The jockeying among banks to get on these lists is like the Kentucky Derby. Netbank has been like Seattle Slew. Of course, the Secretariat of them all is Corus, which also happens to be the king of condo lending. I still think you could make some quid shorting Corus.
My point is...hot money deposits are a bad business model. High-yield CDs are loss leaders. But when the seniors are as sharp as these old folks, the money just keeps moving and loss leaders turn into losses.
Not so much... until last mile throughput is increased, perhaps. The internet is a utility and there are often problems with utility companies from time to time. Not a big deal...
Isn't it odd that people are even asking Greenspan the odds of going into a recession?
Why is recession even in the conversation?
It would be like going into the doctor's office for a routine check up and having him say "well, there is a good chance you don't have the Ebola Virus."
In a vacuum you'd be like..."What! who said anything abou Ebola! What's going on Doc! Am I going to die!"
Panic would set in even at the mention of it, unless........
unless you'd been showing symptoms, there was news it was going around in some animals, and you're friends have been encouraging you to "go get yourself checked out" because you've looked a little peakish lately.
THEN news that you probably didn't have it based at least on some preliminary testing would be greated with euphoric relief.
Any economic optimism seems to be comming from those who swear that it's not Ebola, probably just a head cold, you'll be fine.
I bought some 3 and 6 month CDs through Schwab a few weeks ago. The phone rep actually got a little ticked at me for passing on higher yielding CDs from Countrywide and Indymac. I got the feeling this had happened to him before and he was getting tired of it. Maybe he was supposed to push the stuff.
From Ray's link this bank failure is described as the largest in Georgia's history, but beside the text is a short list of other bank failures that were less. Way less in fact. So much less in fact that it draws my attention to mull over $25M losses in assets compared to $2.5B losses. I know that there has been some dollar depreciation but this 2 orders of magnitude, no?
Somehow "the biggest" doesn't do it justice...
I was trying to gauge the size of this - as stated in an earlier post, the previous bank closure in Feb 2007 was of Metropolitan Savings Bank with a deposit base of $15M ( that's Million not Billion).
NetBank had a deposit base of $2.3 Billion which is a lot bigger than Metropolitan but quite a bit smaller than Northern Rock in the UK that had a deposit base of $50billion per the FT.
NetBank had a deposit base of $2.3 Billion which is a lot bigger than Metropolitan but quite a bit smaller than Northern Rock in the UK that had a deposit base of $50billion per the FT.
Ya and not pictures of depositors in a bank run either - bummer. Well not unless folks send in webcam photos of themselves at their keyboards trying to 'demand' their money.
Went to the Chase local branch this morning to open a new checking account with them. They asked usual questions like who do you presently bank with, etc.
Me: WAMU.
Clerk: Do you know that they are going under? There is a rumor circulating that we may probably buy them...
ING Direct, an online banking arm of Dutch banking group ING Groep, (ING.AS: Quote, Profile, Research) (ING.N: Quote, Profile, Research) said it plans to acquire $1.4 billion in deposits and 104,000 customers from failed Internet bank NetBank Inc for $14 million.
EverBank Financial Corp, a privately-held bank, on Friday said it acquired about $700 million in mortgage assets of NetBank Inc (NTBK.PK: Quote, Profile, Research), a failed Internet bank shut down by U.S. thrift regulators. EverBank acquires $700 mln of NetBank's assets
| Reuters
Although the chances of the US hyperinflating in the next six months is very, very remote it can happen. The CPI went up 27-fold in the Weimar Republic within a six month period and the precursor to those unfortunate circumstances were bank runs. Could that happen now? I am sure that it is possible. I am almost positive the vast majority of people living in the Weimar Republic thought it was impossible just like you. If BofA, CFC and another major foreign bank were to BK all within a one month period, I am sure many people would start trading in their fiat for assets. As for FDIC, who knows how they would be able to respond and in what time-frame. Many people such as yourself think that there is absolutely no chance of hyperinflation or a currency collapse happening and that is simply ignorant. But what is even more ignorant is to condescendingly criticize one that holds the belief that it can actually occur, however remote the possibililty is.
MarketWatch
"NetBank had about $109 million in 1,500 deposit accounts that exceeded the federal deposit insurance limit of $100,000. Those customers will become creditors of NetBank's receivership, the FDIC said."
