Danse Macabre
The Banking and Brokerage Sectors Reel from Crisis to Crisis
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US BANKING CRISES | FINANCIAL INSTITUTION STABILITY PROGRAMS | TARP INVESTMENTS | BANK FAILURES
Crises of the US Banking and Financial Systems
| Dates | Crisis | Economic Impact | Response |
| 1873–1879 | Long Depression | The longest recession documented by the National Bureau of Economic Research involved the collapse of major railroad companies and the 10-day closure of the New York Stock Exchange. | Widespread municipal tax revolts and rioting occurred, along with European depegging of currencies and the institution of trade tariffs. |
| 1893–1896 | Panic of 1893 | Some 20,000 companies, including major railroads, and 500 banks failed; unemployment rose to 17%–19% at the panic’s peak. | The Silver Purchase Act was repealed; the nation saw widespread labor unrest and municipal tax revolts. |
| 1907–1908 | Bankers’ Panic | The New York Stock Exchange fell by nearly 50% in 1907; major banks failed. | In 1913, the Federal Reserve Banking System was created. |
| 1929–1941 | Great Depression | US unemployment exceeded 20% and GDP fell 30% at the height of the Depression. One-fifth of all banks failed. | The Securities and Exchange Commission and Federal Deposit Insurance Corporation were created; the Glass–Steagall Act was passed. |
| 1985–1995 | Savings and Loan | With an estimated cost of $190B, this debacle brought down more than 5,000 S&Ls, banks, and credit unions, and led to the absorption of many S&Ls by banks and to the widening of S&L charters. | Resolution Trust Corporation was created to liquidate the assets of failed S&Ls; the Gramm–Leach–Bliley Act gained passage. |
| 1998 | Long-Term Capital Management | A potential marketwide liquidity crisis was averted by a $3.65B federally organized bailout. | The Federal Reserve Emergency Rate was cut. |
Sources: Economic History Services website, US Treasury Department, General Accountability Office, Time, New York Times, Wall Street Journal, World Book Encyclopedia.
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Government-Sponsored Financial Institution Stability Programs
| Date Announced | Program | Sponsoring Department | Purpose |
| 3/11/2008 | Term Securities Lending Facility | Federal Reserve | Lends Treasury securities secured for 28 days to primary dealers, an extension of the previous overnight program. |
| 9/19/2008 | Temporary Guarantee for Money Market Funds | Treasury | Provides investors with protection for shares of money market funds. |
| 9/19/2008 | Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility | Federal Reserve | Funds banks’ purchases of high-quality asset-backed commercial paper from US money market funds. |
| 10/1/2008 | Excess and Required Reserve Balance Interest Payment Program | Federal Reserve | Pays interest on financial institution reserve balances to eliminate the implicit tax on reserve requirements. |
| 10/3/2008 | Targeted Investment and Asset Guarantee Programs | Treasury | Guarantee the assets of financial institutions. |
| 10/3/2008 | Systemically Significant Failing Institutions Program | Treasury | Provides funding to stabilize non-banks whose failure could destabilize the financial system. |
| 10/3/2008 | Temporary Increase in Deposit Insurance Coverage | FDIC | Increases the per-account maximum deposit insurance from $100,000 to $250,000 through 12/31/2009. |
| 10/14/2008 | Temporary Liquidity Guarantee Program of TARP | FDIC | Encourages liquidity in the banking system by guaranteeing newly issued senior unsecured debt of eligible institutions. |
| 10/14/2008 | Capital Purchase Program of TARP | Treasury | Provides equity investments to eligible financial institutions. |
| 10/21/2008 | Money Market Investor Funding Facility | Federal Reserve | Supports private-sector effort to provide liquidity to money market investors. |
| 10/27/2008 | Commercial Paper Funding Facility | Federal Reserve | Provides liquidity backstop to US commercial paper issuers. |
| 11/25/2008 | Term Asset-Backed Securities Loan Facility | Federal Reserve | Provides funds from the Federal Reserve Bank of New York to support the credit needs of small businesses and households by supporting collateralized asset-backed securities. |
| 12/8/2008 | Primary Dealer Credit Facility | Federal Reserve | Provides overnight loan funding to primary dealers in exchange for eligible collateral. |
Sources: US Treasury Department, Board of Governors of the Federal Reserve, Federal Deposit Insurance Corporation.
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US Government TARP Investments in Financial Institutions
| Date Announced | Institution | Amount | Program |
| 10/28/2008 | Citigroup | $25B | Capital Purchase Program |
| 10/28/2008 | JPMorgan Chase | $25B | Capital Purchase Program |
| 10/28/2008 | Wells Fargo | $25B | Capital Purchase Program |
| 10/28/2008 | Bank of America | $15B | Capital Purchase Program |
| 10/28/2008 | Goldman Sachs Group | $10B | Capital Purchase Program |
| 10/28/2008 | Morgan Stanley | $10B | Capital Purchase Program |
| 10/28/2008 | Bank of New York Mellon | $3B | Capital Purchase Program |
| 11/14/2008 | US Bancorp | $6.59B | Capital Purchase Program |
| 11/14/2008 | Capital One Financial | $3.55B | Capital Purchase Program |
| 11/14/2008 | SunTrust Banks | $3.5B | Capital Purchase Program |
| 11/14/2008 | Regions Financial | $3.5B | Capital Purchase Program |
| 11/14/2008 | BB&T | $3.13B | Capital Purchase Program |
| 11/25/2008 | AIG | $40B | Systemically Significant Failing Institutions Program |
| 12/31/2008 | Citigroup | $20B | Targeted Investment Program |
| 12/31/2008 | PNC Financial Services | $7.59B | Capital Purchase Program |
| 12/31/2008 | Fifth Third Bancorp | $3.4B | Capital Purchase Program |
| 1/9/2009 | Bank of America | $10B | Capital Purchase Program |
| 1/9/2009 | American Express | $3.38B | Capital Purchase Program |
| 1/16/2009 | Bank of America | $20B | Targeted Investment Program |
| 1/16/2009 | Citigroup | $5B | Asset Guarantee Program |
Investments of more than $3B through 2/17/2009.
Source: US Treasury Department, February 23, 2009.
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Bank Failures
Source: FDIC.
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