Let's Take A Second To Remember How The American Banking Landscape Has Changed Since 2006 [CHART]

bear stearns bank american flagEmployees of Bear Stearns watch as demonstrators from the neighbourhood Assistance Corporation of America protest inside the Bear Stearns headquarters lobby in New York March 26, 2008.

It’s been just over five years since we last heard from investment banking giant Bear Stearns.

As the financial crisis escalated, banks like Bear Stearns were dropping left and right.

Even the survivors saw their stock prices plummet.

Unfortunately, only a few were able to make their shareholders whole again.

The chart below comes from Morgan Stanley’s Asia / Pacific research team led by Jonathan Garner.

Here’s some commentary:

It is noteworthy that during the US financial crisis the initial phase was characterised by sharp equity price declines in more peripheral institutions which were wholesale funded and / or exposed to the most risky assets in the system. Later on the stock prices of even the largest and most financially sound participants came under pressure for a relatively brief period of time, prompting in part the policy action which was the turning point of the event (TARP, Stress Tests and QE1). For these larger institutions prices fell 50% in 2 to 3 months prior to policy action before regaining all those losses in the subsequent 6 months (see Exhibit 25). For the weaker financial system participants significant dilution occurred and / or they were absorbed into stronger firms or otherwise wound down.


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