It's easy to forget some of the largest and most well-known financial institutions a few years ago. Due to events such as the financial crisis, mergers and acquisitions, scandals and criminal activity, many financial institutions that were familiar to most are now mere footnotes in U.S. financial history.
Wachovia Bank
Founded in 1879, Wachovia Bank became one of the largest banks in the country. Its demise became one of the defining moments of the 2008 financial collapse. As mortgage losses mounted and customers withdrew millions in a silent bank run, it became clear that Wachovia would collapse without U.S. government intervention.
Wachovia, with assets over 812 billion. USD, was considered insolvent in the fall of 2008 and had no choice but to accept USD 12. 7 billion share buyout offer from Wells Fargo. After outbidding Citigroup's government-backed deal, Wells Fargo's acquisition of Wachovia Bank without government funding erased the fourth-largest bank in the United States.
E. F. Hutton
The brokerage firm E. F. Hutton, one of the best-known brands in the financial sector in the 1970s and 1980s, fell victim to one of the biggest financial scandals of the time. In 1980, the company began a system of regularly overdrawing corporate accounts, which generated substantial profits for Hutton. The strategy, known as check-kiting, allowed the company to use up to $250 million of the bank's money each day without paying interest.
Similar to an individual overdrafting a checking account, the banking system's sophisticated system allowed it to use more money than it actually was, transferring several billion dollars between multiple banks and accounts. E. F. Hutton, then the fifth largest brokerage firm in the country, was able to generate $8 million in additional income over an eight-month period. In 1985, after a three-year investigation by a United Kingdom grand jury, the company pleaded guilty to 2.000 cases of mail and wire fraud. After the scandal, the company's famous slogan "When E. F. Hutton speaks, people listen" as untrue. The company was acquired by Lehman Brothers and is now part of Citigroup.
Lehman Brothers
With $639 billion in assets, Lehman Brothers was the nation's fourth-largest investment bank. The 2008 collapse and bankruptcy filing were the largest in U.S. history. Its downfall was its reliance on high-interest subprime mortgages offered to borrowers with bad credit. The highly profitable loans earned more in interest, but when the housing market collapsed, Lehman's fate was sealed.
It tried to show a strong financial position through creative accounting methods, such as selling the bad debt to Cayman Island entities and agreeing to buy it back later. When forced to disclose its losses, the company was deemed fiscally unsound. The 158-year-old firm, emaciated by toxic residential real estate and no buyers, filed for bankruptcy and played a significant role in the global financial crisis. The remaining global operations were taken over by Barclays and Nomura Holdings.
PaineWebber
Although not one of the largest brokers on Wall Street, by 1880 PaineWebber was among the most prominent financial institutions in the U.S. Thanks to its network of 8,500 brokers and 300 offices nationwide Wealthy investors, PaineWebber has long been one of Wall Street's most attractive targets. Donald Marron, chairman and chief executive officer (CEO), did not deny takeover rumors for years, but relented in 2000 and agreed to a $12 billion offer at UBS AG, Switzerland's largest bank. After the merger, the firm was known as UBS Paine Webber, and in 2003 it was renamed UBS Wealth Management USA.