Bank watch megathread

reply to post by jefwane


Nope. Not by a longshot. Todays#1 victims are Fannie and Freddie. Goverment is putting them in conservership and taking them over.

Going to be a brutal open on monday with the dollar crashing and the markets down big,big,big. Plus Ike will be in the gulf as a cat 4.

Im an investment advisor in south florida and planned on spending the weekend worrying about Ike hitting. Instead I get to think about my clients losing millions of dollars. Maybe Ill win my fantasy football game if nothing else.

Goverment to Seize Fannie and Freddie (Yahoo)

[edit on 5-9-2008 by disgustedbyhumanity]

reply to post by disgustedbyhumanity


I saw the FNM/FRE news right after the bell today. It's still really short on details so I didn't want to get too much into it until I know more. Paulson was really able to keep the "bazooka" in his pocket wasn't he. Call me old fashioned but if they require bailing out at the taxpayers expense, I believe the common should be a zero and the preffered too. What I'm most interested to see is how they will back the debt issued by these two entities. I can live with it if they "haircut" it substansially, after all the prospectus for FNM/FRE debt explicitly said it was not explicitly backed by the government.

I've been saying that FNM/FRE were in incredible trouble for a while now.

Now to talk my book a little bit. Why the hell not, Bill Gross does it every time he opens his mouth.I figured something like this was coming and bought some ATM TLT puts today at the close. If they back the debt to a substantial degree I really don't see how we won't see a serious bond market reaction. If they don't, I've pissed away money gambling in the market again, but maybe the .gov can stay solvent and continue to borrow money at a reasonable coupon.

I found it interesting that this news came out on the same day as the MOAB (Mother of All Baillouts).

From Forbes

Shortly after the largest U.S. savings and loan fired Chief Executive Kerry Killinger, who had run the company since 1990, it was put under special federal regulatory supervision.

Wahington Mutual no less, could they pick a better day to try to slip both the firing of a CEO and increased scrutiny by a primary regulator in with a big story going on elsewhere.

Washington Mutual (nyse: WM - news - people ) also signed a memorandum of understanding with its chief U.S. regulator, the Office of Thrift Supervision, requiring improved risk management and compliance procedures.

Something stinks over at WAMU.

reply to post by jefwane


I barely have time these days to read headlines.

There's so much going on right now it's impossible to keep up unless it's your full time job.

People seem to be shell shocked on the financial news front.
.

reply to post by Gools


Well, you got to have a bit of a sense of humor about it gools. Look at it like this WaMU is a coal miner in a coal mine,and all the canaries are long dead.

reply to post by jefwane




True.
I think the canaries are all dead for Lehman as well from what I've been able to read this weekend.
.

So who will fail tonight? Good chance at this point it will be a biggie either this week or next from the rumors I'm getting wind of.

I'll post the FDIC alert tonight if I get one.

Well, no FDIC Friday night takeover, but it seems we got a biggie this weekend:

Lehman Might be Gone by Monday

Just days after Lehman Brothers Chief Executive Richard S. Fuld tried to pitch Wall Street on a plan to save the firm by shrinking it, he's in complicated negotiations with potential buyers that may see the company sold piecemeal as soon as Sunday night, analysts said.

"Nothing short of a miracle can save Lehman as is," said Anthony Sabino, professor of law and business at St. John's University. "It is highly unlikely Lehman will be in existence on Monday morning."

Next?

reply to post by Relentless


Wow, big bank. I honestly did not think the Gov would let them get that bad without a big step in and nationalizing it, or fire sale all parts to other banks..

Either way, a lot of investors may be screwed out of whats left in their portfolio, once again people this bank was considered "safe or low risk" on the risk scale.. so a lot of pensions, mutuals, 401k's are invested in these types of institutions..

I wonder how many people Lehman employs?

