Posted on 02/09/2008 5:48:41 PM PST by Halgr
Dozens of U.S. banks will fail by 2010: analyst Fri Feb 1, 2008 3:39pm EST
By Jonathan Stempel
NEW YORK (Reuters) - Dozens of U.S. banks will fail in the next two years as losses from soured loans mount and regulators crack down on lenders that take too much risk, especially in real estate and construction, an analyst said.
The surge would follow a placid 3-1/2 year period in which just four banks collapsed, all in the last year, RBC Capital Markets analyst Gerard Cassidy said in a Friday interview.
Between 50 and 150 U.S. banks -- as many as one in 57 -- could fail by early 2010, mostly those with no more than a couple of billion dollars of assets, Cassidy said. That rate of failure would be the highest in at least 15 years, or since the winding down of the savings-and-loan debacle.
"The initial round of failures will come from smaller banks with limited access to capital and overexposure to commercial real estate," Cassidy said.
[snip]
(Excerpt) Read more at reuters.com ...
“On Wednesday, Standard & Poor’s said financial industry losses linked to mortgages may reach more than $265 billion.”
Bullish!
I love the internet!
Where else can an article discuss 50-150 banks possibly failing in a 2 year period, and half the Freepers posting are ignoring the entire topic to just vent their pet peeve with a single bank — B of A.
Communication is impossible. No wonder nobody communicates. Nobody listens — we are all so busy shooting our mouths off about what is immediately, egoistically important to us that we refuse to even listen to the main point.
Stunning.
I hope Wachovia doesn’t fail.
A.P. Giannini is turning over in his grave. I worked for Bank of America many decades ago; we CLOSED the doors from Noon to 3:00 pm on Good Friday to commemorate the Passion of Christ.
That’s about 1.8 million mortgages in default, if the average failing mortgage is approx. $150,000. Are there that many deadbeats in the US?
Nope.
The meat in President Bush’s stimulus plan (passed this week after a crybaby fit by Senate Dems) is the increase to $750k for Fannie Mae loans and FHA limits.
FHA loans were always sub-prime (typically 97% LTV - Loan to Value, which until the last 4 or 5 years were as sub-prime as you could get), just never marketed as such to save peoples’ “feelings.”
But with the raised limits from the Stimulus Package, lenders will now repackage all of their performing sub-prime loans into FHA notes.
Ding!
One easy step.
Banks are saved.
Next...
“Nearly 25% of mortgages — 10 million — carry adjustable interest rates. And most of them went to people with subpar credit ratings who accepted higher interest rates, according to the Mortgage Bankers Association.”
From this article:
http://www.usatoday.com/money/perfi/housing/2006-04-03-arms-cover-usat_x.htm
If 20% default — bingo, you have your 2 million. I suspect the default rate could be higher. We are taking millions of people lying on their loans to buy homes they cannot afford. 2 million defaults is not a stretch. It is a huge number and therefore is hard to really grasp.
Good. I hate banks...
Looks like we are quickly getting there...
“The number of total foreclosure filings rose from about 885,000 in 2005 to 1,259,118 in 2006.”
From this article:
http://www.realtytrac.com/ContentManagement/pressrelease.aspx?ChannelID=9&ItemID=1855&accnt=64847
And a couple of facts you should know...
“In a speech last May, Fed Chairman Ben Bernanke said that 30 percent to 40 percent of all mortgage originations in 2005 fell in this “nontraditional” category (of subprime loans or Option ARMs).”
http://www.bloomberg.com/apps/news?pid=20601039&sid=a2mHr9ol.GUs&refer=columnist_sperling
“More than a fifth of option ARM loans in 2004 and 2005 are upside down — meaning borrowers’ homes are worth less than their debt. If home prices fall 10%, that number would double. “
http://www.businessweek.com/magazine/content/06_37/b4000001.htm
I hear you. What they are really saying (on point) is that the cost of politically correct lending is very high.
btt
read
It isn’t merely “deadbeats.”
What many people (including the Fed) are only starting to grasp is the level of mortgage fraud out there.
The number of owner-occupancy-require loans written to speculators and flippers where no owner occupancy occurred, is only starting to come to light. And as the banks and regulators are starting to get a grasp on the numbers, it is starting to dawn on them that:
1. The programs to “keep people in their homes” won’t be anywhere nearly as successful as pundits and pols hope - because many homes never had anyone in them. In Las Vegas, for example, 45%+ of the houses on the market are empty.
2. That because of #1, there are in some areas a much greater supply of unoccupied houses than previously thought.
which...
3. Will crush prices in those markets even further (oversupply begets lower prices...)
4. Which will result in yet more people being under water on their mortgages, which
5. will inspire ever-greater numbers of walk-away defaults - ie, deadbeats.
Short translation: the flippers can’t pay, which will cause deadbeats to not pay.
But don’t worry. After the residential real estate market bust is seriously under way (we’re only seeing the tip of the iceberg so far), wait until the commercial real estate market problems start to become apparent - starting with how high regional banks have stacked their loan:capital ratios on commercial real estate.
PING
And then there’s this........
The Bush Financial Bust of 2008: “It’s All Downhill From Here, Folks”
By Mike Whitney
http://www.globalresearch.ca/index.php?context=va&aid=8033
and
http://www.fdic.gov/news/news/financial/2008/fil08002.html#body
Right on.....!!!
People are waking up to whats really going on
LOL
I inhabit several other forums....your complaint is so appropriate, but invariably, so true....
The good thing about forums is that you can identify kindred spirits....and I think that is more important than anything else these days....
Not so fast...read these
http://www.tickerforum.org/cgi-ticker/akcs-www?post=28375
http://www.tickerforum.org/cgi-ticker/akcs-www?post=28365
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