Pasadena lender IndyMac bank imploded today. You may have already read about it but this was one of the largest lenders specializing in Alt-A loans, those were they type that were very popular in California. Something like 70% of the loans from 2005 to 2007 were of the Alt-A variety. Indymac was apparently visited by "the suits" from the FED this weekend and it looks like they didn't like what they found. Indymac announced they have stopped all retail and wholesale lending and will lay off more than 50% of their employees. I wonder how many of the 4000 work here in Southern Ca? I hope you didn't have any stock in this train wreck. It has lost over 98% of it's value over the last year and a half.
And if that were not enough Lehman Bros, small business finance unit also imploded today. Two lenders in one day!
And if you missed it Fannie Mae and Freddie Mac got pummeled today. They lost 18% and 16% of their value IN ONE DAY! Too bad the housing market cannot move that fast....
7 comments:
Good thing I pulled out all my money today, I heard the lines were crazy out the door in SG Valley over the weekend, but no lines today. I put some of it in Wachovia, but not sure if that bank is doing any better, gotta keep my eyes on that one. Hopefully Wellsfargo can stay afloat....running out of banks to go to.
From what I've heard, Wachovia and WaMu are next in line to go belly up.
are any banks safe at this point?
Maybe the Bank of Sealy.
Are any banks safe? Well not many US banks, that's for sure. The rumors of Wamu's demise have been floating around for 6 months now. Most banks dove head first into the mortgage koolaid party. You gotta wonder how many of them dove in too deep. I saw a report about a month ago saying the FDIC was preparing for around 100 bank failures.
Scary 100 failures...I hope they have enough money to cover it...most likely they dont
FDIC has less than 60 billion to cover loses. IndyMAC is going to take about $8 billion. Not much left to pass around between 99 others.
They really don't have the funds to cover all the compounding loses. They are hoping to just daisy chain the failures. FDIC will force the deposits onto the next dead bank ie.. "Wachovia" rinse and repeat.
FDIC won't help small business one bit. Think about how many small companies are out there with monthly churns in checking/payroll in the 100-500k range.
Grandma is going to have to wait to get her 100k in paper, a long time maybe. Think about 100 banks freezing up at least 100 small business each.
Each with just 10 employees. That's 100,000 people with paychecks they can't cash. Thousands of vendors with bounced checks.
What happens at a company that gets paid $400,000 from 1 check? (ie. contractors, manufacturers etc..) Go to bank 1 deposit $400k wait for it to clear. Pray to God that it doesn't go tits up while you wait. Transfer it to 3 other banks. Turn around and write checks from 4 different bank accounts to pay bills? You would have to hire an accountant just to open and close accounts and reconcile checks.
The GOV can't allow a bank run to propagate. Your going to get a form letter stating that the electronic 1's and 0's that represent your deposit have been moved to a "safe" place and you're only allowed to cash $500 a week.
As far as what bank to put $$ in... Find out where Dick Cheaney has his. Change your name to Dick ChAEney, then put it there.
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