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More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?

 
Luke@MyNik
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07/15/2008 08:52 AM
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More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
Monday, July 14, 2008
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As home prices continue to decline and loan defaults mount, federal regulators are bracing for dozens of American banks to fail over the next year.

But after a large mortgage lender in California collapsed late Friday, Wall Street analysts began posing two crucial questions: Just how many banks might falter? And, more urgently, which one could be next?

The nation’s banks are in far less danger than they were in the late 1980s and early 1990s, when more than 1,000 federally insured institutions went under during the savings-and-loan crisis. The debacle, the greatest collapse of American financial institutions since the Depression, prompted a government bailout that cost taxpayers about $125 billion.



But the troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. Other lenders are likely to shut branches or seek mergers.

“Everybody is drawing up lists, trying to figure out who the next bank is, No. 1, and No. 2, how many of them are there,” said Richard X. Bove, the banking analyst with Ladenburg Thalmann, who released a list of troubled banks over the weekend. “And No. 3, from the standpoint of Washington, how badly is it going to affect the economy?”

Many investors are on edge after federal regulators seized the California lender, IndyMac Bank, one of the nation’s largest savings and loans, last week. With $32 billion in assets, IndyMac, a spinoff of the Countrywide Financial Corporation, was the biggest American lender to fail in more than two decades.

Now, as the Bush administration grapples with the crisis at the nation’s two largest mortgage finance companies, Fannie Mae and Freddie Mac, a rush of earnings reports in the coming days and weeks from some of the nation’s largest financial companies are likely to provide more gloomy reminders about the sorry state of the industry.

The future of Fannie Mae and Freddie Mac is vital to the banks, savings and loans and credit unions, which own $1.3 trillion of securities issued or guaranteed by the two mortgage companies. If the mortgage giants ever defaulted on those obligations, banks might be forced to raise billions of dollars in additional capital.

The large institutions set to report results this week, including Citigroup and Merrill Lynch, are in no danger of failing, but some are expected to report more multibillion-dollar write-offs.

But time may be running out for some small and midsize lenders. They vary in size and location, but their common woe is the collapsed real estate market and souring mortgage loans. Most of these banks are far smaller than the industry giants that have drawn so much scrutiny from regulators and investors.

Still, only six lenders have failed so far this year, including IndyMac. In 1994, the Federal Deposit Insurance Corporation listed 575 banks that it considered to be troubled. As of this spring, the agency was worried about just 90 banks. That number may go up in August, when the government releases an updated list.

“Failed banks are a lagging indicator, not a leading indicator,” said William Isaac, who was chairman of the F.D.I.C. in the early 1980s and is now the chairman of the Secura Group, a finance consulting firm in Virginia. “So you will see more troubled, more failed banks this year.”

And yet IndyMac, one of the nation’s largest mortgage lenders, was not on the government’s troubled bank list this spring — an indication that other troubled banks may be below the radar.

The F.D.I.C. has $53 billion set aside to reimburse consumers for deposits lost at failed banks. IndyMac will eat up $4 billion to $8 billion of that fund, the agency estimates, and that could force it to raise more money from the banks that it insures.

The agency does not disclose which banks it thinks are troubled. But analysts are circulating their own lists, and short sellers — investors who bet against stocks — are piling on. In recent weeks, the share prices of some regional banks, like the BankUnited Financial Corporation, in Florida, and the Downey Financial Corporation, in California, have stumbled hard amid concern about their financial health. A BankUnited spokeswoman said the lender had largely avoided risky subprime loans.

In his “Who Is Next?” report over the weekend, Mr. Bove listed the fraction of loans at banks that are nonperforming, meaning, for example, that the assets have been foreclosed on or that payments are 90 days past due. He came up with what he called a danger zone, which was a percentage above 5 percent. Seven banks fell in this category.

An important issue for the regional and community banks will be whether they have managed to sell their riskiest loans to Wall Street firms.

And the government may have fewer failures than in the past because private investment funds might buy some troubled lenders. Regulators are considering rule changes that would allow private equity firms to buy larger shares of banks, and several prominent investors, like Wilbur Ross, have raised funds to leap in.
[link to finance.yahoo.com]
LKXXON
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07/15/2008 09:20 AM
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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
There's already several pinned diaries covering this subject matter.

The polite thing to do would have been to add your two cents to an existing pinned diary as opposed to your diarrhea spamming.
Anonymous Coward
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07/15/2008 09:22 AM
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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
i never had money in the bank . bills dont let me ;-(
Luke@MyNik (OP)

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07/15/2008 11:32 AM
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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
There's already several pinned diaries covering this subject matter.

The polite thing to do would have been to add your two cents to an existing pinned diary as opposed to your diarrhea spamming.
 Quoting: Garbage Collector 468467


Hmm, can you show me these so called diarreah spamming post you seem to so uhh hmm POLITELY say i post here as you say the uhhh hmmm POLITE thing to do is add this thread to already pinned threads on this sublect?


I think if the mods/trin thought i was doing any type spamming here they/he would warn me of such in which has never happened and if you think all my post are of this nature then its your right and perogative to NOT click on them if you so feel as such that my post are of the spamming nature.
LKXXON
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07/15/2008 11:33 AM
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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
2000-3000 will fail before its all over.
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_____________________________________
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Better to take action now rather than chances later. Your choice.
WW RAUPP

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07/15/2008 11:56 AM
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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
10% of FDIC funds went to IndyMac. 3 or 4 more of those banking giants and the FDIC is without funds.

Ouch.
To shape the world is to become immortal
elsie
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07/15/2008 02:34 PM
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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
Join a credit union.
Doomamatrix

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07/15/2008 02:49 PM

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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
But, Guys! The banks are UP today! YAY!!

Our beloved fuerer and his money man have calmed the people and all is well!

We are all safe now and can continue going about our lives...provided your life is that of a hippie who lives in the woods and bangs a drum all day.


This is such BULL what they are trying to pull on the American public!
Obamacare: Never has so much been taken away from so many for so few.
Anonymous Coward
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07/15/2008 05:09 PM
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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
Today the FDIC Chairman would not answer the important question: "If 100 banks fail, do you have enough funds for all of them?" The question was dodged.
535
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07/15/2008 05:41 PM
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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
"Is your money safe"

In a bank: No.
Anonymous Coward
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07/16/2008 04:42 AM
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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
Is this your spam from another thread? -- "I see the fawning article and the mentionings of all the big names who enjoy has you all baring your fangs amd sharpening your claws. But like Adrian said to Rocky in Part 4, "You cant Win." So just sit back and bask in the ambience."
Anonymous Coward
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07/16/2008 05:59 AM
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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
There's already several pinned diaries covering this subject matter.

The polite thing to do would have been to add your two cents to an existing pinned diary as opposed to your diarrhea spamming.


Hmm, can you show me these so called diarreah spamming post you seem to so uhh hmm POLITELY say i post here as you say the uhhh hmmm POLITE thing to do is add this thread to already pinned threads on this sublect?
 Quoting: Luke@MyNik


Does this sounds like your spam, or perhaps that belonging to one of your other personalities? --

"I see the fawning article and the mentionings of all the big names who enjoy has you all baring your fangs amd sharpening your claws. But like Adrian said to Rocky in Part 4, "You cant Win." So just sit back and bask in the ambience."
Anonymous Coward
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07/16/2008 06:44 AM
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Re: More banks could fail-Analysts say that up to 150 banks nationwide could close over the next 18 months.» Is your money safe?
No spam

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