It looks like it is time once again for St. Nick to tally up the good and bad for the year. While there are some financial folks who belong on the "nice" list (maybe the billionaires who publicly pledged to make sizable bequests?), there is no doubt that the "naughty" list on Wall Street is always quite a bit longer. (For more holiday related reading, check out Top Holiday Budget Busters.)

IN PICTURES: 8 Easy Ways To Slash Your Holiday Budget

Then again, maybe the naughty boys and girls on this list should take some cheer from their inclusion - because of their own actions, commodities like lumps of coal are worth more than they have been in a while!

While the European sovereign debt crisis undoubtedly stretches back to 2008 (if not earlier), it really heated up early in 2010. Greece was already something of a basket case, but the news kept getting worse, culminating in an international bailout in early May. Amidst all the worries about whether Greece would single-handedly sink a major bank or two, worries began to bubble up that Spain and Portugal would soon be in similar straits. Although Spain and Portugal seem relatively stable for now, Ireland brings the year to a close with its own prolonged financial difficulties and bailout.

There is no shortage of names that can go down on Santa's black list for this one. National governments lied to each other and their citizens about the state of their economies, and then gorged on cheap external debt to fund public largess. Of course, the banks who bought the debt also bought the lie(s) or assumed that they could pass the buck on to the public in the form of bailouts if things went south. Last and not least, some of the citizens of these countries themselves should earn a spot on the list for protesting and demonstrating against their governments for daring to actually try to put themselves on a paying, solvent basis and cutting some of these debt-fueled freebies. (For more, check out How Countries Deal With Debt.)

U.S. Government
It seems like the U.S. government and/or the Federal Reserve is looking to have a permanent spot on the list. This year brought two notable actions that bookended the year. Early in the year, the administration succeeded in passing its health care reform bill, but at great cost. While the bill itself does not necessarily earn a spot on the naughty list (though others will certainly disagree), it earns a spot here because of its opportunity cost. The administration spent an enormous amount of time, energy and political capital running this bill through; leaving almost nothing in reserve to use to push through any really meaningful economic reform.

Speaking of reform, the government's efforts to reform Wall Street and banking ultimately proved to be a lot more about sound and fury than substance, perhaps missing yet another chance to really fix the system.

The Fed's second major foray into quantitative easing, called QE2 for short, also may earn the government a spot on the naughty list. Though QE2 might have the amusing side-effect of exporting inflation to China - a nice gift exchange for a country that keeps its currency artificially low - it is a major risk to the U.S. economy in the long-term and may not serve to stimulate demand as much as the government hopes. (Learn more about QE2 in What is Quantitative Easing?)

Wall Street
Wall Street must love coal in its stockings, because it too is a semi-permanent fixture on these naughty lists. Not only did Wall Street go kicking and screaming into new reforms, but allegations are bubbling that some firms were even more naughty than normal. Rumors are spreading that more than one major firm may be (or have been) involved in manipulating the silver market. If that was not bad enough, and it is, now there are stories of a wide-ranging government probe of insider trading that could involve several big-name sell-side firms, as well as hedge funds, mutual funds and corporations.

IN PICTURES: 6 Millionaire Traits That You Can Adopt

Commercial Banks
Mortgage lenders made a late push to get themselves on the naughty list on a retroactive basis. As banks like Wells Fargo (NYSE:WFC), Bank of America (NYSE:BAC) and Citigroup (NYSE:C) have moved borrowers through the foreclosure process, details started coming to light that all was not well in that process. Banks foreclosed on houses that had no mortgages as well as foreclosing on the wrong houses. Making matters worse, banks have apparently provided fraudulent documents to courts in these foreclosure proceedings (though it is still an open question as to whether the banks knew the documents were fraudulent). While there is nothing wrong with a bank foreclosing on a borrower who will not or cannot pay, it is naughty indeed to take shortcuts simply to speed up the process. (For more on the foreclosure mess, take a look at The Story Behind The Foreclosure Crisis.)

