Say Bye Bye

[Porsche-O-Phile]

I don't find it "narcissistic" in any way for a person to do whatever they damn well please with their own money. Hell, they can light it on fire or wrap weed in it and toke it for all I care. It's theirs. Banks have absolutely NO right or entitlement to it. If they want it so badly so they can go make more $$$ for themselves and their investors off of it, then make the incentives better for people to shop at their bank. Pretty simple to me.

But there will always be some people who opt to do the stupid/foolish things like burying it or whatever too. Maybe it doesn't help the rich bankers get richer, but it's also their right - and that ultimately trumps any "father knows best" position from a bank or financial institution or government.

[daepp]

Sounds very 60's ish - if it feels good, do it. Don't bother worrying about anyone else - just do what you feel.

Is there any concept of a social contract left in America? Looking out for one another?

Obviously if a person needs the money they should make a withdrawal. What we began talking about were the fools who are afraid of losing their INSURED deposits.

[daepp]

Sounds very 60's ish - if it feels good, do it. Don't bother worrying about anyone else - just do what you feel.

Is there any concept of a social contract left in America? Looking out for one another?

Obviously if a person needs the money they should make a withdrawal. What we began talking about were the fools who are afraid of losing their INSURED deposits.

[turbo6bar]

Haha, leaving money in the bank is part of the social contract in America. Haha. The stupid morons at the banks shouldn't have leveraged those dollars into crap loans and speculative investment. What of their 'social contract' with hard-working Americans, huh? If anything, the FDIC has created a moral hazard for bankers and their clients. Piss away the dollars on anything that floats, because Mama Bear has us covered.

[turbo6bar]

Hey, Island, analyst at Lehman says WM primed for losses up to $26Billion. That's roughly 8 times current market capitalization, and nearly 50% of WM market cap before these 'scare' tactics hit the economy.

I suppose you could argue WM is a responsible lender, but I'd say they simply got caught wearing no swimming trunks while the tide receded. Truth is probably in between.

[The Gaijin]

Put the old guys back in charge!

[Porsche-O-Phile]

If my bank had made a bunch of *****ty gambles on the recent housing idiocy, I'd pull every last dime of my money out of there too.

I'd go find one that didn't.

FWIW, I have accounts with two lending institutions right now. Both are credit unions and neither got involved with this subprime mess. They originate mortgages (although not many) and are strictly "buy and hold paper" places. I've checked.

[daepp]

The point is well taken that many banks have made bad decisions. But Indymac was taken over because it could not meet the withdrawal demand set off by Schumer. While they had a huge Alt-A portfolio, they were not even on the FDIC's watch list of 90 troubled banks.

But the larger point is that customers should leave their insured deposits be unless they need them. Do you think it's any wonder that Roosevelt coined the term "We have nothing to fear but fear itself" during the last major run on the banks.

And yes - we have a social contract with one another to do the right thing - which right now includes trying to minimize irrational behavior due to panicked depositors.

OTOH, I would not have uninsured deposts (i.e greater than $100K) at any marginal institution.

[Porsche-O-Phile]

It sounds an awful lot like you're leaning towards saying "unless someone gives banks/investors their money, it's 'socially irresponsible'".

If this is the implication, I disagree with that.

However the rest of your point I agree with. I heard on the radio a little while ago that there's a line out the door and around the block at IndyMac's headquarters in Pasadena, most people are opting to yank their funds out of the bank even after being told by federal regulators that they are insured and their money is safe. There are a couple of things that might be read into this:

1. People don't trust what they're being told by the FDIC (this is stupid/irrational)
2. People are "punishing" the bank for being so cavalier/reckless with their money in the first place (this is somewhat warranted or justified).

While it's easy to conveniently lump all the blame on "irrational" people pulling their money out of a bank, perhaps if the bank hadn't made themselves vulnerable to such distrust by being so cavalier in the first place, they wouldn't be dealing with the consequences today, no?

I'm not defending the people who ARE being foolish about this, but if I had money in IndyMac, I'd probably be pulling it out today too, just because they've betrayed my trust by being so reckless. . . Not necessarily because I don't believe in the federal guarantees behind my account (at least not this time. . . ).

There is no "social obligation" on the part of people to hand their money over to a bank or anyone else however. If they want to be stupid with it and hide it in their mattress or whatever, such is their prerogative. Foolish, yes. But maybe if the banks were more trustworthy and/or willing to pay more % return for it, maybe some of those people would be inclined to give their business to the bank.

In general, I think a lot of people are just sick and tired of being told half-truths by their banks, getting tossed a few measly % points their way like so many crumbs from the master's table while the banks make humongous returns elsewhere with THEIR money, and then get added insult to injury added by getting slapped with fees for everything under the sun on top of it. So is there some resentment out there? Probably. I think a lot of the problems IndyMac is having right now (not all, but a lot) are somehow attributable to their OWN past sins.

