Comments on: Banks at Risk of Failure

By: Joe in Oly

Joe in Oly — Mon, 25 Aug 2008 22:41:30 +0000

One of our banks (my mortgagee) failed here in Olympia, WA during that time (1979-81). It was one of over 2,000 banks that failed in the US back then! I was a house appraiser at the time, so I was very familiar with what went wrong.
What we have going on now that is eerily similar is a housing bubble caused by lending to parties not qualified, then a bust caused by rising oil and a housing glut, higher foreclosures, and then double digit inflation. The latter caused many banks to try to stay afloat by investing in riskier and riskier schemes such as oil wildcatting; hence they went under.
NOTE: everyone who had FDIC insurance got their money back, BUT IT TOOK MANY YEARS to get it.
My advice…buy gold and silver (5% of your portfolio); buy solid company stocks (avoid all financials) that pay over 8% dividends (inflation will be up to 9-10% soon). Hold some cash and metals in a safe place (not a bank). Good Luck

By: CB

CB — Wed, 23 Jul 2008 15:18:57 +0000

I just had my first FDIC experience via the takeover of IndyMac Bank, as I bought a CD from them the day before they failed! From reading about the bank collapse, I learned that IndyMac wasn’t even on any of the risky-bank-radars that you mention above, which tells me that things can get bad really fast and not even have time to appear on such a list. Either that, or the radars are missing some very vital metrics that contribute to bank failures.

(You can read more about my IndyMac experience and what will happen to my money at http://gimmefivebucks.blogspot.....id-i.html)

By: mapgirl

mapgirl — Tue, 22 Jul 2008 13:08:39 +0000

Not to get too political here. Feel free to delete this comment if you want. I’m ok with that.

But why doesn’t anyone remember that McCain is one of the Keating Five? Everyone seems to remember the ’80’s S&L debacle, but forgets that he was found to exercise poor judgement just by dealing with Keating.

What’s a little sad about the list is that these are smaller regional banks. Creating a run on them will surely make them collapse completely.

By: nickel

nickel — Mon, 21 Jul 2008 22:36:36 +0000

I’d be curious to know where WaMu ranks, as well. They’re not in the top ten, but the rankings are only as fresh as the data. I’m not sure how frequently the FDIC releases this sort of info, but the rankings referenced in the article are based on data from March.

By: Eric

Eric — Mon, 21 Jul 2008 21:23:09 +0000

Yes, is Washington Mutual anywhere near the top?

By: cemccon

cemccon — Mon, 21 Jul 2008 16:57:22 +0000

What’s WAMUs ratio, I wonder?

By: Funny about Money

Funny about Money — Mon, 21 Jul 2008 16:29:41 +0000

Interesting!

Those of us who recall the S&L fiasco perk up our ears at this kind of information.

During the time of the S&L collapse, SDXB had just retired as the premier investigative reporter in the state. After he ended his journalistic career, he started raking in the bucks doing P.R. for the largest S&L in Arizona. Shortly thereafter the economy fell apart. He says — I don’t recall this but at the time was in my Sleeping Beauty phase — that every bank and S&L in the state either failed or was acquired, on the brink of ruin, by national financial institutions.

And come to think of it, not a single old-line name still graces any of the skyscrapers downtown. Or any other bank building.