Fri
26
Sep
The slow motion collapse of the US financial system continues with yet another bank failure being announced:
Washington Mutual Inc. was seized by the Federal Deposit Insurance Corp. in the largest failure ever of a U.S. bank, after which JPMorgan Chase & Co. Inc. came to its rescue by buying the thrift’s banking assets.
JPMorgan Chase took over all deposits, so Washington Mutual account holders did not lose any money - thankfully! However equity and preferred shareholders were wiped out as a result of this deal.
I have no doubt that this event will spook a lot of people - it may even cause a run on the banks! I bet a lot of people are now wondering if their bank is sound.
The question now is , which will be the next bank to fail?
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Friday, September 26th, 2008 at 9:49 am
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September 26th, 2008 at 9:44 pm
I hope it´s not Wells Fargo, I am trading with MbTrading and they have the funds there.., what do you think about this Bank?
Traders should ask their Broker where are their funds deposited.
September 27th, 2008 at 4:30 am
Well Jose it could very well end up that Wells Fargo may report some major loses or worse. Here is some stuff I found on google:
“Wells Fargo Bank Northwest had the highest ratio of charge-offs to loan loss reserves, at 80.66%. It also had by far the largest percentage of nonperforming one- to four-family mortgages, at 44.52%. That figure is somewhat misleading, however, because the institution is a wholesale bank. Its mortgage origination is exclusively wholesale, and the bank sells as many mortgages as it can, releasing servicing. The remaining mortgages on its books are mainly troubled ones it can’t sell. Finally, this institution represents only $13 billion in assets in a $486 billion-asset holding company.”
Wells Fargo is the second largest US mortgage lender so I have no doubt that they will be hit in some way by this mess.
“Wells Fargo, the number five U.S. bank has said it will recognize $1.4 billion in losses in the fourth quarter OF 2007. Unlike most of the losses which have clobbered other lenders, Wells Fargo appears to be in trouble not because of sub-prime lending of first mortgages but because of its large portfolio of home equity loans.
The announcement of the write downs came after the market closed yesterday in a Securities and Exchange Commission filing and shares of his stock immediately dropped $1.40 or 4.7 percent in extended trading.
Michael Liedtke, AP business writer stated in his article that Wells Fargo is still in far better shape than many other banks because it had previously sold most of the $2 trillion in home mortgages it had originated in the last six years and had not been a big investor in the mortgage-backed securities that are now decimating other banks’ bottom lines.”
If you find anything interesting I’d invite you to start a thread at my forum at: http://www.moneyguruforum.com
Take care Jose :)
September 27th, 2008 at 11:13 am
Thanks a lot for this information Alan.
Many people are thinking to buy gold or sell in these moments lol
I recommend you this great post:
http://www.forexpeacearmy.com/forex-forum/forex-basics-boot-camp/3033-wealth-protection.html
September 27th, 2008 at 11:15 am
Thanks a lot Alan.
It seems that many people are buying gold or silver now lol
Read this great post:
http://www.forexpeacearmy.com/forex-forum/forex-basics-boot-camp/3033-wealth-protection.html
September 28th, 2008 at 2:19 am
Thanks for sharing Jose. Yep I’ve read that article and my good buddy Pharaoh hit the nail right on the head with that article. One idea that I’m seriously contemplating is buying a safe.