[Eli]

Forbes article

$this->bbcode_second_pass_quote('', 'S')ubprime loans - mortgages given to borrowers with poor credit history - and alt-A loans are rarely considered high quality. American Home Mortgage sold primarily alt-A loans - loans to customers who cannot provide income documentation like traditional, prime borrowers or that have minor credit problems.

Two companies, Countrywide Financial Corp. and IndyMac Bancorp Inc., are among the largest subprime and alt-A mortgage lenders in the nation, but should be safe because they own and operate regional banks on the west coast, KBW's George said.

Because both operate banks, they can tap deposits and bank funds if they face margin calls because of faltering loans, George said.

[Cloud9]

This is not 1929. The F.D.I.C. will protect most deposits.

[Eli]

Sure the Fed is going to protect you, after you fill out the forms and wait two years they will happily cut you a check. And if the Fed doesn't have the money on hand to pay they will happily print some up for you.

But per FDIC, they only cover up to 100K if you have more than that your SOL.

If you have over 100k in retirement with one of these banks how safe would you feel. These guys have massive toxic mortgage exposure, and when they can't cover they are going to start taking from their depositors, very reassuring.

[Cloud9]

Quite true. Most people do not have $100,000 on deposit.

[Eli]

Cloud I hear you but it does show how massive the problem is and how it is far from contained.

If I was a large depositor at this bank I would be moving my funds right now, and many people will. The idea that they are going to use current deposits to cover losses is going to spook people.

The Forbes article illustrates that this not a Subprime problem this is a serious Banking Crisis.

My moneys and my mortgage is with Bank of America, what is there exposure to this melt down?

[dukey]

$this->bbcode_second_pass_quote('', 'T')his is not 1929. The F.D.I.C. will protect most deposits.

[Tyler_JC]

$this->bbcode_second_pass_quote('dukey', '')$this->bbcode_second_pass_quote('', 'T')his is not 1929. The F.D.I.C. will protect most deposits.

[Daculling]

Have some cash on hand in case you need to get out of dodge... FDIC won't replace your money overnight. Forget that... go with the three G's.

[Pretorian]

$this->bbcode_second_pass_quote('Daculling', 'H')ave some cash on hand in case you need to get out of dodge... FDIC won't replace your money overnight. Forget that... go with the three G's.

[Kingcoal]

Precious metals anyone?

[azreal60]

$this->bbcode_second_pass_quote('', 'T')his is not 1929. The F.D.I.C. will protect most deposits

[Cloud9]

We have to remember that unemployment compensation, social security, and the F.DI.C are all programs that were spawned by the great depression. None of these institutions existed prior to 1929.

Will government programs banish the great depression to the dust bin of history never to reoccur? That question has yet to be answered. Nonetheless, these programs will slow the free fall into oblivion.

There were national banks in 1929, but most were locally owned and operated. Many became victims of a self fulfilling prophesy. Word spread that the bank was unsound. Depositors rushed in to withdraw their savings and the bank collapsed. If memory serves me, about 500 banks closed each month in 1930. Hysteria was killing the economic infrastructure of the country. The banking holiday and the F.D.I.C. were specifically designed to restore depositor’s faith in their local banks and quiet the national panic.

[Eli]

Cloud I get your point and the things you listed will be a hindrance as well as a help in the coming years.

We are already seeing a financial run on the hedge funds and there are plenty of Banks that have large exposure. What we are seeing is a financial collapse that is an order of magnitude more complex and worse than what happened in 1929. The previous crash was more about how the individual related to his bank. What we are seeing now is the break down in how smaller banking institutions relate to the larger banking institutions.

I read yesterday that history does not repeat itself, but does rhyme. That is what is happening now.


Back to your point, Social Security is already a mess and headed for insolvency, Medicaid the same, we are trillions of dollars in debt unlike we were back then. The government backed lending organizations already have major issues.

Looking to the Government for a bailout now is a lot like this. A friend has stiffed you and written you a bad check, you go to him and say hey you need to take care of this, your friend says sure here let me write you another check.

[Cloud9]

Eli, I agree there are dark days ahead. The brooding mood in the body politic is similar to the dark feelings in Europe just prior to WW I. Something is amiss. The herd senses it. What it is, and how it plays out is anybody’s guess.