Dot chart showing the comparison of 20 largest financial and 20 largest non-financial company bankruptcies from 1980 to 2008. Between 1987 and 2001, the record shows 11 financial and 4 non-financial companies, the largest bankruptcy for the period being Enron with 78 billion US$ in 2001. From 2002 to 2005, the record shows 13 non-financial and 2 financial, the largest bankruptcy being WorldCom with 122 billion US$ in 2002. From 2006 to 2008, the record shows 6 financial and 3 non-financial companies, the largest bankruptcy being Lehman Brothers with 691 billion US$ in 2008.

Comparing the largest failures which took place from 1980 to 2008 in the financial business on one hand, and the non-financial business on the other hand, provides some interesting findings.

First, large failures occurred in waves. From 1988 to 2002, large bankruptcies hit mainly the financial world. From 2001 to 2006, it was the turn of the non-financial businesses. Alas, the period 2007-2008, claims the dubious privilege of witnessing very large failures in both the financial and the non-financial worlds.

Second, the financial world exhibits an awing performance in terms of total assets loss. The sum of the assets of the bankrupt financial companies included here reaches the exorbitant figure of 1,446 billion US$ (constant 2008=100). This is more than the 2008 GDP (gross domestic product) of South Korea (1,312 billion US$ PPP). It is also 2 times higher than the equivalent value for the non-financial businesses - 1,446 against 688 billion. This is indicative of the hegemonic weight and the correlated risk - of the financial industry in today's developed world.

Third, large failures in the non-financial world are symptomatic of the shake ups that took place in the real economy. The energy (2001 to 2005), automotive (2001 to 2005), air carrier (2002 to 2005), retail distribution and the telecommunication businesses (2002) registered major company failures probably resulting from the competitive earthquakes that affected these industries.

 

20 largest company bankruptcies, financial and non-financial
1980 - 2008

Company

Date

Business

Pre-petition assets
billion constant US$ (2008=100)

Texaco, Inc. 1987-04-12 Petroleum & Petrochemicals 58
Financial Corp. of America 1988-09-09 Financial Services & Savings & Loans 55
MCorp 1989-03-31 Banking & Financial Services 31
Gibraltar Financial Corp. 1990-02-08 Savings & Loan Holding Company 22
Imperial Corporation of America 1990-02-28 Savings & Loan Holding Company 18
Bank of New England Corp. 1991-01-07 Interstate Bank Holding Company 43
Southeast Banking Corp. 1991-09-20 Bank Holding Company 19
First Executive Corp. 1991-05-13 Life Insurance & Financial Services 22
First City Banc. of Texas 1992-10-31 Multi-Bank Holding Company 14
HomeFed Corp. 1992-10-22 Savings & Loan Holding Company 20
Reliance Group Holdings, Inc. 2001-06-12 Insurance Holding Company 17
FINOVA Group, Inc. 2001-03-07 Financial Services 14
Enron Corp. 2001-12-02 Energy Trading, Natural Gas 78
Federal-Mogul Corporation 2001-10-01 Automotive Parts Manufacturing 12
Pacific Gas & Electric Company 2001-04-06 Electricity & Natural Gas 43
Adelphia Communications Corp. 2002-06-25 Telecommunications 25
Conseco, Inc. 2002-12-17 Financial Services Holding 72
WorldCom, Inc. 2002-07-21 Telecommunications 122
UAL Corporation 2002-12-09 Passenger Air Carrier 30
Kmart Corporation 2002-01-22 Retail Discount Stores 17
Global Crossing, Ltd. 2002-01-28 Global Telecommunications Carrier 35
NTL Incorporated 2002-05-08 Telecommunications 20
Mirant Corporation 2003-07-14 Electric Services 22
NRG Energy, Inc. 2003-05-14 Energy Production 12
Yukos Oil Company 2004-12-14 Oil Production & Distribution 14
Northwest Airlines Corporation 2005-09-14 Passenger Airline 15
Delta Air Lines, Inc. 2005-09-14 Passenger Airline 24
Calpine Corporation 2005-12-20 Integrated Power Company 29
Delphi Corporation 2005-10-08 Automotive Systems Manufacturing 18
Refco Inc. 2005-10-17 Brokerage Services 36
Dana Corporation 2005-03-03 Automotive Parts Supplier 9
American Home Mortgage Investment Corp. 2007-08-06 Real Estate Investment Services 19
New Century Financial Corporation 2007-04-02 Real Estate Investment Trust 27
Lehman Brothers Holdings Inc. 2008-09-15 Investment Bank 691
Fremont General Corporation 2008-06-18 Financial Services Holding Company 13
Washington Mutual, Inc. 2008-09-26 Savings & Loan Holding 328
Tribune Company 2005-08-12 Media & Entertainment Company 13
IndyMac Bancorp, Inc. 2008-07-31 Bank Holding Company 33
Downey Financial Corp. 2008-11-25 Bank Holding Company 13
Lyondell Chemical Company 2009-01-06 Global Manufacturer of Chemicals 27

 

Source: see BankruptcyData

 

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