those who REALLY DO believe that “this time is different,” take a very brief
look at all the dregs that were left after the combined stupidity of the
subprime market fiasco of 2007-2010. And this does not include all of the
economic collapse that has persisted to date.
2004, the U.S. housing market peaked with homeownership at 70%. By the 4th quarter
of 2005, housing prices had fallen by 40%.
During February and March 2007, more than 25 subprime
lenders filed for bankruptcy. In April, well-known New Century Financial also
filed for bankruptcy.
17, 2007 - Bear Stearns High-Grade Structured Credit Fund had lost more than
90% of its $1 billion value, while the Bear Stearns High-Grade Structured
Credit Enhanced Leveraged Fund had lost virtually all of its $600 million
31, 2007 – The two Bear Stearns hedge funds filed for Chapter 15 bankruptcy.
Bear Stearns effectively wound down the funds and liquidated all of its
holdings. Bear Stearns, an investment bank and brokerage firm, was
acquired by JPMorgan Chase in March 2008.
September 15, 2008, Lehman Brothers filed for the
largest bankruptcy in
US history: $639 billion in assets and $619
billion in debt; 25,000 people lost their jobs. From 2003 to 2004, Lehman
Brothers acquired 5 mortgage lending companies including two subprime lenders
specializing in “Alt-A” loans (low documentation).
July 11, 2008 – IndyMac bank collapsed:
taken over by the Office of Thrift
Supervision and transferred to the Federal Deposit Insurance Corp.; the largest thrift to fail since Continental Illinois in
September 14, 2008 - Merrill Lynch was sold to Bank of
21, 2008: Goldman Sachs and Morgan Stanley,
the last two of the major investment banks still standing, convert from
investment banks to bank holding companies in order to gain bailout
funding from the Federal Reserve.
25, 2008: After a 10-day bank
run, the Federal Deposit Insurance
Corporation (FDIC) seized Washington
Mutual, then the nation's largest savings and loan, which had been heavily
exposed to subprime mortgage debt. Its assets were transferred to JPMorgan
29, 2008: Mitsubishi UFJ Financial Group, Japan's
largest bank, invested $9 billion in Morgan Stanley for a 21% share of the
company; Morgan Stanley borrowed $107.3 billion from the Federal Reserve – the
most of any US bank.
October 3, 2008 – National Economic Stabilization Act of 2008
(a reworked TARP bailout plan) was passed by Congress, creating a pool of $700
billion authorizing the US Secretary of the Treasury to purchase distressed
assets, especially mortgage-backed securities.
2000, J.P. Morgan & Co. Incorporated merged with The Chase Manhattan Corp.,
effectively combining four of the largest and oldest money center banking
institutions in New York City (J.P. Morgan, Chase, Chemical and Manufacturers
Hanover) into one firm under the name of J.P. Morgan Chase & Co.
2008, JPMorgan Chase & Co. acquired The Bear Stearns Companies Inc.
2008, JPMorgan Chase & Co. acquired the deposits, assets and certain
liabilities of Washington Mutual's banking operations.
September 11, 2015 - Credit default swaps lawsuit brought
by the Los Angeles County Employees
Retirement Association, hedge funds, university endowments and others.
Twelve defendant banks are: Bank of America
Corp., Barclays PLC, BNP Paribas
SA, Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG,
Goldman Sachs Group Inc., HSBC Holdings PLC, J.P. Morgan Chase &
Co., Morgan Stanley, Royal Bank of Scotland Group PLC, and UBS
Plus two industry groups: the International Swaps and
Derivatives Association and data provider Markit Group Ltd.
Agreed to $1.87 billion settlement, one of the largest
antitrust settlements, over allegations that they conspired to rig the market
for credit derivatives.
please don't point to the brilliant quants in the remaining companies or to the
incredibly naive regulators who were asleep at the wheel. These are not
very bright people -- none of them. The smartest guys/gals in the room
actually are the authors of the books that tell the real story after the second
shoe dropped. This is why we need Dodd-Frank, Sarbanes-Oxley, and a
Federal Reserve System that is not strangled by political hacks.