NetBank sustained significant losses in 2006 primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies. As a result, the OTS executed a formal enforcement action with NetBank in 2006 directing the institution to correct its operating deficiencies and enhance its capital position. While the institution continued to operate in excess of minimum capital standards, the actions taken to address these problems were unsuccessful and it became clear that high operating expenses combined with continuing losses were jeopardizing the institutions viability.
In response, NetBanks board of directors undertook efforts to complete a private sale of the institution. These efforts were unsuccessful and the institution had no remaining prospects for raising capital and achieving profitability. Accordingly, the OTS exercised its authority under the Home Owners Loan Act to appoint the FDIC as receiver of the institution.
I took a decent position yesterday in SPY puts. Oct should be a lot of fun as volatility kicks up and price discovery in equities really kicks into gear. August was a warm up act. Waiting for the fat lady to sing...
"NetBank also had approximately $744 million in brokered deposits that are not part of today's transaction. The FDIC will pay the brokers directly for the amount of their insured funds."
barley -
Historically, FDIC always takes control on either a Thursday or Friday so that its employees have an entire weekend to balance the books and hopefully prepare to reopen Monday - or if Monday is a holiday which sometimes happens - then opening is Tuesday. This is nothing new in the way FDIC has operated for the past two decades.
FFDIC, Thanks. You are quite an asset on this site. I think CR should consider making you a formal contributor.
With the decreased regulation and the general look-the-other-way attitude of AG and the current administration, we should expect MANY more of these. Like the wild west of banking.
The NetBank web site will be closed from 3:00 pm to 8:00 pm EST, on September 28th and will reopen in a read only mode. Normal online services will be restored in the early evening Sunday, September 30th.
You just know that somewhere on the planet is a room full of IT guys trying to make the web site "read only" (I'd be surprised if that was a design consideration when it was built) while taking frequent breaks to browse dice and monster...
In Mishkin's speech today he seemed to focus a lot on regulation and shutting down insolvent institutions quickly. Conincidence?
[Crucial to a country's successful resolution of a financial crisis is a commitment to necessary reforms and a refusal to go halfway. Allowing weak financial institutions or practices to continue may encourage excessive risk-taking because participants have little to lose. ecause the continued presence of excessive risk diminishes confidence in the future health of the financial system, insolvent financial institutions must be shut down. ]
I have Netbank account and now I'm kicking myself for my own laziness. In the last couple of months I saw their stock go down the toilet, but didn't switch to a different bank. Hopefully I'll get my couple grand back.
In the meantime I have to open new checking account. Can anyone recommend a reasonable bank that has a good chance of surviving the ordeal? (I live in San Diego)
well it looks like BSC was a rumor after all. what a bunch of schmucks. my new rule is: if Buffett is mentioned, then its a short squeeze. actually surprised it didn't drop more today but probably window dressing. can't wait til Monday.
why would u short SPY. if in fact there is a PPT, that is exactly the wrong place to be. if its b/c its an index, why not go after a mortgage etf like REM?
barley,
Thanks. I had not read it yet. It very well could also be that Mr. Mishkin was directing his comments towards England and Northern Rock's recent panic.
FFDIC, Yes possible. I thought that myself but the timing makes it suspicious, if you're a PPT believer.
idoc - I am short a lot of lenders already. I think Oct is going to be ugly across the board. I decided SPY would be another general bet on poor Q3 results and an overall sell-off on Wall St. BSC could pay off but I wouldn't rule out some foreign investors so keep that stop in case you're in the bathroom when the next rumor comes in. I got HOV when it went through $18 on the way down on the Buffet rumor. Sweet.
I don't think WAMU is going down the tubes yet.they have a lot of teaser rate option ARMS in their portfolio.enough that an auditor would be ordering triple martinis and giggling uncontrollably at lunch the first day...but they have mostly Alt-A which is slower to go sour than subprime.Any value would be in the branch network and servicing,they were VERY aggressive in qualifying people for their teaser rate loans.(Stated income,qualified for the tease rate,100% financing)
barely-great minds think alike. i too am short lenders, HB's, MCO, LBO's, BSC.
i think Oct will be great as well. DSL, FHN, BKUNA, FED all have been deteriorating rapidly after the headfake jump on the rate cut. i'm sure their earnings will hurt if IB's and Netbank are any indication. also shorted Barclays which i think is really interesting given the UK situation. i think they're further out on the edge than we are.
i think the rapid decline in the dollar and consequent rise in commodities is going to play a big role on volatility next month. Wall St has done its best to window dress to this pt.