EDIT:

Lehman Brothers Holdings
Rank: 176 (2005 rank: 270)
Get quote: LEH
Employees: 22,919

Revenues 32,420.0 52.6
Profits 3,260.0 37.6
Assets 410,063.0 --
Stockholders' Equity 16,794.0 --

FORTUNE

[edit on 9/13/2008 by Rockpuck]

Originally posted by Rockpuck


Wow, big bank. I honestly did not think the Gov would let them get that bad without a big step in and nationalizing it, or fire sale all parts to other banks..

Well, let's not forget, IndyMac was a biggie and it was recommended as a buy the day before it's takeover. Went solvent overnight? I don't think so. No bank is immune to the mess now. I'm only surprised Lehman beat WAMU to the pit. also, another reminder, the FDIC has a secret watch list of banks they are ready to step in on if need be and IndyMac wasn't even on it.

P.S. You get applause for getting the raw numbers, but if you look at the balance sheet - there is the proof the books are being cooked. Profit - my tushie! It's just shameless, and no (and know), we can't trust the balance sheets anymore to try and figure out if our bank is safe.

Would it be possible for someone in this thread with knowledge of the subject to quickly explain how a bank fails, what it means to me and you, and where this all may be heading? Or maybe point me towards some laymen friendly links?

I don't understand much of this financial stuff and would appreciate it if someone could help me out.

For example, I see WAMU's name talked about here.

So, what would it mean if WAMU fails? Am I affected if I have a savings or checking account with them? What about a credit card that I owe money on? Would I be forced to pay up what I owe all at once, or would my debt disappear, or would nothing at all happen?

You bring up an interesting point....
the Freddie & Fannie 'Takeover' (not bailout) is understood to mean that only the senior debt of FRE & FNM will be monetized...
in our laymans language, only Bonds will have any value
as all the common stock (owned by individuals mostly) and the various issues of 'Preferred Stocks' (owned by institutional investors) are Kaput!
...

Originally posted by jefwane


I saw the FNM/FRE news right after the bell today. It's still really short on details so I didn't want to get too much into it until I know more. Paulson was really able to keep the "bazooka" in his pocket wasn't he. Call me old fashioned but if they require bailing out at the taxpayers expense, I believe the common should be a zero and the preffered too. What I'm most interested to see is how they will back the debt issued by these two entities.

many regional banks and some of the investment banks have various ammounts of Preferred stock that is technically worthless...
the banks have used these common & preferred shares as part of their treasury of required collateral, so they could keep solvent as the bank rules require.

Now..IF... all these many banks now have their treasuries & the required collateral greatly depleated.. (because their treasuries held substantial ammounts of top rated & desirable shares of Freddie & Fannie stocks) ....



??Will these financial institutions be able to show up at the Federal Reserve discount window... with the now worthless equities in their hand....
and swap their stock holdings of Freddie & Fannie for an equal ammount of good/valuable US Treasuries released by the Fed, so the damaged banks don't become bankrupt or in-solvent??



?? If the Fed window is open to the banks to exchange those worthless equities...Then why can't individuals or the IRA funds the individuals have accounts with also go to the Fed window to seek some degree of financial relief??


all-in-all... it seems almost obvious that the banks & financial houses could get a bailout... while the little people get a 100% loss on
their investment in Freddie & Fannie !
~this stinks of Fascism~ as in, when one class/group gets bailed out and another does not get help !!



can someone here provide a reply or answer

[edit on 13-9-2008 by St Udio]

Originally posted by quango
For example, I see WAMU's name talked about here.

So, what would it mean if WAMU fails? Am I affected if I have a savings or checking account with them? What about a credit card that I owe money on? Would I be forced to pay up what I owe all at once, or would my debt disappear, or would nothing at all happen?

You still owe your debts, sorry to tell you, it just may now be to someone else, but it will be on the same terms that exist now, whatever that may be.

As for the money you have at a failed bank, it is insured up to $100,000 (at the moment) via the FDIC. Normally, the bank gets closed on a Friday and you have access to your accounts by Monday. Do not keep more than $100,000 in any bank right now unless you know what you are doing.

