2012 in Review: The 10 Biggest Finance News Stories that Impacted Your Bank Accounts
It’s hard to believe another year has passed us by, and one that was just as tumultuous as 2011. Looking back on the biggest finance news stories that held our attention in 2012, we experienced the insane buzz over a tech company going public, a historic presidential campaign and election and more trouble from Congress as they implement solutions to our economic problems in the 11th hour, as usual.
Below are the top 10 financial news stories of 2012 that had the largest impact on Americans’ finances.
Top Financial News Stories of 2012
1. Facebook IPO
When Facebook went public in May, investors went nuts getting their hands on shares of the hottest tech IPO in history. Unfortunately, Facebook stock value quickly plummeted from an IPO price of $38.23 down to the mid-twenties, even dropping to under $18 at one point, causing thousands of hasty investors to lose huge chucks of change.
Falling share prices wasn’t the only problem to emerge from the Facebook IPO, either. A NASDAQ trading glitch within the first few hours of the IPO caused incorrect trades to be placed, resulting in major losses for some big investors. Morgan Stanley (the underwriter for these faulty trades), along with the NASDAQ, are currently facing lawsuits as a result.
2. LIBOR Scandal
The scandal that broke out in the summer of 2012 had many Americans outraged — and confused. The LIBOR rate, a major benchmark affecting everything from the U.S. banking sector to the world economy, yet had not been a part of the average citizen’s vocabulary, was revealed to be fixed by major banks. This allowed them to appear healthier than they were in reality, manipulate the derivatives market and ultimately contributed to the financial crisis in 2008.
3. Supreme Court Upholds Affordable Care Act
Last June, the Supreme Court ruled to uphold the Affordable Care Act, deeming the individual mandate requiring all Americans to acquire health insurance, often referred to as “Obamacare,” to be constitutional.
While this act makes healthcare much more accessible to many Americans, Obamacare opponents have argued that it also increases costs for everyone, especially patients. Arkansas Senator Lisa Murkowski has said that the new plan will cause higher insurance premiums and rising costs on medications, and healthcare costs could skyrocket from its current $2.1 billion annually to $18.2 billion in 2018.
4. Soaring Gas Prices
According to AAA, drivers experienced the highest average gas prices ever in 2012. They reported the 2012 average gasoline price was $3.60 per gallon — the highest annual average on record. Many states broke the $4.00 per gallon threshold, likely shocking residents causing many to consider riding a bicycle instead of driving during the summer.
5. Clint Eastwood Makes Unemployment Subject of the RNC
6. President Obama Is Reelected for 2nd Term
With 51 percent of the popular vote and 332 electoral votes, Barack Obama beat out Mitt Romney in the 2012 Presidential election. Though his second term doesn’t officially begin until January 20, 2013, we’ve already begun experiencing some of the major changes he promised while campaigning for his second term, such as the extension of the Bush tax cuts. However, we have another four years to find out exactly how President Obama will impact personal finances in the U.S.
7. Hurricane Sandy Causes Billions in Damages
The hurricane that ripped through the East Coast in October caused billions of dollars in damage, and had a wide and varied impact on Americans’ finances. Following the disaster, big banks waived late payment and overdraft fees for victims. Trading on the New York Stock Exchange actually halted completely. Car shoppers were warned that flood damaged vehicles would be a major concern for years to come.
8. Hostess Files for Bankruptcy
In November, 82-year-old company Hostess Brands filed for bankruptcy, making beloved Twinkies a snack of the past. In a press release on the company website, Hostess Brands reported that the bankruptcy resulted in the loss of “33 bakeries, 565 distribution centers, approximately 5,500 delivery routes, 570 bakery outlet stores and the loss of 18,500 jobs.”
Hostess products then became instant collectors items, with consumers buying every last Ding Dong, Ho Ho and loaf of Wonder Bread available on store shelves. Twinkies have even shown up on eBay for anywhere from $10,000 for a box of 10, to $5,000 per single Twinkie.
9. Tax Law Changes Set for 2013
As the end of the year came closer, Americans became increasingly concerned over impending tax law changes – many of which would reduce their take home pay in 2013. Some of these tax increases were related to the fiscal cliff (see below), such as the expiration of the Bush tax cuts. Others, like the reversal of the payroll tax cut, would mean less money in citizens’ paychecks regardless of the ultimate fiscal cliff deal.
10. Fiscal Cliff
Maybe the biggest story of the entire year, the fiscal cliff referred to the combination of spending cuts and tax increases that would go into effect January 1, 2013, likely causing the country to head back into a recession. Luckily, the major financial disaster never happened, prevented by a Congressional agreement finally reached on New Year’s Eve. However, solutions implemented to prevent us from falling off the fiscal cliff only warded off the immediate problem, and we will soon be hearing about how the U.S. government will have to come up with long-term solutions to avoid hitting the debt ceiling in 2013.