Thanks for answering my question above. Here's another one.
What does this paragraph from the FDIC press release mean? It sounds as if uninsured money will be returned to those whose deposits exceeded the limits!
In addition to continued access to their insured deposits, depositors of NetBank with deposits in excess of the insurance limits will also receive an immediate payment of 50 percent of their uninsured balance from the FDIC as receiver.
When the FDIC takes over, how many employees do they usually keep on at the failed bank? The reason I ask is...1,200 employees would be a lot to lose in a small town. Especially, Alpharetta, the armpit of Georgia. Lots more foreclosures there, no?
Good catch. The FDIC often with the help of the primary regulator projects future recoveries and pays out on uninsured amounts an amount it believes it will recover thru various means of liquidation or litigation against the bank's D&Os, and other professional claims, i.e. attorneys, appraisers, defacto directors, accountants, etc. These lawsuits can take years to settle and hence a long wait for uninsured depositors in certain cases. If they are already getting 50% that is great for those who could have lost it all.
rich & Tanta-
In this case layoffs could be significant because NetBank was all backroom with no employees serving the public face-to-face as tellers, loan officers, etc. The buyer is a foreign owned bank with little loyalty to the local community which could hurt as well. There are many factors that creates more or less layoffs which are unknown to us. I would read the local Atlanta (ajc-com) newspaper if you want to track it closely going forward.
the fdic/ots no longer could keep up the charade. netbank has been insolvent for some period and they were praying for everbank to be foolish enough to purchase the POS. seems like they could have let it go sooner as the streak of no failures was broken earlier this year with the failure in PA.
the transaction is interesting as ING only took the insured deposits for a 1% premium and no assets. unusual for the fdic to pay brokered deposits directly. the uninsured depositors will receive 50 cents on the dollar immediately and will be first in-line to receive any additional monies from the liquidation.
the structure of the transation indicates how bad things were at netbank.
look at the recent news at freemont with ford stepping aside even the fdic approved the takeover. that shop should be high on the fdic failure list but they will try everything to prop that one up to.
the other one to watch is coast in florida. again fdic did everything to prop it up even issuing a brokered waiver. have not checked lately to see if first bank out of missouri consumated the deal yet. they would be foolish to buy such a worthless franchises (high cost deposits and leased branches) with significant litigation risk. along with approving the merger, the primary regulator should slap a cease & desist order on first bank for plain stupidity.
someone mentioned about it being the largest failure ever in georgia. i wonder then how they classify the former national bank of georgia (former bert lance bank) that went out business due to its affiliation with bcci. it technically may not have been a failure but it was in serious distress.
this is just the initial wave of failures to come. wait until the banks can no longer show all of those home construction loans to pick-up truck builders as current.
Bankrate.com has a bank stablity rating system calles Safe & Sound.
I just looked up the two local state chartered banks in my area (north FL). Both have about 125MM in deposits. One has a CAEL rating of 1 and the other has a 2. Plus there are two regionals, both with $2BN in deposits and both ranked with a 2. First glance would suggest that the local banks are in decent shape.
I'd watch the stock and the PE ratio, when either gets too too low something must be fishy. After all investors have more at stake than depositors, and lots of them tend to know.
Then there is the site bankrate.com that rates the soundness of banks.
Bankrate.com has a bank stablity rating system calles Safe & Sound.
Nice! Thanks, Shiboke. I found a few other "bank ratings" sites but missed this one.
By Ben White in New York
Published: 28/9/2007 | Last Updated: 28/9/2007 23:15 London Time
ING Direct, a subsidiary of the Dutch financial group, is to take over the customers and insured deposits of NetBank, an online lender with $2.5bn (£1.2bn) in assets that was shut down on Friday by the US government following losses on subprime mortgages and other loans.
The closure marks the largest US bank failure since the end of the savings and loan crisis in the early 1990s.
It also underscores the ongoing impact of the US mortgage crisis, which has destabilised banks around the world, including Northern Rock in the UK.
ING said it would take on about $1.5bn in deposits insured by the Federal Deposit Insurance Corporation. It said it had paid about $15m to acquire the deposits. ING will also acquire $724m in assets from NetBank, which filed for bankruptcy protection....
