Now The Banks???
14/07/08 22:18
Last Friday, July 11, 2008, the federal government shut down the IndyMac bank to prevent a complete collapse, as nervous depositors made a run and tried to withdraw their money. Word began to circulate that the bank was in trouble and stock plummeted as investors divested themselves of their holdings in the lender. IndyMac had large mortgage holdings, many which were unconventional and risky loans. Regulators called the event the second largest bank failure in US history. IndyMac stock had dropped to less than a $1, prompting depositors to try and retrieve their money. The FDIC reopened the bank today under their control and depositors who were unable to get to their money on Friday, lined up and stood for hours to withdraw funds from the wounded bank. The bailout is expected to cost the FDIC between $4-$8 billion. Read the story here.
Americans are beginning to lose faith in banking institutions after the IndyMac closure. Investors are dumping bank stocks and other financial institutions are seeing runs on funds by depositors. Wall street analysts are distributing lists of banks that are likely to fail and bank values are in freefall. Analysts are calling for the FDIC to shut down several banks that are at risk, all at the same time. The government has come up with a plan to shore up ailing Fannie Mae and Freddie Mac, but will it be enough to restore investor confidence and stop the foreclosure tsunami? Analysts are predicting more bank and lender failures due to the problems suffered by IndyMac. When depositors make a run on their funds, the bank is left without any liquid assets to work with. Read the story here.
Until next time...
Americans are beginning to lose faith in banking institutions after the IndyMac closure. Investors are dumping bank stocks and other financial institutions are seeing runs on funds by depositors. Wall street analysts are distributing lists of banks that are likely to fail and bank values are in freefall. Analysts are calling for the FDIC to shut down several banks that are at risk, all at the same time. The government has come up with a plan to shore up ailing Fannie Mae and Freddie Mac, but will it be enough to restore investor confidence and stop the foreclosure tsunami? Analysts are predicting more bank and lender failures due to the problems suffered by IndyMac. When depositors make a run on their funds, the bank is left without any liquid assets to work with. Read the story here.
Until next time...