Because of the dramatic events in the financial and credit markets, 2008 will undoubtedly go down in history as a dark and difficult year. 2008 was a challenging year for bloggers, too. So much happened of such significance that trying to find the time to comment and the words to express it all were almost overwhelming blogging challenges.


But dramatic headline events do not always make the best blog posts, because high profile events are exhaustively reported in the mainstream media. The blog posts that stand out in retrospect are those that analyze a specific detail of larger events reported elsewhere; that draw connections between otherwise disparate events; or that highlight developments that otherwise would be lost in the noise.


I have set out below my own list of The D&O Diary’s Top Ten Blog Posts of 2008. I have used a simple standard in determining which posts to include; I listed posts that stand up best to re-reading now. The Top Ten posts are presented chronologically.


1. "CDO Squared" Securities Lawsuit Hits MBIA (January 13, 2008): MBIA is only one of several bond insurers to get caught up in the subprime litigation wave. But the lawsuit against MBIA arose at a time when all of us were still just becoming acquainted with some of the complex financial instruments that have caused so much trouble.


This post attempted to explore the then-unfamiliar CDO-squared instruments, incorporating into the exercise both a detailed study of Warren Buffett’s condemnation of derivative securities as "financial weapons of mass destruction," as well as a reflection of the possible lessons for the current crisis from the near-collapse of Long Term Capital Management ten years earlier.


Little did I suspect at the time how relevant my observations about derivative securities or the lessons of LTCM would become later in 2008. (As an aside, I must note how instructive I found it to reread now all of January 2008’s posts. What an astonishing year 2008 was.)


2. Auction Rate Securities: The Next Subprime Litigation Wave? (February 13, 2008): This post commented on "a developing breakdown in an obscure corner of the credit market involving debt instruments called ‘auction rate securities.’" The post accurately foresaw the coming wave of auction rate securities litigation, which according to my tally involved at least 21 companies in new securities lawsuits during 2008. (My subprime and credit crisis-related litigation tally, which includes auction rate securities litigation, can be found here.)


Litigation involving auction rate securities remained one of the top securities litigation stories throughout 2008 (as reflected here, for example), and the lawsuits were a significant factor in the upsurge in new securities filings in 2008. My complete overview of the 2008 securities filings can be found here.


3. A Single "Toxic" CDO, A Multitude of Subprime Lawsuits (March 9, 2008): So many of 2008’s dramatic events were so large and their effects were so sweeping that they defy easy comprehension. An alternative way to try to understand what happened is to look at a single investment vehicle – in this case, a collateralized debt obligation (CDO) called "Mantoloking" – and examine the difficulties and litigation that has followed in its wake.


The extent and magnitude of the problems from just this one investment structure (among other things, it played a role in Bear Stearns’ demise) helps put some context around the problems now besetting the global financial marketplace.


4. D&O Insurance: Defense Expense and Limits Adequacy (June 2, 2008): Every now and then a set of circumstances come along that helps illustrate one of the perennial problems in D&O insurance. In this instance, the case involved was the criminal prosecution arising from the collapse of Collins & Aikman. The particular problem involved was the possibility that defense costs alone threatened to exhaust the company’s entire $50 million insurance program before the criminal case even went to trial.


As discussed in the post, the increasing possibility that defense costs could deplete or exhaust available insurance undermines traditional notions of limits adequacy and underscores the importance of issues involving program structure as part of the insurance acquisition process.


5. Section 11 Lawsuits: Coming Soon to a State Court Near You (July 21, 2008): One of the more interesting (yet little noted) features of the subprime and credit crisis-related litigation wave has been the frequency with which plaintiffs’ lawyers in reliance on the ’33 Act’s concurrent jurisdiction have chosen to file Section 11 lawsuits in state court rather than federal court.


As I speculated elsewhere (refer here), these state court lawsuits arguably represent an involved form of forum shopping. They also may represent an attempted end run around the PSLRA’s procedural requirements. But whatever the motivation may be, the plaintiffs’ bar has shown a heightened interest in proceeding in state court and have even has some success in opposing removal to federal court.


In the general hubbub of the current financial turmoil, this litigation development has not attracted nearly as much attention as it deserves. The anomalous phenomenon of federal class action litigation going forward – in significant volume – in state court represents a trend that deserves greater attention. As I have noted in this blog post, some "recalibration" may be required.


6. A Closer Look at the Fed’s $85 Billion AIG Bailout (September 17, 2008): Both the significance and consequences of the AIG bailout are still emerging, as reflected in Carol Loomis’s December 24, 2008 Fortune article (here). But in rereading a blog post written in the immediate aftermath of the first announcement of the AIG bailout, it appears that many of the continuing questions were immediately apparent.


7. WaMu: A Thrift Falls in the Forest: (September 28, 2008): It is one measure of the massive scale of this fall’s events that the largest bank failure in U.S. history is almost a footnote to the year’s events. Even though WaMu’s failure may be overshadowed by other events, that does not mean that the event lacks significance. Indeed, many of the consequences of WaMu’s collapse still have yet to emerge.


Moreover, WaMu was only one of 25 bank failures in the U.S. during 2008. Though overshadowed by other more dramatic events, these bank failures portend further difficulties in 2009.


8. More Damn Things to Worry About (September 30, 2008): So many things happened so quickly in September 2008 that we were all left wondering: what else could go wrong? This post embodies sheer frustration we felt at the time and the depth of the concern about what may lie ahead. Many of the specific fears expressed have indeed come to pass. Though written quickly and at a very late hour, the post withstands scrutiny now.


9. Reading the New Buffett Bio (October 8, 2008): In the midst of this Fall’s financial crisis, it was a reassuring pleasure to read about Warren Buffett’s life. I enjoyed Alice Schroeder’s new biography of Buffett, and I enjoyed writing about her book. Writing a book review is something of a departure for this blog, but it stands out perhaps for that very reason. Given everything that was happening at the time, it was a relief just to read a book.


10. The Evolving Credit Crisis Litigation Wave (December 3, 2008): As we head into 2009, it is critically important to understand that as 2008 progressed, not only did the credit crisis itself evolve into something much more extensive and dangerous, but so too did the related litigation wave. In an earlier post (here), I speculated that the litigation wave might have reached an "inflection point." Further lawsuit filings confirmed that the litigation wave has spread beyond the financial sector.


Because this litigation wave is likely to continue to spread in the weeks and months ahead, this development represents an important and noteworthy trend for the New Year.


And Finally: In addition to my favorite blog posts, I also had a favorite video of the year, the viral video Where the Hell is Matt? I not only smile every time I watch this video, I like it a little bit more with each viewing. YouTube reports that the video has been viewed over 16 million times. Matt’s website (here) reports that the video was shot in 42 countries and took 14 months to videotape and edit.