Which banks are in the most trouble now?
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Plenty are in trouble, but these five stand out
After Friday afternoon's news that IndyMac Bancorp was being taken over by the government and then reopened yesterday under the new name IndyMac Federal Bank, the worry on Wall Street and Main Street has grown substantially. Consumers from around the country are now wondering if their money is safe and if their bank could be the next to go.
There is no denying that there are a huge number of banks in deep trouble at this point. The bigger question though is this, do these banks have enough capital to get through this mess? For many the answer is yes, for others the answer could well be no. The FDIC has released a list of 90 troubled banks, but it is keeping it a secret from the general public. As of now, we are left to wonder which banks may the next to go. Let's look at a list of five banks that could be fighting for their life now, or in the near future.
- Corus Bankshares- Bad loans here are the story as they are at many of the other troubled banks. The company's asset levels have many worrying about its ability to go on. Insiders did buy more stock in late May, so apparently they think they can stay afloat.
- Downey Financial- Reports are that Downey's non-performing assets are surging by the month. In theory the company appears to have less to fall back on than IndyMac did, and we know how that turned out. Downey is another California bank, where the housing market has been hit very hard.
- BankUnited- It seems as if the market believes the writing is on the wall for BankUnited. The stock is now trading under 50 cents a share. BankUnited is in another area very hard hit by the mortgage crisis, south Florida.
- Washington Mutual- WaMu is far bigger than the previous three on the list, but as this crisis gets worse and worse one wonders if it would be immune. The company has said that its capital position is strong, but we've heard that before from other banks near failure. Expect huge write downs going forward and maybe worse.
- National City- Ohio's largest bank has made big bets in the mortgage markets, and they aren't paying off. They do have a lot more capital than many banks of their size, so they just might make it. It seems the market doesn't believe recent comments that the bank has a solid position though, as the stock has plunged to a 24 year low.
What about the bigger banks? What about Wachovia, Bank of America, Wells Fargo, and other major banks in the United States. It is very unlikely that any of them are in any real substantial trouble of going under, but more large writedowns are a real possibility.
Who could be next is anyone's guess, but these five are certainly in some deep trouble. Make sure you don't have any accounts with uninsured funds (over $100,000 in the same account) to protect yourself against a bank failure. Just as the banks always need to be ready for the worst, so do you!
Previous articles that may interest you:
IndyMac Bancorp nearly out of capital, who's next?
The top five reasons to stay in the stock market
What happened to the one time write off for the credit crisis?
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Comments
The people who have over $100,000 in their account will likely lose some. The FDIC only insures up to $100,000. In most cases it is said that amounts over $100,000, the owner generally receives about 75% of their money back eventually. Still not a good situation to be in!
Oh, just because they opened doesn't mean everyone keeps all their money. I guess that makes sense. I was just curious if the gov was able to reopen without anyone losing yet.
I hope everyone doesn't starts to get too worried. A quick run to get your money can end up causing everyone to lose. It seems that maybe we should learn something from the past and realize that holding firm and realizing a small lose is much better than panicking and losing almost everything.
It is mighty hard to do what is right.
i heard this evening on the news there is a list of banks that are in default or something to that effect. anyway, the news lady said it was on the fdic web site. I found the failed web page but that is all. does anyone have a list of the banks or better yet the link to the list on the fdic web site. the news lady said it was 150 banks.
Thank you for naming names. I understand why the FDIC won't do it, I mean they don't want runs on these banks, but I work for one of these and I can tell you for sure it's been damn scary the last several days. Every day I debate whether to move my money to a stronger institution. I just don't know. Thanks for the hub. We'll see what happens, won't we?
paula,
I did a little research on the web as well as the fdic site and didn't find any list of banks that are in default. If anyone else has seen it, speak up!
pgrundy,
Yeah I also completely understand why the FDIC wouldn't release the names, that wouldn't be a good move at all. Yeah the longer we go into this crisis the more questions that are raised. Obviously only time will tell, but I suspect we'll look back and see that some banks failed that we never thought would. On the other hand I think we'll see some banks rebound much better than one could ever think they will. It won't be uniform that's for sure. Thanks for the comment!
