This was certainly an amazing year and definitely one for the record books. For those bankers still puttering around the office in these last few hours of 2007, we take a moment to look back at the year to gain some perspective.
2007 was significant for many reasons, but two of the biggest for any banker would have to be the subprime debacle and the corresponding credit crisis. These crises arrived quickly and left many feeling battered and blue. The end result was enormous spikes in trading volume in the global capital markets and massive volatility. Both crises served to underscore the need for better risk management, increased capital levels and expanded liquidity options. Feeling the ramifications of this, Countrywide and WAMU hit on hard times; as did FNMA, FHLMC and many of the largest U.S. banks.
Meanwhile, China surged to prominence as a dominant financial powerhouse and the dollar languished. Small business banking was hot, as large banks flooded into this community bank sector. Construction and development lending softened, while regulatory scrutiny ramped up. Loan losses and loss reserves increased, while profitability slowed. Remote capture exploded, as bankers everywhere chased deposits and customers. Debit and credit cards grew exponentially, as cash and checks continued to drop out of favor.
As for technology and the internet, our attention in 2007 was captured by the iPhone (a multimedia and internet-enabled mobile phone that transformed the way we think about phones), Webkinz/Club Penguin (a virtual world for young kids to play in), TMZ (a website and TV show that stalks movie stars in the 30 mile zone around Hollywood), Transformers (a toy made into a movie that pits 2 robotic groups against each other over domination of Earth), YouTube (a free video sharing website), MySpace/Facebook (a social networking website for high school and college students respectively) and Heroes (a popular 20 something TV show about comic book like people that can do amazing things).
In sports, the New England Patriots closed off a perfect season (first time in 35Ys) looking like a powerhouse no team would want to meet on the road to the Super Bowl. In baseball, Barry Bonds set the career mark for home runs at 762, but an indictment threw cold water on any celebration. As if that weren't enough, a blistering Mitchell Report that named names showed steroid use was rampant in the Major Leagues. Finally, Atlanta Falcons quarterback Michael Vick was convicted for promoting dog fighting at his house.
On the global front, the wars in Iraq and Afghanistan continued to evolve, however the much maligned troop surge appeared to produce results in Iraq.
On the lighter side of things, people remained interested in watching American Idol, CSI and Dancing with the Stars and mocking Paris Hilton, Britney Spears and Lindsey Lohan. Hanna Montana, Rihanna and the Rolling Stones were also hot on the musical front, quickly selling out their tours.
As bankers prepare for 2008, one thing is sure. The issues that produced a difficult end to 2007 are going to remain with us through much of the upcoming year. Preparation and risk management will be critical as bankers head into the New Year.