by Brian Lund
Putting together any type of Top 10 list is a dicey business. Once you get past the usual subjects, the criteria for the rest of the candidates is a matter of personal opinion. So for my list of the Top 10 Financial Scandals of all time I'm taking the approach of a blockbuster Hollywood movie and throwing in everything.
Want massive financial losses? We have those, but there are also political double-dealings, public spectacles, massive pyramid schemes, celebrity downfalls, rogue traders and a sprinkling of Nazis.
Want massive financial losses? We have those, but there are also political double-dealings, public spectacles, massive pyramid schemes, celebrity downfalls, rogue traders and a sprinkling of Nazis.
1. The Scandal: The Panic of 1792
The players: Alexander Hamilton, William Duer, George Washington.
The story: In 1791, George Washington signed a charter creating the Bank of the United States, a precursor to the Federal Reserve. During its initial public offering, investors aggressively bought up shares of the bank, causing them to soar in value.
William Duer, a speculator and signer of the Article of Confederation, attempted to corner the market by buying all available shares with borrowed funds. Using them as collateral, he then attempted to start a rival bank but overextended himself, forcing the liquidation of his holdings and sending share prices plummeting. Duer lost everything and was thrown into debtors' prison, where he died seven years later.
The credentials: Considered the first crash ever in the United States, it prompted securities dealers to enter into the Buttonwood Agreement, named for the location where it was signed at 68 Wall St. This created the first exchange for buying and selling securities, what we now call the stock market.
Fun fact: Treasury Secretary Alexander Hamilton's quick action contained the financial damage. A friend of Duer, he tried to intervene on his behalf but couldn't keep him out of prison.
The players: Alexander Hamilton, William Duer, George Washington.
The story: In 1791, George Washington signed a charter creating the Bank of the United States, a precursor to the Federal Reserve. During its initial public offering, investors aggressively bought up shares of the bank, causing them to soar in value.
William Duer, a speculator and signer of the Article of Confederation, attempted to corner the market by buying all available shares with borrowed funds. Using them as collateral, he then attempted to start a rival bank but overextended himself, forcing the liquidation of his holdings and sending share prices plummeting. Duer lost everything and was thrown into debtors' prison, where he died seven years later.
The credentials: Considered the first crash ever in the United States, it prompted securities dealers to enter into the Buttonwood Agreement, named for the location where it was signed at 68 Wall St. This created the first exchange for buying and selling securities, what we now call the stock market.
Fun fact: Treasury Secretary Alexander Hamilton's quick action contained the financial damage. A friend of Duer, he tried to intervene on his behalf but couldn't keep him out of prison.
