Top 5 Wall Street Stories of 2009

NEW YORK ( TheStreet) -- Wall Street experienced a tumultuous 2009, enduring a 12-year market low and the nation's financial system coming back from the brink. Here, in no particular order, are our picks for the top 5 Wall Street stories of 2009:

Bailouts Come and Go

Of all the acronyms rolled out in 2009, TARP may have been the least accurate and the most reviled. But it also represented the biggest market mover of the year.

The Troubled Asset Relief Program never actually handled the troubled assets directly. At first, the $700 billion program was viewed as a positive. It instilled confidence that the financial sector would not, in fact, collapse. Eventually, however, its presence contributed to fears that banks were close to being insolvent and might even be nationalized, sending the stock prices of many companies in the financial sector plummeting to their historic lows in March. Next came the TARP-related stress tests in May that showed the banks were much healthier than the market believed. That, along with signs of improvement in the economy, spurred a rally of more than 60% in the broad market through year-end.

In June, 10 large banks, including JPMorgan Chase ( JPM), Goldman Sachs ( GS) and Morgan Stanley ( MS), were granted approval to repay TARP. Their more troubled counterparts were scrambling to exit the program in order to escape government interference with pay and operations in 2010. Bank of America ( BAC), Citigroup ( C) and Wells Fargo ( WFC) joined the ranks of TARP-free banks just this month.

For a program that was pilloried as a money-losing bailout at the start of 2009, TARP has actually seen some rewards. Though a couple of investments have been lost outright -- like the $2.3 billion funneled into CIT Group ( CIT) before it filed for bankruptcy protection -- and dozens of banks have been late with dividend payments, the biggest investments have given taxpayers big returns through dividend payments and warrant repurchases. The government's investment in Goldman, for instance, posted an annualized return of 23%.

-- Written by Lauren LaCapra in New York.

Stocks Return from the Brink

The global economy fell to its knees in 2009, before crawling back from the edge of total ruin and -- remarkably -- witnessing one of the biggest bull market rallies in history.

On March 9, panic swept across Wall Street as the Dow Jones Industrial Average closed at 6,547.05, the lowest finish for the blue-chip index in 12 years, amid worries over the viability of General Motors, another bailout of American International Group ( AIG) and the woes of the financial industry. By then, the Dow's value had dropped nearly 25% in only 45 trading days as part of the massive capitulation. In other words, investors had given up.

Since that time, the Dow has once again regained the 10,000 mark, and the S&P 500 and the Nasdaq have also staged a remarkable comeback, surging more than 60% each on a recovery of the banking sector and the end of the Great Recession. Ford ( F) shares have rallied 488% since their March low, while Bank of America ( BAC) has surged 379%, Citigroup ( C) jumped 222%, and Apple ( AAPL) has climbed 146%. Investors in a penny stock like Sirius XM ( SIRI) have enjoyed a 301% profit since March 9.

More job losses, foreclosures and debt concerns may conspire to make any economic recovery in 2010 a tepid one. But for now, Wall Street and Main Street can breathe a little easier.

-- Written by Robert Holmes in Boston.

Bernie, Sir Allen and Raj

The first major Ponzi scheme of the financial crisis was unearthed late last year, when Bernard Madoff's massive fraud came to light. But 2009 had its share of swindlers as well.

Madoff was sent to prison in March after a months-long trial. His high-profile scheme is believed to have pilfered up to $50 billion from unsuspecting charities, pension funds and private investors. Allen Stanford then followed in Madoff's ignominious footsteps. He's accused of defrauding clients of $7 billion through his offshore firm, Stanford Financial. His trial is set for 2011.

Meanwhile, the latest alleged fraudster, Raj Rajaratnam, is suspected of another type of scam: insider trading. Federal investigators believe the hedge fund manager received illegal tips from tech executives and used them to generate tens of millions of dollars in profit. Among the firms he allegedly infiltrated are IBM ( IBM), Intel ( INTC) and Advanced Micro Devices ( AMD).

However, the true cost of the widespread fraud during Wall Street's days of excess might come from the smaller, low-profile swindlers. A recent Associated Press analysis found that 150 Ponzi schemes collapsed in 2009, while the FBI opened 2,100 securities fraud investigations and the Securities and Exchange Commission issued 82% more restraining orders against such schemes.

The cost of each individual con might have been small -- $10,000 here, or $200,000 there -- but a multitude of unsuspecting investors were robbed of their life savings. Factor in the damage from hundreds or perhaps even thousands of low-level schemes from across the country, and the impact is large and lasting.

-- Written by Lauren LaCapra in New York.

Auto Wreck

General Motors and Chrysler, two American automotive icons, were wheeled into bankruptcy earlier this year. After a government tune-up (billions from the TARP program) and various labor concessions, two of Detroit's original Big Three were up and running again.

New GM, which emerged from bankruptcy protection on July 10, barely a month after it went in, will focus on four core brands -- Buick, Cadillac, Chevrolet and GMC. GM is now primarily owned by the U.S. and the UAW union, and aims to be publicly traded again in 2010.

Chrysler, a veteran of the government bailout game following its much-ballyhooed rescue led by Lee Iacocca in 1979, emerged from bankruptcy on June 10, also a little more than a month after it filed. The UAW was awarded a 55% stake in the company.

Chrysler had become a private company after it was acquired by hedge fund Cerberus Capital Management in 2007. It has found a post-bankruptcy operations partner in Fiat. The Italian automaker took an initial 20% stake with an option to eventually control a majority stake of 51%.

Its competitors' pain was Ford's ( F) gain. The company, under the leadership of CEO Alan Mulally , saw its 2009 stock price increase north of 300%.

-- Written by William Hennelly in New York.

Health Care Reform

Reform of the nation's health care system was one of the defining domestic issues of 2009. As the federal government battled the Great Recession with billions in stimulus dollars and the bank bailout, critics questioned whether it was the proper time to tackle such an ambitious legislative project. Proponents argued the nation couldn't afford to wait.

President Obama won the election in 2008 after campaigning for health care reform, but the early days of his administration were consumed by the fallout from the financial crisis set in motion by Lehman Brothers' bankruptcy in September, the failing U.S. auto industry, and a plummeting stock market. It wasn't until the middle of the year that Congress picked up consideration of a reform bill, and the issue dominated the national debate from that point forward.

The House and Senate both introduced bills in July, and Obama used a prime-time television address to rally support for the legislation. Concerns about cost and the inclusion of a so-called "public option" for insurance, however, gave some more conservative Democrats pause, making passage of the legislation in a deeply partisan legislature seem impossible.

The debate turned hostile in August, as members of Congress were berated at town hall-style meetings designed to seek citizen feedback on the issue. The criticism altered the direction of the legislation when Congress returned to Capitol Hill in the fall. The House passed a bill that included the public option by a 220-215 vote on Nov. 7. The Senate dropped the public option and made other concessions to secure the support of 60 senators to win passage on Christmas Eve. The shape of the final legislation will now be determined by a conference committee, including members of both the House and Senate, before it heads to Obama's desk to sign.

Jim Cramer sees good things for health care stocks in the wake of the watered-down legislation, including long-term care provider Rehabcare ( RHB); insurers like Cigna ( CI), Aetna ( AET) and UnitedHealth ( UNH); and medical device maker Stryker ( SYK).

-- Written by Michael Gannon in New York.