Georgia was one of the headquarters for mortgage fraud in the U.S. If I were looking to move my money, I'd compare the states with the highest mortgage fraud rankings, with the banks in that state, spliced with how much mortage business the bank was doing as a percentage of overall business.
The penal rate of interest that the Bank of England is charging Northern Rock for emergency funding is likely to plunge the mortgage bank into losses this year, according to one of its leading shareholders.
RAB Capital, the hedge fund group that has built up a 6.6 per cent stake in Rock, has called for the Bank to change the way it responds to crises, warning that the current system gave Rock little hope of a viable future.
I would like to know if the 'uninsured' funds include any money market funds? I read the other day that savings accounts are FDIC insured but that money market are not? That seems to incredible to be true... What is the real story?
I toyed a little with the BankRate ratings page. IMB has the same 1-star rating as NetBank. I would not hesitate to pull every nickel out of the institution on Monday, if I had an account there.
I'm surprised that there haven't been more bank failures in Florida ... last year there was an institution (Coast Bank, I think) rumored to be goin' down due to bad construction loans. Anyone heard anything lately about "da Coast is toast?"
Notice that there is no "Safe and Sound" Bankrate rating for Countrywide Bank. Also notice the Countrywide banner ads on the Bankrate website. Coincidence?
Perhaps Netbank was somehow heavily leveraged to Los Angeles Port Cargo Traffic, lol.
Tastes just like a peach
Well, I guess the internet revolution is finally over. I wonder what my Cyberian Outpost stock will go for now...
Shutdown all the e-banks first in order to push the deposits to the B&M's as a back door bailout?
So does this mean that Netbank's mortgage lender (Market Street Mortgage) is shut down?
Ministry of Truth,
Fed funds always spikes on the last day of the quarter as banks close their books.
You can take off your hat, tinfoil.
Netbank's problem = RBMG. Period, amen.
Thanks Clyde, I normally expect the actual fed rate to be somewhat close to the target rate. That has not been the case for quite awhile now.
I don't think this is about e-banks as much as hot money deposits. I've been telling you about hot money.
There's a lot of seniors who spend almost full-time shopping around for the highest CDs in the nation, which are easy to find on the Net.
Highest rates and yields on bank certificates of deposit (CDs) updated daily by Money-Rates.com
The jockeying among banks to get on these lists is like the Kentucky Derby. Netbank has been like Seattle Slew. Of course, the Secretariat of them all is Corus, which also happens to be the king of condo lending. I still think you could make some quid shorting Corus.
My point is...hot money deposits are a bad business model. High-yield CDs are loss leaders. But when the seniors are as sharp as these old folks, the money just keeps moving and loss leaders turn into losses.
Now, Countrywide is in the Derby, too.
Feds unplug NetBank - The Atlanta Journal-Constitution
Metro Atlanta Business News | ajc.com
Rate Fink -
Not so much... until last mile throughput is increased, perhaps. The internet is a utility and there are often problems with utility companies from time to time. Not a big deal...
Riddle me this:
Isn't it odd that people are even asking Greenspan the odds of going into a recession?
Why is recession even in the conversation?
It would be like going into the doctor's office for a routine check up and having him say "well, there is a good chance you don't have the Ebola Virus."
In a vacuum you'd be like..."What! who said anything abou Ebola! What's going on Doc! Am I going to die!"
Panic would set in even at the mention of it, unless........
unless you'd been showing symptoms, there was news it was going around in some animals, and you're friends have been encouraging you to "go get yourself checked out" because you've looked a little peakish lately.
THEN news that you probably didn't have it based at least on some preliminary testing would be greated with euphoric relief.
Any economic optimism seems to be comming from those who swear that it's not Ebola, probably just a head cold, you'll be fine.
I bought some 3 and 6 month CDs through Schwab a few weeks ago. The phone rep actually got a little ticked at me for passing on higher yielding CDs from Countrywide and Indymac. I got the feeling this had happened to him before and he was getting tired of it. Maybe he was supposed to push the stuff.
ooops, forgot to throw something in about Netbank to keep it on topic.
But these things don't happen (bank failures) when things are hunkydory.
From Ray's link this bank failure is described as the largest in Georgia's history, but beside the text is a short list of other bank failures that were less. Way less in fact. So much less in fact that it draws my attention to mull over $25M losses in assets compared to $2.5B losses. I know that there has been some dollar depreciation but this 2 orders of magnitude, no?
