"Your deposits are secure....on Monday we start feeding the house flippers to packs of East African wild hyenas on the Savana."
Posted on 07/25/2008 7:39:47 PM PDT by rabscuttle385
"Your deposits are secure....on Monday we start feeding the house flippers to packs of East African wild hyenas on the Savana."
You're right. According to FT, WaMu got $10 Billion from the Fed discount window, plus the FHLB system, and "open market operations."
WAMU was crowing about having 50 billion in reserves lined up a couple weeks ago.
They can crow all they want, but if the market doesn't believe them and the equity prices get driven to zero, or something or someone (like Chuck Schumer) does something stupid and sparks a bank run on WaMu, it's game over.
It comes down to whether folks believe that WaMu's "assets" are priced accurately.
Then there's that issue with TPG (hedge fund?) in Dallas that tied WaMu's hands if it needs to raise more equity or if the equity price goes to certain levels.
I am not an expert on holding companies, but this looks like just one bank failure to me, sloppy reporting by Reuters again.
Here is the 2007 Annual Report of 1st National Bank of Nevada, who has a division in SoCal called First Heritage Bank...makes for interesting reading!!
http://www.fnbnonlinehb.com/pdfs/annualreport.pdf
I peeked at their annual report too. The ratio of equity to assets for the holding company was just over 5 percent, which is dangerously low. Probably, the holding company got walloped by losses (look at the listing of bank-owned properties on one of their sites) and the OCC swooped in to shut the whole thing down. Per FDIC reports, deposits were transferred to Mutual of Omaha Bank, but loans were retained by the FDIC while they sort through the rubble.
OK...thanks for the info., and my apologies to Reuters! ;-)
B of A is still paying dividends, so with the current lower Stock price, the yield is about 13%. Capitalization is not a problem for them.
My Wife just retired last month, and has Roth IRAs, and other financial investments. I've talked to her about pulling the Roth out and going all cash as you have. Found out she will have to pay a ten percent penalty, and possibly pay a percentage to the IRS as well, as she retired on disability and is five years younger than the minimum.
Do any of you have any wisdom to throw her way as to what the best road is to save on penalties in converting her assets?
I'm going to talk to my CPA next week about it, but I would love to have some ideas for her to kick around until then from You guys!
JD
Derivatives should be called RUBINS FOLLY.
while more banks may fail, the US Dollar is on the rise again.
Perhaps they were paid actors....was NBC televising this event? Actually, WAMU has grown it's leverage ratio from about 5.6% in 9/07 to 7.8% in 6/08. Wachovia by way of comparison is around 6.6% (not that they're a role model or such). So no run yet. And they've added an extra $10bn in fresh capital since the end of June in an effort to quell continued speculation over its financial health. per the Financial Times on Friday. Amazingly, the SEC didn't put WAMU on its Naked Short prohibition list, so I guess the SEC is ok with the naked shorts having their way for a while longer.
OH, and a lot of the 'headline' losses are simply a write-down of the Goodwill for Golden State, the source of WAMU's headaches ( a zero expense writedown).
Wow...I've heard exactly the opposite. see above post...WAMU has RAISED capital (ie, added creditors) this month. If you're referring to WAMU Assets like home equity loans, commercial loans, etc. Think why would a debtor run away. Let's say WAMU goes Chapter 11...you'd renegotiate your loan at something less than 100%, wouldnt' you?
Dude... are you smoking crack? Because BofA paid about $4 billion in stock for Countrywide. Countrywide lost $2.3 billion LAST QUARTER...
The Federal debt ceiling was raised to 10.3 trillion. There is actually nothing to cover anything. Private debt is another 10 trillion. It’s not a problem, we can pay it all off in ten years. Seven banks down 8000 to go. What is happening in other countries?
If she’s only 5 years away taking out equal payments may be the way to go, but I would hold cash in the IRA itself. Talk to the CPA to make sure.
1. Do you include Put & Call Options in your definition of "derivatives?"
2. How 'bout "naked shorts?"
3. How 'bout anything "leveraged" in securities markets?
By the way, I remember Dodd being lobbied even more heavily than Graham to passing the death knell to "the tie that binds" banks!!! (even if it did have Graham's name on it)
I really enjoy your posts and commentary! Bravo!! Encore!!!
Yep, bank failures do have the potential to be deflationary, which would strengthen the dollar.
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