Monday - More Bank Failures, EESA Still Not Done

[jyl]

Two more big bank failures, and some near-misses.

Wachovia's banking operations sold to Citigroup with FDIC support (strictly speaking not a "failure", but must feel like it to WB's shareholders, stock now $2).

Bradford & Bingley (large UK mortgage lender) shut down by govt.

Fortis (large Benelux bank and insurer) receives $17BN in govt rescue. Also rescued - Hypo Real Estate Holding AG (#2 German commercial RE lender) rescued by other German banks, Glitnir Bank (#3 Iceland bank) nationalized.

Fed and other central banks increasing liquidity support to banking sector. Citigroup ratings on negative watch. LIBOR/Treasury spread moves higher.

Meanwhile, Paulson plan (now called Emergency Economic Stabilization Act of 2008) still not voted on, unclear if gets passed this week.

[Drdogface]

I am a Wachovia share holder but it's a preferred stock. It's still trading but down to $1.50/share. What I wanna know is what will happen to it now? It pays a nice coupon (about 7%) based on the par of $25. If one of you more experienced money guys can chime in and tell me what happens in situations like this.... Thanks?

[jyl]

Don't know - you have to figure out if the preferred is now the obligation of C or remains w/ what is left of WB, then what you think about viability of the remaining WB.

[Drdogface]

Thanks for the reply John. That's what I was basically asking...is it the obligation of Citi. Guess that will be announced sometime? Not gonna sell or buy so just wait and see.

[jyl]

Whatever your preferred was worth, with this morning's House vote, it is now worth much less.

[Drdogface]

Everything seems to be tanking just now... ugh...