Is Wachovia the next bank to fail?Wachovia, after having bought Golden West in May 2007 became the largest holder of bad sub-prime mortgages. Yesterday, Friday, Sep. 26, 2008 the shares of Wachovia fell 27%. Wachovia is talking to at least 3 banks about being bought. One of those banks is Banco Santander, SA of Spain. |
The sixth-largest U.S. bank (by assets, natch,) Wachovia is sitting on a time bomb called Option ARMs, $122 billion of them to be exact accounting for perhaps 60% of all manifestations of this lousy idea. If its portfolio is anything like the overall pool analyzed by Fitch this month, perhaps half of such loans are expected to reset in the next two years. At that time, borrowers will be in for a rude shock, especially those who opted for a lower initial down payment. Overall, such resets will boost the average monthly payment by $1.053, or 63%, Fitch estimated.
How much do you think the bank will lose on such loans if that comes to pass. Because Wachovia is sticking to its forecast that it will lose 12% of the principal.
Quoting: Igor Greenwald, 1:07 PM ET on 9/26/08 in Smart Money Magazine
UPDATE: After Friday's closing bell, published reports said Wachovia Corp. was in early talks with Citigroup Inc., Banco Santander SA, Wells Fargo & Co. and a handful of other suitors for a buyout of the troubled bank.
Its going to fail for sure if people keep wondering if it will be the next one to fall. Speculation is what drove Lehman Bros into bankruptcy, Merrill Lynch to B of A, Morgan Stanley's stock down, Goldman Sachs stock down etc...
If the investors, head honchos etc... stopped wondering if its going to be the next one and actually did something to prevent it from being the next one, then Wachovia would be better off and wouldnt have to force itself to merge with somebody else. Besides, i've heard analysts say that Wachovia could probably survive on its own with out merging because its problems arent as bad as Washington Mutual's.
Possible. I don't think the govt is really in the mood to help out banks at the moment.
WAMU was in far better shape than Wachovia..and after seeing the suitors back off from wamu and see how cheaply and and easy it was for some of the assets were to obtain..I think the feds will step in by tues.
Why are you people going to keep allowing someone to smack you in the face just think for a second if all banks fail how would the government be able to pay back all that debt. I know the banks and government say that your money is FDIC up to 100,000 but just think if all the banks was to fail at once how would the government be able to pay everybody back what they have saved up in the bank. The Government is full of Shyt and you should not trust this LIE. DONT PUT THIS TYPE OF TRUST IN ANYONE if the government could afford to pay all of us off then why is the US in debt the way it is, Please have something stashed away ~GOD BLESS~
Yes, they just did this a.m.
