Large U.S. bank collapse seen ahead

[Dover]

Source: Reuters

SINGAPORE (Reuters) - The worst of the global financial crisis is yet to come and a large U.S. bank will fail in the next few months as the world's biggest economy hits further troubles, former IMF chief economist Kenneth Rogoff said on Tuesday.

"The U.S. is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say 'the worst is to come'," he told a financial conference.

"We're not just going to see mid-sized banks go under in the next few months, we're going to see a whopper, we're going to see a big one, one of the big investment banks or big banks," said Rogoff, who is an economics professor at Harvard University and was the International Monetary Fund's chief economist from 2001 to 2004.

"We have to see more consolidation in the financial sector before this is over," he said, when asked for early signs of an end to the crisis....>





Read more: http://www.reuters.com/article/ousiv/idUSSP21695020080819

[Rosa Luxemburg]

1. I wonder which one?

looks like we'll have to hoard gold coins instead?

[Blackhatjack]

2. Let's see ... Wachovia? Bank of America? Lehman? Hmmm...

IF he is right you can bet there will be a huge run on a lot of banks with insufficient reserves.

This could get real ugly really quick.

("Now where is my shovel and where did I put that coffee can? .....")

[Wednesdays]

13. All of the above?

:shrug:

[lib2DaBone]

18. Wachovia

Bob Chapman of International Forecaster.com says it is Wachovia. He is usually very accurate.

[Ex Lurker]

22. I'm not convinced JP Morgan Chase is as strong as

the pundits claim it to be.

[NV Whino]

3. Toss a coin

If you still have one to toss, that is. It could be Citibank, Wells Fargo or B of A. Watchovia is certainly a possibility, but I don't consider it a BIG bank. All of the first three have been mentioned previously as "being over-extended." So I'm betting it's one of those.

[Coventina]

4. I know from family members that B of A has gotten VERY STINGY

lately with their HELOCs...

[Debau2005]

5. I have B of A accounts

I loathe them, and am about to transfer to another bank any way. Maybe now is a good time. Although all together I have less the $1000 in all the accounts. Maybe I should wait and see what they do....B of A is truly the lowest of all!

[jaysunb]

6. WaMu...

they've been on the edge for a while now. Glad my wife retired.

[Blackhatjack]

7. Here may be your answer.... Lehman LINK

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3444446

[cyberpj]

8. Lehman faces loss, $4 billion writeoff: report

Lehman faces loss, $4 billion writeoff: report
Tue Aug 19, 2008 8:03am EDT

- Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz) may post a third-quarter loss and suffer about $4 billion in write downs, according to an analyst at J.P. Morgan Securities, who also said a sale of the company's Neuberger Berman business was unlikely.

It will be another difficult quarter for Lehman, analyst Kenneth Worthington said.

Lehman continues to have significant exposure to mortgages and asset-backed securities, totaling $61 billion, he noted.

The analyst said the fourth-largest U.S. investment bank may suffer a $4 billion write down given a decline in residential and commercial mortgage-related indices. He also said Lehman may have already been selling assets especially in its commercial mortgage portfolio.


http://www.reuters.com/article/ousiv/idUSBNG25914520080819

[CountAllVotes]

11. Merrill Lynch is my guess

they've had two huge losses very recently. They are right up there with Lehman and WAMU.

:shrug: I wonder which bank is going to go belly up?

:dem:

[ret5hd]

9. Consolidation was the CAUSE of the problem...

I am not so sure that it will be the cure.

[frankieT]

10. huh ? Please give us some details of your opinion ? -nt-

[Dover]

12. Is Citigroup too big to fail?

I saved this paragraph from a financial blog this past March:

I don't think the Fed is trying to move the market any more. It's trying desperately to keep the lid on through the panic. The Times reported last week that the increase in TAF was to prevent the collapse of "a major bank." Not hard to guess which one. Early Friday, Schwab was offering Citigroup notes due April 09 at a price which would yield just under 9.9% to maturity (13 months away!). They apparently had no takers. By the end of the trading day they were offering the same security to yield 10.11%. There's massive doubt out there as to whether Citigroup will still be there in April 09 to pay off its notes. We have never had a bank the size of Citibank fail. Hell, until recently we never had a bank the size of Citibank. Such a bank failure would be game changing. One can interpret everything Bernanke's done simply as trying to prevent it. Apply Occam's razor.