Corporate America
Last and not least, the management of many of America's largest companies may well find themselves on the wrong side of Santa this year. Largely in response to record-low interest rates, corporate America has gorged on debt this year. Instead of putting that debt to use to build factories or expand businesses, much of that cash has either sat on balance sheets or gone straight out the door to investors in the form of dividends and buybacks.

All the while, more than 100 CEOs make more than $15 million a year in compensation and executive pay is up nearly 6% from last year. Keep in mind, though, that official unemployment is still nearly 10% and overall wage growth is under 2% for the year to date. It seems, then, that the question of whether the recession is over or not has a little something to do with whether the person in question works in a spacious private office, a small cube or can find work at all.

Still Reasons for Cheer
Even though this year, like every year, has its well-deserving membership on the rolls of the naughty, that is no reason to lose the holiday spirit. Overall, things are better than they were a year ago and there are plenty of reasons to think that 2011 will be better still. Moreover, the naughty still stand out in part because they are the exceptions - there are plenty of good companies, run by good people, out there and their continuing success and improvement is what everybody should focus on going into the New Year. (Discover some of the generous souls in finance. Check out The Christmas Saints Of Wall Street.)

Find out what happened in financial news this week. Read Water Cooler Finance: Insiders, Door Busters And Debt Contagion.

Related Articles
  1. Investing Basics

    Why Interest Rates Affect Everyone

    Learn why interest rates are one of the most important economic variables and how every individual and business is affected by rate changes.
  2. Economics

    Investing Opportunities as Central Banks Diverge

    After the Paris attacks investors are focusing on central bank policy and its potential for divergence: tightened by the Fed while the ECB pursues easing.
  3. Professionals

    4 Must Watch Films and Documentaries for Accountants

    Learn how these must-watch movies for accountants teach about the importance of ethics in a world driven by greed and financial power.
  4. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  5. Investing Basics

    4 Iconic Financial Companies That No Longer Exist

    Learn how poor management, frauds, scandals or mergers wiped out some of the most recognizable brands in the finance industry in the United States.
  6. Markets

    What Slow Global Growth Means for Portfolios

    While U.S. growth remains relatively resilient, global growth continues to slip.
  7. Economics

    Will a Hike in Interest Rates Affect the US Dollar?

    Learn about how rising U.S. interest rates affect the U.S. dollar and where the dollar could be heading once the rising rate cycle begins again.
  8. Credit & Loans

    How To Minimize Holiday Debt Before It Happens

    Holiday expenses can drown you in debt. Find out how to avoid this festive spending hangover.
  9. Investing

    The Enormous Long-Term Cost of Holding Cash

    We take a look into how investors are still being impacted by the memory of the tech bubble and the advent of the last financial crisis.
  10. Retirement

    What Was The Glass-Steagall Act?

    Established in 1933 and repealed in 1999, the Glass-Steagall Act had good intentions but mixed results.
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. What happens if interest rates increase too quickly?

    When interest rates increase too quickly, it can cause a chain reaction that affects the domestic economy as well as the ... Read Full Answer >>
  3. When was the last time the Federal Reserve hiked interest rates?

    The last time the U.S. Federal Reserve increased the federal funds rate was in June 2006, when the rate was increased from ... Read Full Answer >>
  4. Do lower interest rates increase investment spending?

    Lower Interest rates encourage additional investment spending, which gives the economy a boost in times of slow economic ... Read Full Answer >>
  5. How is the Federal Reserve audited?

    Contrary to conventional wisdom, the Federal Reserve is extensively audited. Politicians on the left and right of a populist ... Read Full Answer >>
  6. Who decides when to print money in the US?

    The U.S. Treasury decides to print money in the United States as it owns and operates printing presses. However, the Federal ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  2. Bullish Engulfing Pattern

    A chart pattern that forms when a small black candlestick is followed by a large white candlestick that completely eclipses ...
  3. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  4. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
  5. Black Friday

    1. A day of stock market catastrophe. Originally, September 24, 1869, was deemed Black Friday. The crash was sparked by gold ...
Trading Center