Somehow "the biggest" doesn't do it justice...
The Schwab guy could tell right away you are a hot money person.
You have to try harder to act stupid.
EverBank | Press Release
EverBank nearly acquired NetBank, but terminated the deal last week.
I was trying to gauge the size of this - as stated in an earlier post, the previous bank closure in Feb 2007 was of Metropolitan Savings Bank with a deposit base of $15M ( that's Million not Billion).
NetBank had a deposit base of $2.3 Billion which is a lot bigger than Metropolitan but quite a bit smaller than Northern Rock in the UK that had a deposit base of $50billion per the FT.
-K
NetBank had a deposit base of $2.3 Billion which is a lot bigger than Metropolitan but quite a bit smaller than Northern Rock in the UK that had a deposit base of $50billion per the FT.
Ya and not pictures of depositors in a bank run either - bummer. Well not unless folks send in webcam photos of themselves at their keyboards trying to 'demand' their money.
Netbank's problem = RBMG. Period, amen.
Yeah, and what have you got against the Really Bogus Mortgage Guys?
All I'm sayin' is lesson learned to those who want acquire their way into the mortgage banking arena...
buyer beware...
Didn't RBMG also own Mertitage? I seem to recall they were one of the first to go up on the 'implodometer'.
Went to the Chase local branch this morning to open a new checking account with them. They asked usual questions like who do you presently bank with, etc.
Me: WAMU.
Clerk: Do you know that they are going under? There is a rumor circulating that we may probably buy them...
Did anybody hear anything?
Time to start Regional Bank Implode-o
ING Direct, an online banking arm of Dutch banking group ING Groep, (ING.AS: Quote, Profile, Research) (ING.N: Quote, Profile, Research) said it plans to acquire $1.4 billion in deposits and 104,000 customers from failed Internet bank NetBank Inc for $14 million.
ING Bank to acquire NetBank deposits
| Reuters
EverBank Financial Corp, a privately-held bank, on Friday said it acquired about $700 million in mortgage assets of NetBank Inc (NTBK.PK: Quote, Profile, Research), a failed Internet bank shut down by U.S. thrift regulators.
EverBank acquires $700 mln of NetBank's assets
| Reuters
Biggest Us bank failure since 1992, Crossland Savings (Brooklyn). Wiped out by bad real estate loans.
Netbank will be the first of many and not the biggest.
"You have to try harder to act stupid."
Rich-
Although the chances of the US hyperinflating in the next six months is very, very remote it can happen. The CPI went up 27-fold in the Weimar Republic within a six month period and the precursor to those unfortunate circumstances were bank runs. Could that happen now? I am sure that it is possible. I am almost positive the vast majority of people living in the Weimar Republic thought it was impossible just like you. If BofA, CFC and another major foreign bank were to BK all within a one month period, I am sure many people would start trading in their fiat for assets. As for FDIC, who knows how they would be able to respond and in what time-frame. Many people such as yourself think that there is absolutely no chance of hyperinflation or a currency collapse happening and that is simply ignorant. But what is even more ignorant is to condescendingly criticize one that holds the belief that it can actually occur, however remote the possibililty is.
At this stage in the game, anything can happen.
MarketWatch
"NetBank had about $109 million in 1,500 deposit accounts that exceeded the federal deposit insurance limit of $100,000. Those customers will become creditors of NetBank's receivership, the FDIC said."
Online bank NetBank closed by U.S. regulators - MarketWatch
The OTS actually shut the lights out on Netbank:
NetBank sustained significant losses in 2006 primarily due to early payment defaults on loans sold, weak underwriting, poor documentation, a lack of proper controls, and failed business strategies. As a result, the OTS executed a formal enforcement action with NetBank in 2006 directing the institution to correct its operating deficiencies and enhance its capital position. While the institution continued to operate in excess of minimum capital standards, the actions taken to address these problems were unsuccessful and it became clear that high operating expenses combined with continuing losses were jeopardizing the institutions viability.
In response, NetBanks board of directors undertook efforts to complete a private sale of the institution. These efforts were unsuccessful and the institution had no remaining prospects for raising capital and achieving profitability. Accordingly, the OTS exercised its authority under the Home Owners Loan Act to appoint the FDIC as receiver of the institution.