-----

[happyslug]

14. My Guess is HSBC

HSBC handles a lot of Store Credit Cards and I seen ads recently where HSBC is offering 3.5 % interest on deposits. Indymac was offer just slightly higher interest jut before they failed, all to get more CASH into the bank hoping to fight off creditors and other outflows of Cash.

They web site;
http://www.us.hsbc.com/1/2/3/personal?home=personal

[atomic-fly]

15. crap

I recently opened an account there...then the rates plunged.

[foo_bar]

27. HSBC stands for (The) "Hongkong and Shanghai Banking Corporation Limited"

They'll be fine. "Big investment banks" could mean Lehman:

Tanona lowered his third-quarter earnings-per-share forecasts as follows: Citigroup, to nil from 17 cents; JPMorgan, to 40 cents from 64 cents; Lehman, to a loss of $2.75 from a profit of 68 cents; Merrill, to a loss of $4.75 from a loss of $4.40; and Morgan Stanley, to 85 cents from $1.10.

http://www.reuters.com/article/fundsFundsNews/idUSN1931951620080819 (today)

[mwooldri]

29. Not HSBC. Too international.

They have more business in Asia and are going like gangbusters to expand into China. Its UK business is bigger than its US business.

Mark.

[Dover]

16. Lots of guesses. Oh MY.........what if we're ALL right!

kidding..........I kid......:7

[Earth_First]

17. Fantastic! Where do I send my check? n/t

[Ilsa]

19. Jeebus. I was in lending when we had to worry more about foreign credit

going sour. Then several big banks in Texas started failing. Workout banks (FDIC supervised) were where the jobs were for about ten years.

[Sanctified]

20. What happens if it's a bank I owe money too?

Do I get out of owing the money or does it get handed over to another lender?

[Ex Lurker]

23. You'll owe somebody

the only thing that changes is the name on your loan coupon.

[OmahaBlueDog]

24. No, your loan is considered a "receivable"; they are sold or auctioned to the highest bidder

In some cases, all of the assets and liabilities of a weak bank are simply sold to a larger, stronger bank by the FDIC. The Mutual of Omaha purchase of two weaker banks that was arranged with the FDIC is a recent example.

[Sanctified]

25. Can I buy the loan back at the auctioned price? n/t

[Ex Lurker]

26. Short answer, no....

the assets are sold as a package deal.

[OmahaBlueDog]

28. As a practical matter, no

It could be theoretically possible, but generally loans are sold in bundles, called "portfolios." Generally, a portfolio would mix stronger and weaker loans to make the purchase palatable for the buyer.

Generally, the only way banks currently take less than a loan is worth is a "Short sale." You bought a house, say, with a mortgage for $400K. Prices fell, and your home has a market value of $325K. You might be able to go to the bank, and say "look, I have a buyer for my house, and I'll settle this loan with you for $325, otherwise, you'll end up foreclosing me, you'll get stuck with the house, and it may be years before you can get it off your books." (never do this without consulting an attorney and being fully aware of potential resulting credit issues).

[OmahaBlueDog]

21. No bank will fail, silly -- Ben Bernanke will bail them out

Because that's how free-market, laizze faire government works....banks get in trouble, Ben & Henry print more money, and then they loan it to the bank, or brokerage, or good friends of the Carlisle group at ridiculous interest.

Now if you're a homeowner, it's a whole different issue.

[onethatcares]

30. shock doctrine anyone?

guess we'll all be in debt to the mega bank that emerges after this. Our currency will be pegged to its' stock on some exchange or other and we'll get soup some days, nothing others.

After reading Naomi Kleins' book, I wouldn't trust anyone from the IMF or World Bank to tell me the sky is up.