Dozens of U.S. banks will fail by 2010: analyst

[RobertB]

Dozens of U.S. banks will fail by 2010: analyst

Jonathan Stempel, Reuters

Friday, February 01, 2008

NEW YORK (Reuters) - Dozens of U.S. banks will fail in the next two years as losses from soured loans mount and regulators crack down on lenders that take too much risk, especially in real estate and construction, an analyst said.

The surge would follow a placid 3-1/2 year period in which just four banks collapsed, all in the last year, RBC Capital Markets analyst Gerard Cassidy said in a Friday interview.

Between 50 and 150 U.S. banks -- as many as one in 57 -- could fail by early 2010, mostly those with no more than a couple of billion dollars of assets, Cassidy said. That rate of failure would be the highest in at least 15 years, or since the winding down of the savings-and-loan debacle.

http://www.forbes.com/reuters/feeds/reuters/2008/02/01/2008-02-01T202750Z_01_N01433678_RTRIDST_0_BANKS-FAILURES.html

[lyngraphics]

Time to find a hidey-hole!

Seriously, I have been thinking about buying a safe for some cash-on-hand.... even if only for a Natural disaster or something. (Our town is on the path out of Houston when Rita came and the largest evacuation of a major city- it was horrible)

[Nova]

I can't get the link to open.

I think the Fed is going to do everything possible to prevent bank failures. Mostly by loaning loads of cash to them thru TAF. And brokering deals where big banks buy up smaller failing banks. Does this mean big banks are safe or stable?-no, not in my opinion. They are hughly over extended thru derivatives. But as long as things keep chugging along without the general public panicing, then all this will go on behind the scenes.

[Nova]

Time to find a hidey-hole!

Seriously, I have been thinking about buying a safe for some cash-on-hand

In my opinion, cash isn't the thing to hold. All the FED actions have reduced the buying power of the dollar. I can't forsee this changing. You will have a better hedge by putting extra cash into a food stockpile. And you can always eat food.

[Brick]

I can't get the link to open.

I think the Fed is going to do everything possible to prevent bank failures. Mostly by loaning loads of cash to them thru TAF. And brokering deals where big banks buy up smaller failing banks. Does this mean big banks are safe or stable?-no, not in my opinion. They are hughly over extended thru derivatives. But as long as things keep chugging along without the general public panicing, then all this will go on behind the scenes.

Leme see if I got this right. Small unstable bank is bought up by bigger bank that is also having problems. Won't this just consolidate the problem and make it bigger? If a small bank is having problems and gets bought won't that be a drain on the bigger bank who has to shore it up?

[jds6958]

Leme see if I got this right. Small unstable bank is bought up by bigger bank that is also having problems. Won't this just consolidate the problem and make it bigger? If a small bank is having problems and gets bought won't that be a drain on the bigger bank who has to shore it up?

yes

[lyngraphics]

In my opinion, cash isn't the thing to hold. All the FED actions have reduced the buying power of the dollar. I can't forsee this changing. You will have a better hedge by putting extra cash into a food stockpile. And you can always eat food.

True- I always buy a bit extra when I go grocery shopping... also water. It has been ingrained into us being so close to the coast! I always research survivalist tips and such, also. I am praying that the Lord will take us away before I will need anything like that, but I also feel drawn to protect my family!

[Nova]

Leme see if I got this right. Small unstable bank is bought up by bigger bank that is also having problems. Won't this just consolidate the problem and make it bigger? If a small bank is having problems and gets bought won't that be a drain on the bigger bank who has to shore it up?

Yes, but the big banks are being propped up by loans from the FED thru TAF.

[HisAlways]

So.....what will happen to my mortgage, if the bank that has it goes out of business?

[Brick]

So.....what will happen to my mortgage, if the bank that has it goes out of business?

More than likely you'll have to pay the rescuing bank who'll buy it. I wish it were that easy to get a free house.