Bernanke's Mystery: 12 Out of 13 Major Firms at Risk in 2008

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The Financial Crisis Inquiry Commission produced a bit of a mystery with its report yesterday.

The report revealed that in a secret interview with the commission in November of 2009, Federal Reserve Chairman Ben Bernanke said that 12 of the 13 most important U.S. financial firms were at the brink of failure in 2008.

The report doesn’t say which firms count as the 13 “most important” or which one never came to the brink. It does indicate, however, that Goldman Sachs was one of the 13 and was not the lone non-brink-y firm.

This has people guessing, which is ridiculous. Someone should just ask Bernanke which firms he meant to include in the 13 and which one he thought never came to the brink of failure. What reason could there possibly be for keeping this a secret?

Let’s take a stab at guessing ourselves. It’s fair to say that Bernanke could not have been referring to Bear Stearns, Fannie Mae or Freddie Mac—since these would have already failed by the time the height of the crisis was reached.

A good starting place is probably the nine firms that were required to accept the first tranche of TARP funds, plus AIG and Lehman Brothers. But that only leaves us with 11.

1. JP Morgan Chase

2. Bank of America

3. Citigroup

4. Wells Fargo

5. AIG

6. Goldman Sachs

7. Morgan Stanley

8. Merrill Lynch

9. Lehman Brothers

10. State Street

11. Bank of New York Mellon

So who are the missing 2? I’d say that we can probably include PNC Financial and US Bancorp on the list, each of which was a huge recipient of TARP funds.

But that still leaves us with the question of which firm Bernanke thought never came close to failing.

As I said, this is a silly exercise. Bernanke should just come out and tell us.


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