However, as the banks continue to fail, it IS possible that the FDIC will run out of funds. It is assumed the government will keep the FDIX afloat - but anything could happen. (Keep a watch on this thread for that):

And keep your eyes peeled for a thread I will be starting about the FDIC Insurance itself. (We aren't there yet, but it's not looking good).









[edit on 9/13/2008 by Relentless]

reply to post by Relentless


How many people in the U.S. actually HAVE $100,000.00 with a reciept to prove it? I know I don't, and I don't know ONE person that does either. So why are the majority of people worried if they have way less than the 100,000 dollar figure?

reply to post by 38181


You might want to worry because every bailout that occurs is costing each of us with nothing to begin with MORE! Ultimately someone has to pay for all these failures, and so far it's us little guys.

Freaking Gosh!!!!!

Lehman Update

Participants in Saturday's meeting were also trying to tackle a broader agenda that includes problems at American International Group Inc. and Washington Mutual Inc., said the investment bank officials, who were briefed on the talks.

AIG, the world's largest insurer, and WaMu, the biggest U.S. savings bank, have taken steep losses during the past year from risky investments. Investors, worried the financial institutions do not have enough cash on their balance sheets to withstand further hits, unloaded their shares on Friday.

AIG's shares dropped about 31 percent on Friday. WaMu's shares shed about 3.5 percent. Shares of investment bank Merrill Lynch & Co. Inc. also lost 12.3 percent.

But here's what really got me.

Geithner convened the meeting Friday evening, and told bankers gathered at the New York Fed's imposing building in downtown Manhattan to come up with a solution or risk being the next to go under, said investment banking officials with direct knowledge of the talks.

He actually told the other Banks to step to the plate or risk being next?????

Okay - unnamed source, but.....am I taking this wrong or was that a threat?

Either way (threat or statement of fact), it's pretty much saying to me they are all in danger right now.

I think we'll here something as to the disposition of Lehman this evening. Last I heard talks were still going on, and Barclays had pulled out of an offer. Asian markets (i think) are mostly closed tommorrow, but US futures open at 5pm so we may here something by then.

It's looking like Lehman may actually go bankrupt. We'll see, no idea what's going to happen tommorrow as of now. I am glad I'm not too involved in the market right now.

Wow! All I got to say is wow. Lehman BK and Merril Lynch being force sold to BoA.

If some one had told you this time last year that Bear Sterns, Lehman Brothers, and Merril Lynch would be no more in a year what would they've called you.

Originally posted by St Udio

??Will these financial institutions be able to show up at the Federal Reserve discount window... with the now worthless equities in their hand....
and swap their stock holdings of Freddie & Fannie for an equal ammount of good/valuable US Treasuries released by the Fed, so the damaged banks don't become bankrupt or in-solvent??



?? If the Fed window is open to the banks to exchange those worthless equities...Then why can't individuals ... also go to the Fed window to seek some degree of financial relief??


all-in-all...
~this stinks of Fascism

At 4AM on
Moday morning, the market-watch TV channel....reports that the Fed is ready to accept stocks equities from the banks & brokers who want cash loans at the Fed window.


lets examine that action for a minute....
Its now possible for Bank of America, (especially after buying Merrill Lynch [MER])
to pull out all the Lehman and Freddie & Fannie stock that Merrill & BofA owns...
and walk up to the Fed Window for a cash loan on all those worthless stocks.

Of course, every bank that has any of the recently bankrupt financial stocks [FRE, FNM, LEH] can now present those worthless equities at the Fed Window...and get cash
much like they all did with a portion of the severely downgraded CDOs, SIVs, CDS, the banks & brokers once held as 'collateral'---
(all told values over +$500Billion known, or +$1Trillion in secret)


how did Bank of America get the nod?
As i see it, the new financial landscape should have JP Morgan, BofA
and a yet unknown 3rd entity as the new-world-order 'Trinity',
or 2nd tier of money/credit access, acting under the new rules of a (combined) Fed-Treasury Central Bank.