OTS Appoints FDIC Receiver of NetBank
actually it was Meritor out of Philly in 1992. Not Crossland.
Funny how this released at 3 pm on a Friday.
Did the FDIC wait until after the market closed today, and just before the weekend, to minimize reaction to the news?
PPT is everywhere now.
I took a decent position yesterday in SPY puts. Oct should be a lot of fun as volatility kicks up and price discovery in equities really kicks into gear. August was a warm up act. Waiting for the fat lady to sing...
How much of the FDIC's ($50B I think I read) pool of money will be eaten away to pay off the insured deposits of NetBank?
Is it in the millions, since NetBank has some assets that can be used? Or is it over a billion? Do we know?
An excerpt from FDIC's press release:
"NetBank also had approximately $744 million in brokered deposits that are not part of today's transaction. The FDIC will pay the brokers directly for the amount of their insured funds."
I have/had a Netbank account. This will be fun. Only a few $1,000 in it but still.
barley -
Historically, FDIC always takes control on either a Thursday or Friday so that its employees have an entire weekend to balance the books and hopefully prepare to reopen Monday - or if Monday is a holiday which sometimes happens - then opening is Tuesday. This is nothing new in the way FDIC has operated for the past two decades.
ShortCourage,
FDIC's press release:
"The FDIC estimates the cost of this transaction to its Deposit Insurance Fund to be approximately $110 million."
overnight rate seems to be in fire any news on that ?
FFDIC, Thanks. You are quite an asset on this site. I think CR should consider making you a formal contributor.
With the decreased regulation and the general look-the-other-way attitude of AG and the current administration, we should expect MANY more of these. Like the wild west of banking.
barley,
Thanks & watch out after the elections.
Heh, netbank.com currently says:
The NetBank web site will be closed from 3:00 pm to 8:00 pm EST, on September 28th and will reopen in a read only mode. Normal online services will be restored in the early evening Sunday, September 30th.
You just know that somewhere on the planet is a room full of IT guys trying to make the web site "read only" (I'd be surprised if that was a design consideration when it was built) while taking frequent breaks to browse dice and monster...
Anyone know how to tell how healthy a bank is?
In Mishkin's speech today he seemed to focus a lot on regulation and shutting down insolvent institutions quickly. Conincidence?
[Crucial to a country's successful resolution of a financial crisis is a commitment to necessary reforms and a refusal to go halfway. Allowing weak financial institutions or practices to continue may encourage excessive risk-taking because participants have little to lose. ecause the continued presence of excessive risk diminishes confidence in the future health of the financial system, insolvent financial institutions must be shut down. ]
FRB: Speech--Mishkin, Systemic Risk and the International Lender of Last Resort --September 28, 2007
i didnt read any comments
HOLY SHIT
i've banked with them for 6 years at least
my checking account is there!
ruh roh
I have Netbank account and now I'm kicking myself for my own laziness. In the last couple of months I saw their stock go down the toilet, but didn't switch to a different bank. Hopefully I'll get my couple grand back.
In the meantime I have to open new checking account. Can anyone recommend a reasonable bank that has a good chance of surviving the ordeal? (I live in San Diego)
barely,
well it looks like BSC was a rumor after all. what a bunch of schmucks. my new rule is: if Buffett is mentioned, then its a short squeeze. actually surprised it didn't drop more today but probably window dressing. can't wait til Monday.
why would u short SPY. if in fact there is a PPT, that is exactly the wrong place to be. if its b/c its an index, why not go after a mortgage etf like REM?
banco rosarito
This doesn't change my view one IOTA.
Banks get knocked off all the time. Thats why we have the FDIC. What the big deal?
barley,
Thanks. I had not read it yet. It very well could also be that Mr. Mishkin was directing his comments towards England and Northern Rock's recent panic.
FFDIC, Yes possible. I thought that myself but the timing makes it suspicious, if you're a PPT believer.
idoc - I am short a lot of lenders already. I think Oct is going to be ugly across the board. I decided SPY would be another general bet on poor Q3 results and an overall sell-off on Wall St. BSC could pay off but I wouldn't rule out some foreign investors so keep that stop in case you're in the bathroom when the next rumor comes in. I got HOV when it went through $18 on the way down on the Buffet rumor. Sweet.
