A — it's with a smaller, more regional chain — but Bank of America is my credit card carrier and I don't have any complaints from that perspective.
It was a dramatic year for banks, and Bank of America has managed to keep itself out of most of the chaos.
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Lehman Brothers was 158 years old when it declared bankruptcy, and the prestigious firm's collapse was one that shocked everyone inside the industry and out. The company was left with no other choice but to declare bankruptcy when it couldn't find a buyer and the government refused to bail it out. The New York Times called the fateful event one of the most dramatic days in Wall Street history.
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Banks have been going through big drama from the beginning of the year all the way through the end. In January, a French rogue trader named Jérôme Kerviel managed to lose about $7.2 billion with a series of bogus transactions. The 31-year old trader was responsible for betting on the markets' future performance for his employer, French bank Societe Generale.
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There's no way react to the banking trouble that occurred this past year without shaking our heads in disbelief. The crazy banking news just kept rolling in as one century-old firm after another collapsed, was bailed out by the government, or purchased by another existing bank. The bad news started with investment banks and found its way into commercial banks.
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The business glamour exuded by Wall Street met its demise when one old bank after another collapsed because of bad real estate bets. The debts they owned outnumbered their assets, and that's a recipe for exactly what happened: disaster. Bear Stearns was bailed out back in March, months before the other big banks could no longer fend off failure.
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The buttoned-up world of banking's drama-filled year is impossible to ignore, so we're left with the surviving bunch to choose from as the Best of 2008.
We've never seen a year like this one in the banking industry as a whole, and between the bailouts and buyouts the number of big commercial banks has been whittled down. You don't see Washington Mutual on the list because it's now part of Chase.
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Another week, another bank bailout. The most recent recipient of government aid is Citigroup, and the government's bailout package includes a $20 billion investment in the company and a $306 billion guarantee of risky assets.
Monday's market close was met with cheers as investor enthusiasm sent the market soaring, reflecting a general investor bet that the worst of the financial industry's problems may be over.
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Mattresses and shoeboxes don't have quite the security measures that banks have, yet The New York Post reports a few skeptical New Yorkers are withdrawing their funds and turning these household items into deposit places.
One of the biggest lessons the government learned from the 1930s can be seen in the formation of the FDIC, and the FDIC website reminds us that "In the FDIC’s 75-year history, no customer has ever lost a single penny of insured deposits." It would seem that this would offer consumers peace of mind, but obviously some have become distrustful of banks.
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