How Did They Get So Big?: A Too-Big-to-Fail Timeline

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http://www.dollarsandsense.org/archives/2010/0710larson.html


How Did They Get So Big?
A Too-Big-to-Fail Timeline

By Jill Mazzetta


1975: Maine becomes the first state to open its borders to out-of-state banks. Other states quickly follow suit.

1977: Lehman Brothers merges with Kuhn, Loeb & Co.; becomes fourth-largest investment bank in the United States.*

1984: Lehman Brothers acquired by Shearson/American Express, a brokerage company, for $360 million.

1986: Wells Fargo acquires Crocker National Bank for about $1.1 billion; becomes the tenth largest commercial bank in the United States; sets record for largest bank acquisition in history.**

1992: Bank of America acquires Security Pacific Corporation; takes title of largest bank acquisition in U.S. history.

1994: Riegle-Neal Act passed. Allows national banks to set up branches anywhere in the United States, regardless of whether they own a subsidiary in any state they receive deposits from.

Bank of America acquires Continental Illinois National Bank and Trust Co.; becomes the largest U.S. bank in terms of deposits.

1995: Wells Fargo acquires First Interstate Bancorp for $11.3 billion in hostile takeover; becomes ninth largest bank.

1996: Chemical Bank acquires Chase Manhattan Corp. and takes its name.

1997: NationsBank Corp. acquires Bank of America for $64.8 billion; sets new record for the largest bank acquisition in history.

1998: First Union acquires CoreStates Financial Corp. for $17 billion.

Long-Term Capital Management (LTCM) runs out of funds. Federal Reserve Bank of New York organizes a $3.6 billion bailout by several major creditors, including Goldman Sachs, JP Morgan, and Lehman Brothers. Participating banks get a 90% share in LTCM.

Citicorp merges with Travelers Group to form Citigroup for $70 billion; becomes world’s largest financial services organization.

Wells Fargo merges with Norwest for $31.7 billion.

1999: Gramm-Leach-Bliley Act passed. Repeals part of Glass-Steagall Act of 1933, allowing commercial banks, insurance companies, investment banks, and securities firms to merge with each other.***

2000: Chase Manhattan merges with J.P. Morgan & Co. to form JP Morgan Chase.

2001: WaMu acquires PNC Mortgage Co. and Fleet Mortgage Corp.

Lehman Brothers acquires Cowen & Co.

2003: Lehman Brothers acquires Crossroads Group and Neuberger Berman. Faces SEC litigation; pays $80 billion settlement; forced to restructure.

Wachovia acquires Metropolitan West Securities; adds over $50 billion in securities to its portfolio.

2004: Bank of America acquires FleetBoston Financial for $47 billion.

JP Morgan Chase merges with BankOne Corp.

Wachovia acquires SouthTrust Corp. for $14.3 billion; becomes the largest bank in southeastern United States.

2005: Bank of America acquires MBNA (Maryland Bank, National Association) for $35 billion.

2006: Wachovia acquires Golden West Financial for about $25.5 billion.

2007: April: Citigroup suffers from subprime mortgage crisis; eliminates 17,000 jobs.

August: Lehman Brothers closes BNC Mortgage, its subprime lending firm; leads to 1,200 job cuts.

Bank of America acquires Countrywide Financial for $4.1 billion; becomes the country’s leading mortgage servicer, cornering about 25% of the market. Countrywide becomes Bank of America Home Loans.

September: Bank of America acquires LaSalle Bank for $21 billion.

December: WaMu reorganizes loan division, closing offices and laying off 2,600 staff.

2008: March: JP Morgan Chase acquires Bear Stearns for $236 million.

April: WaMu closes offices and lays off 3,000 due to subprime mortgage crisis; receives $7 billion infusion from outside investors.

September: Massive bank run on WaMu; customers withdraw $16.7 billion over 10 days.

Lehman Brothers files for Chapter 11; is the largest bankruptcy in U.S. history.

Bank of America acquires Merrill Lynch for about $50 billion; becomes the world’s largest financial services company.

WaMu seized by the Office of Thrift Supervision, handed over to FDIC; FDIC sells WaMu’s assets, debts, and deposits to JP Morgan Chase for $1.9 billion.

Wachovia declared “systematically important,” i.e. too big to fail, by the FDIC; FDIC plans to auction off its assets.

October: Emergency Economic Stabilization Act (“the bailout”) passes. Allows U.S. Treasury to spend $700 billion purchasing troubled assets (e.g. subprime mortgages) and injecting capital directly into banks.

Goldman Sachs receives $10 billion in TARP funds.

November: U.S. government agrees to back $306 billion in Citigroup’s loans and invest another $20 billion directly into the company.

December: Wachovia acquired by Wells Fargo for $15.1 billion to avoid failure.

2009: January: Bank of America reports massive losses from Merrill Lynch; receives $20 billion in emergency TARP bailout funds to stay solvent, in addition to an initial TARP investment of $25 billion from fall 2008.

March: New York Times article claims Bank of America received an additional $5.2 billion in government funds, channeled through AIG.

June: Goldman Sachs repays TARP investment with interest.

August: Bank of America agrees to pay $33 million fine to SEC for not disclosing bonus payments totaling $5.8 million to top Merrill Lynch employees.

December: Bank of America announces it will repay the $45 billion it received from TARP and exit the program.

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