Lehman Lynchs The Federal National Mortgage Association

1st April 2008, Bear Stearns is acquired by JP Morgan Chase. September 7th 2008 the Federal National Mortgage Association, â€Å"Fannie Mae† and the Federal Home Loan Mortgage Corporation, â€Å"Freddie Mac† are acquired by the United States Federal Housing Finance Agency. September 14th 2008, Merrill Lynch is acquired by Bank of America. September 16th 2008, American International Group is acquired by the United States Federal Government. September 17th 2008, Lehman Brothers is acquired by Barclays. September 26th 2008, Washington Mutual is acquired by JP Morgan Chase. In a period of six months, seven of the most dominant financial institutions in the country crashed. Seven Goliaths were downed by stone shots right to the sweet spot but there were no Davids in this story, these were all self-inflicted wounds. Deep wounds that affected the nation as a whole, wounds that cut so deep that they crushed the American Dream for some with each passing day. In this essay I aim to address the decisions that led to the demise of these behemoths and the worst economic downturn since the infamous Great Depression of the early 20th century. The 1930s, the period of the Great Depression is perhaps the most unstable financial time in United States history. The decade where more than 40 percent of nation’s banks disappeared crippled the economy for years and caused the Senate to pass the Glass-Steagall Act (part of the U.S. Banking Act of 1933). The main purpose of the legislation was to separateShow MoreRelatedModern Banking19159 Words   |  77 Pages(leaving the deposit in the bank for an agreed period of time, such as 60 days or one year), the customer is paid a higher deposit rate. If the customer withdraws the money before then, an interest penalty is imposed. Likewise, if customers repay their mortgages early, they may be charged for the early redemption. Figure 1.1 does not allow for the other activities most modern banks undertake, such as off-balance sheet and fee for service business. However, the same principle applies. Figure 1.2 shows the