THE KERVIEL SCANDAL: French bank Societe Generale revealed 4.9 billion euros in losses related to trader Jerome Kerviel in January. Chief Executive Daniel Bouton had to step down from his post in the aftermath of the scandal.
BANK RUN IN THE UK
After the first bank run in more than a century, the British government decided Feb. 17 to nationalize the troubled mortgage lender Northern Rock. Buying stakes in other troubled lenders followed.
BEAR STEARNS DOWN
In March, JP Morgan Chase agreed to buy Bear Stearns, the fifth largest investment bank in the United States. JP Morgan paid $236 million for the firm, valuing it at $2 per share, compared with $169 in January.
In September, the U.S. government seized control of government sponsored mortgage financiers Fannie Mae and Freddie Mac, agreeing to invest as much as $100 billion in each if necessary.
LEHMAN FALLS, AIG SAVED
Lehman Brothers filed for bankruptcy on Sept. 15. The next day, the U.S. government bailed out insurance giant American International Group for $85 billion. Merrill Lynch was bought by Bank of America.
STATE TO THE RESCUE
The U.S. Treasury organized a $700 billion bailout package for the financial sector with its Troubled Asset Relief Program, or TARP. Coordinated interest rate cuts, currency swaps and other measures were also used.
WaMu, WACHOVIA SOLD
In September, JP Morgan Chase acquired the banking operations of Washington Mutual, after it was seized by U.S. regulators. In October, Wells Fargo sealed a deal to buy rival Wachovia for $11.7 billion.
In October, Iceland’s economy nearly collapsed after the U.S. let Lehman fail, triggering a seizure of credit markets. Iceland’s banks failed one after the other, forcing the government to borrow from the IMF.
US IN RECESSION
The authoritative United States National Bureau of Economic Research announced in December that the world’s biggest economy had been in recession since December 2007.
On Dec. 11, respected fund manager Bernard Madoff was arrested on suspicion of running a pyramid scheme. Those who invested in Madoff’s fund were estimated to have lost nearly $50 billion.