Great River Bank & Trust
Davenport, Iowa is troubled...Fed halted dividends
http://www.federalreserve.gov/newsevents/press/enforcement/enf20070926a1.pdf
I don't think WAMU is going down the tubes yet.they have a lot of teaser rate option ARMS in their portfolio.enough that an auditor would be ordering triple martinis and giggling uncontrollably at lunch the first day...but they have mostly Alt-A which is slower to go sour than subprime.Any value would be in the branch network and servicing,they were VERY aggressive in qualifying people for their teaser rate loans.(Stated income,qualified for the tease rate,100% financing)
barely-great minds think alike. i too am short lenders, HB's, MCO, LBO's, BSC.
i think Oct will be great as well. DSL, FHN, BKUNA, FED all have been deteriorating rapidly after the headfake jump on the rate cut. i'm sure their earnings will hurt if IB's and Netbank are any indication. also shorted Barclays which i think is really interesting given the UK situation. i think they're further out on the edge than we are.
i think the rapid decline in the dollar and consequent rise in commodities is going to play a big role on volatility next month. Wall St has done its best to window dress to this pt.
FFDIC,
Thanks for answering my question above. Here's another one.
What does this paragraph from the FDIC press release mean? It sounds as if uninsured money will be returned to those whose deposits exceeded the limits!
In addition to continued access to their insured deposits, depositors of NetBank with deposits in excess of the insurance limits will also receive an immediate payment of 50 percent of their uninsured balance from the FDIC as receiver.
gng,
Bankrate.com has a bank stablity rating system calles Safe & Sound.
Bankrate.com Safe & Sound (tm): Bankrate free rating system for banks, thrifts, credit unions
You can also find thestreet.com's bank stability ratings in book format at a good library reference section (used to be Weiss Ratings).
Good luck,
shiboke
Tanta,
When the FDIC takes over, how many employees do they usually keep on at the failed bank? The reason I ask is...1,200 employees would be a lot to lose in a small town. Especially, Alpharetta, the armpit of Georgia. Lots more foreclosures there, no?
ShortCourage,
Good catch. The FDIC often with the help of the primary regulator projects future recoveries and pays out on uninsured amounts an amount it believes it will recover thru various means of liquidation or litigation against the bank's D&Os, and other professional claims, i.e. attorneys, appraisers, defacto directors, accountants, etc. These lawsuits can take years to settle and hence a long wait for uninsured depositors in certain cases. If they are already getting 50% that is great for those who could have lost it all.
Did NetBank actually have a lobby and a teller line ?
Or was it a 100% ephemeral bank ?
rich & Tanta-
In this case layoffs could be significant because NetBank was all backroom with no employees serving the public face-to-face as tellers, loan officers, etc. The buyer is a foreign owned bank with little loyalty to the local community which could hurt as well. There are many factors that creates more or less layoffs which are unknown to us. I would read the local Atlanta (ajc-com) newspaper if you want to track it closely going forward.
the fdic/ots no longer could keep up the charade. netbank has been insolvent for some period and they were praying for everbank to be foolish enough to purchase the POS. seems like they could have let it go sooner as the streak of no failures was broken earlier this year with the failure in PA.
the transaction is interesting as ING only took the insured deposits for a 1% premium and no assets. unusual for the fdic to pay brokered deposits directly. the uninsured depositors will receive 50 cents on the dollar immediately and will be first in-line to receive any additional monies from the liquidation.
the structure of the transation indicates how bad things were at netbank.
look at the recent news at freemont with ford stepping aside even the fdic approved the takeover. that shop should be high on the fdic failure list but they will try everything to prop that one up to.
the other one to watch is coast in florida. again fdic did everything to prop it up even issuing a brokered waiver. have not checked lately to see if first bank out of missouri consumated the deal yet. they would be foolish to buy such a worthless franchises (high cost deposits and leased branches) with significant litigation risk. along with approving the merger, the primary regulator should slap a cease & desist order on first bank for plain stupidity.
someone mentioned about it being the largest failure ever in georgia. i wonder then how they classify the former national bank of georgia (former bert lance bank) that went out business due to its affiliation with bcci. it technically may not have been a failure but it was in serious distress.
this is just the initial wave of failures to come. wait until the banks can no longer show all of those home construction loans to pick-up truck builders as current.
Alex,
Farmers and Merchant's Bank of Longbeach has branches in San Diego.
Northern Trust also has Branches in San Diego.