[island911]

Originally Posted by turbo6bar

Hey, Island, analyst at Lehman says WM primed for losses up to $26Billion. That's roughly 8 times current market capitalization, and nearly 50% of WM market cap before these 'scare' tactics hit the economy.

I suppose you could argue WM is a responsible lender, but I'd say they simply got caught wearing no swimming trunks while the tide receded. Truth is probably in between.

Thanks. FWIW Bloomberg had this to say:

WAMU -after dropping the most since its initial public offering in 1983, said it is ``well capitalized'' with more than $40 billion in liquidity and $150 billion in retail deposits.

The company's tangible equity to tangible assets ratio is 7.8 percent as of June 30, Seattle-based Washington Mutual said in a Business Wire statement after the close of regular trading. Details will be provided on its July 22 earnings call, the company said.

full read:http://www.bloomberg.com/apps/news?pid=20601087&sid=aSx0z01vzYQY&refer=worldwide

All I can argue is that WM WAS a responsible lender. Randy P. pointed out the more recent irresponsible components.

Now I'm just interested in their chances of surviving.

[red-beard]

Originally Posted by Jim Bremner

so, is it time to take the 40% hit on pulling out of the 401(K) ?


is it time to pull out of the stock market?

And who will be hurt by a tanking stock market the most? That group of people who are starting to retire over the next 20 years.

[pwd72s]

Originally Posted by red-beard

And who will be hurt by a tanking stock market the most? That group of people who are starting to retire over the next 20 years.

The market does what it does. Thus the reason why one should reduce his percentages of equities and increase his (hopefully fed guaranteed) bonds as he ages.

Don't get caught with your pants down.

[pwd72s]

Originally Posted by BLEW911

Two questions for the "experts"............ Am I in danger banking at Wa Mu? & Are there any healthy banks out there??

Don

If you have less than 100K depositedt there? Worry not.You will, at the Fed's leisure, get your money back.


Yes, there are healthy banks out there.

[red-beard]

Yes, but how many boomers were smart enough to do this?

[pwd72s]

Originally Posted by red-beard

Yes, but how many boomers were smart enough to do this?

Well...I was born in late '43. Cindy was born in mid '47. I only hope we were smart enough.

[daepp]

Originally Posted by pwd72s

Worry not.You will, at the Fed's leisure, get your money back.

My experience has been that they are ready with a check for your insured deposit (if you want it) the Monday morning following a Friday afternoon takeover. In other case, they simply sell your deposits to another bank, making for a seamless and largely uneventful transaction. You then have the option of maintaining your relationship with the new bank or not.

[trap]

Originally Posted by daepp

The point is well taken that many banks have made bad decisions. But Indymac was taken over because it could not meet the withdrawal demand set off by Schumer. While they had a huge Alt-A portfolio, they were not even on the FDIC's watch list of 90 troubled banks.

Not according to Bernanke...

"Its failure ... was inevitable," Bernanke said, because the bank was weighted down by low-quality mortgages."

[the]

Originally Posted by daepp

My experience has been that they are ready with a check for your insured deposit (if you want it) the Monday morning following a Friday afternoon takeover. In other case, they simply sell your deposits to another bank, making for a seamless and largely uneventful transaction. You then have the option of maintaining your relationship with the new bank or not.

Yep, the FDIC does not mess around. You walk out of the bank with your check the same day you go in.

[daepp]

Originally Posted by trap

Not according to Bernanke...

"Its failure ... was inevitable," Bernanke said, because the bank was weighted down by low-quality mortgages."

Maybe yes, maybe no - hard to say for sure, and Bernake has hardly been accurate in his predictions.

But I can say for sure that Indymac was closed due to a run on the bank by depositors.

[turbo6bar]

Dredging this one up after a recent newspaper article.

Originally Posted by island911

tabs, why do you think WAMU is in that much trouble? --From my experience they have been one of the more responsible lenders.

Seattle Times: "Reckless strategies doomed WaMu"

"The big saying was 'A skinny file is a good file,' " said Nancy Erken, a WaMu loan consultant in Seattle. She recalled helping credit-challenged borrowers collect canceled checks, explanatory letters and other documentation that they could afford their loans.

"I'd take the files over to the processing center in Bellevue and they'd tell me 'Nancy, why do you have all this stuff in here? We're just going to take this stuff and throw it out,' " she said.

If you need any more evidence that WAMU was rotten, read the linked Seattle Times article. If you need any more evidence of the dangers still lurking in the financial system, consider that most/all of the big banks and Wall St were engaged in this supersized game of 'risk' aversion. When I say banks were averting risk, I really mean banks are ignoring risk.