Time Magazine recently listed the top ten financial collapses of businesses and financial institutions in 2008, and I thought that you might like to look at what the magazine thought was the worst.
10. Iceland Goes Bankrupt – It takes some real talent for a whole country to go belly up.
9. Alan Greenspan’s Reputation – By not raising rates quickly enough in a real estate bubble, Greenspan helped let the money flow to every high-risk, no document loan applicant extant.
8. Hedge Funds – When the going was good, people could not get enough of them. When the going was bad, they couldn’t get out fast enough. A lot of times exclusivity isn’t all it’s cracked up to be.
7. Rating Agencies – Moody’s, Standard & Poor’s and Fitch stood by their AAA top ratings for Collateralized Debt Obligations (CDOs), which are based in part on pools of subprime mortgages.
6. Ultra Safe Exotic Investments – Auction-rate securities, the Reserve Fund, CDOs. Money market funds were supposed to be ultra safe, always maintaining an asset value of $1 per share and always investing in rock solid government bonds to maintain liquidity. That didn’t happen.
5. FannieMae and Freddie Mac
4. Citigroup – This year Citi has announced 75,000 job cuts, sold off divisions, and blew the acquisition of equally troubled Wachovia, which was whisked away by Wells Fargo. It’s been forced to take a $20 billion handout from the U.S. government
3. The Big Three Auto Makers – Shouldn’t this count as like 3, 4, & 5? You want to hear something crazy? Watch GM need to go into bankruptcy twice over the next ten years like an airline. Mark my words, here and now, one bankruptcy won’t be enough for that horrible company.
2. AIG – The inventors of such exotic investments as CDOs, collateralized debt obligations
1. Lehman Brothers – The largest bankruptcy in US history.