No CDO's on any of their balance sheets. My money is at Farmers.
Bankrate.com has a bank stablity rating system calles Safe & Sound.
I just looked up the two local state chartered banks in my area (north FL). Both have about 125MM in deposits. One has a CAEL rating of 1 and the other has a 2. Plus there are two regionals, both with $2BN in deposits and both ranked with a 2. First glance would suggest that the local banks are in decent shape.
Other banks to get your money out of:
CNB
RF,AF,EWBC,STSA,NARA,OZRK,CORS,BKUNA,
NYB,FHN,CFC(HA,HA),VCBI,PVTB, PBCT,UCBI,BBT,cobz,dsl,fed,FTBK,MI,
MTB,PBCT,WTNY
This is only a short list.(pun intended)
"Especially, Alpharetta, the armpit of Georgia."
LOL. Alpharetta is one of the nicest places in the whole state. At least for now.
Ottwan: are Chase clerks supposed to be spreading rumors about other banks? I think that is Not NICe.
"Anyone know how to tell how healthy a bank is?"
I'd watch the stock and the PE ratio, when either gets too too low something must be fishy. After all investors have more at stake than depositors, and lots of them tend to know.
Then there is the site bankrate.com that rates the soundness of banks.
Alex: well isn't there a Wells Fargo in S. Diego or a Chase? Not likely to fail, IMO.
Bankrate.com has a bank stablity rating system calles Safe & Sound.
Nice! Thanks, Shiboke. I found a few other "bank ratings" sites but missed this one.
The page cannot be found
NG Direct steps in as US bank collapses
By Ben White in New York
Published: 28/9/2007 | Last Updated: 28/9/2007 23:15 London Time
ING Direct, a subsidiary of the Dutch financial group, is to take over the customers and insured deposits of NetBank, an online lender with $2.5bn (£1.2bn) in assets that was shut down on Friday by the US government following losses on subprime mortgages and other loans.
The closure marks the largest US bank failure since the end of the savings and loan crisis in the early 1990s.
It also underscores the ongoing impact of the US mortgage crisis, which has destabilised banks around the world, including Northern Rock in the UK.
ING said it would take on about $1.5bn in deposits insured by the Federal Deposit Insurance Corporation. It said it had paid about $15m to acquire the deposits. ING will also acquire $724m in assets from NetBank, which filed for bankruptcy protection....
Georgia was one of the headquarters for mortgage fraud in the U.S. If I were looking to move my money, I'd compare the states with the highest mortgage fraud rankings, with the banks in that state, spliced with how much mortage business the bank was doing as a percentage of overall business.
Hedge Fund cries "uncle" over Northern Rock "punishment"
Penalty charge by Bank 'will plunge Northern Rock into loss' -
Business News, Business - The Independent
The penal rate of interest that the Bank of England is charging Northern Rock for emergency funding is likely to plunge the mortgage bank into losses this year, according to one of its leading shareholders.
RAB Capital, the hedge fund group that has built up a 6.6 per cent stake in Rock, has called for the Bank to change the way it responds to crises, warning that the current system gave Rock little hope of a viable future.
I feel like some crocodile tears welling up...
I would like to know if the 'uninsured' funds include any money market funds? I read the other day that savings accounts are FDIC insured but that money market are not? That seems to incredible to be true... What is the real story?
doogie:
If the money market account is in an FDIC insured bank, then the money is insured (up to a combined $100K in the bank).
You may be thinking of money-market mutual funds, which are NOT insured by the FDIC.
"Bankrate.com has a bank stablity rating system calles Safe & Sound.
Good luck,
shiboke"
Thank you, ... very much.
You're a real daisy.
What happens to safe deposit boxes when my local WaMu branch goes under?
I toyed a little with the BankRate ratings page. IMB has the same 1-star rating as NetBank. I would not hesitate to pull every nickel out of the institution on Monday, if I had an account there.
I'm surprised that there haven't been more bank failures in Florida ... last year there was an institution (Coast Bank, I think) rumored to be goin' down due to bad construction loans. Anyone heard anything lately about "da Coast is toast?"
Notice that there is no "Safe and Sound" Bankrate rating for Countrywide Bank. Also notice the Countrywide banner ads on the Bankrate website. Coincidence?
Coast was bought by Fifth Third? I think I read that somewhere
I have read that HSBC is a very solid bank. Any comments?