I understand the reluctancy to name banks, however, what about the duty to the American citizen. I suppose there aren't any outside of the fed limit. I saw a clip on the crowd waiting at an indymac bank. anyway, this one man had 80,000 in one account. well when he finally got in the bank to get his money, none was there for him to withdraw. so he is what SOL until the feds decide to let him have any of his money. seems to me the feds locked down anything of significant value.
I think if we hear of one more bank going under and any stories, the other banks are in trouble of more withdrawals. I am banking with B of A and Chase. I hope things are stronger with these banks.Man! If National City gets hit, that will REALLY hurt us here in Ohio!!
Paula,
Everyone should be fine as long as they make sure all of their accounts are FDIC insured. If there is more than $100,000 in an account at one bank, then it becomes a problem and the funds are uninsured.
B of A and Chase will be fine, those two are huge banks and though they are suffering quite a bit, they will weather the storm!
A analyist said today on KQED to look at the stop prices of banks for find the troubled ones. I wonder how the investors and brokers get info. The report showed a long line of people waiting to withdraw money at an IndyMac. We need the Federal Gov't to stop spending our money on the occupation of Iraq and Afganistan and other failed "wars", like the war on drugs, and get a financial policy going quickly.
Good comment, it'll be interesting to see how economists will reflect on the government's actions regarding IndyMac and of course Fannie & Freedie in years to come.
Alot of people have commented incorrectly an bank issues on this site. FDIC insured accounts are PER ACCOUNT, not per person, so depending on the registration of the account or the product held, an individual has the possibility of having at least $800,000 insured by the FDIC. That being said, At an investment firm I used to work at, we used to say FDIC was the acronym "FOR DUMB INVESTING CUSTOMERS"! FDIC accounts almost never give returns much above inflation, and for every dollar in an FDIC account, only $0.01 is in a trust account. If all FDIC insured accounts went belly-up, it would take more than 85 years for everyone to get their PRINCIPLE money back. They would not pay interest! So 4 generations from now, the FDIC would pay of all their debts! At least the private insurance companies have $1.50 in a trust account to cover every $1 in an annuity!!!!
Mike,
I did quote it wrong in the comments section as far the bank vs account statement. In the actual post, it does specifically say "Make sure you don't have any accounts with uninsured funds (over $100,000 in the same account)" It certainly is by account.
With that said, I still think it is a wiser move not to open 8 accounts at the same bank, its better to branch out a little bit.
The point you make about it taking 85 years if that did happen is certainly a concern, but I don't think we are in any trouble of the current bank collapse causing anything to that degree. Thanks for comment.
Aaron
what about 401K's? where exactly does that money go? is it safe? my 401k goes up & down & Im wondering if when the time comes for me to cash out if I'll have anything left with all this stock market & banking drama continues!? any advice? words of wisdom? should i just cash my checks & put it all in a safety deposit box?
I read a few days ago that quite a few large retail banks were refusing to accept FDIC checks issued on IndyMac accounts and the few that were accepting them were putting holds on them of up to 21 days. I found that story at the NYT and it kind of disappeared, haven't seen any follow up on it. FDIC was said to be in the process of investigating this.
It did bring up a question several people have asked and one I don't really have an answer for: if large regional banks start to fail and there are a lot of these FDIC checks issued, can they compel other institutions to accept them? Will they? I've found that in assuring people about FDIC insurance, many refuse to assured because they have no confidence in the financial solvency of the US government.
Thanks for the heads up. I was telling a friend the other day that Wa Mu might be in trouble and she refused to believe it- but somewhere I did see a list of possible troubled banks and WaMu was on there.
Good Hub!
Health Conscious says:
16 months ago
Thank goodness the feds don't release that list. People get really stupid with that type information. :-)
There was one thing I have been wondering about the Indy deal, maybe you can tell me.
Has anyone lost anything being that they reopened?