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Wachovia Has $8.9B Loss, Cuts 6,350 Jobs, Dividend

Posted by Charlie Kilo on July 22nd, 2008

Wachovia on the brink:

Wachovia Corp. lost $8.86 billion in the second quarter, and said Tuesday it was slashing its dividend and cutting 6,350 jobs after losses tied to mortgages soared.

Even excluding one-time items, the results substantially missed Wall Street estimates, and shares sank to mid-1991 levels in premarket trading.

How Goldman Sachs took over the world

Posted by Charlie Kilo on July 22nd, 2008

Who ya gonna call…

If there’s something weird in the financial world, who you gonna call? Goldman Sachs.

The US government, involved in a firefight against the conflagration in the credit markets, is calling in another crisis-buster from the illustrious investment bank, this time Goldman’s most senior banker to finance industry clients, Ken Wilson.

And so with this appointment, the Goldman Sachs diaspora grows a little bit more influential. It is an old-boy network that has created a revolving door between the firm and public office, greased by the mountains of money the company is generating even today, as its peers buckle and fall.

Almost whatever the country, you can find Goldman Sachs veterans in positions of pivotal power.

The 61-year-old Mr Wilson has already proved influential in deals to recapitalise and reorganise some of America’s listing banks. At the Treasury he will advise on what the federal government must to do help the process, but he will face scrutiny from those concerned about the tentacles wrapping lightly around government from Wall Street’s mightiest bank. For the time being, bailing out Wall Street looks to be the same as bailing out the economy, but if those diverge there could be more questions asked about the influence of Goldman Sachs alumni on public policy.

George Bush picked up the phone this month, partly at the instigation of another Goldman Sachs alumnus, his Treasury secretary, Hank Paulson. Together with Mr Bush’s chief of staff, Joshua Bolten, there will be three Goldman Sachs old boys in major positions of influence in the White House – but the US government is hardly alone in finding the bank’s executives to be attractive hirees.

They are well-credentialed, partly by design. From its beginning when the German immigrant Marcus Goldman began discounting IOUs among the diamond merchants of New York in the 1870s, Goldman Sachs has always known about the power of the network of influence. Goldman hires former politicians and civil servants, as readily as it supplies them.

And then there is simply the intellectual quality of the employees, many hired as much youngster men via a gruelling interview process, and then forged in the fire of 17-hour work days.

With Goldman Sachs at the heart of Wall Street, and Wall Street at the heart of the US economy, few expects its power to wane. Indeed, The New York Times columnist David Brooks noted that Goldman Sachs employees have given more money to Barack Obama’s campaign for president than workers of any other employer in the US. “Over the past few years, people from Goldman Sachs have assumed control over large parts of the federal government,” Brooks noted grimly. “Over the next few they might just take over the whole darn thing.”

What if my bank fails? Some questions and answers

Posted by Charlie Kilo on July 17th, 2008

Could what happened at IndyMac Bank happen to my bank? Some questions and answers.

Jim Rogers: Fannie and Freddie … let it die!

Posted by Charlie Kilo on July 15th, 2008

Way to go Jim Rogers!

Confidence Ebbs for Bank Sector and Stocks Fall

Posted by Charlie Kilo on July 15th, 2008

The house of cards begins to fall:

Even as the Bush administration moved to rescue the nation’s two largest mortgage finance companies, confidence in the banking sector spiraled downward Monday. 

In Southern California, lines snaked around branches of IndyMac Bancorp, the large lender that was seized by federal regulators on Friday, as customers hurried to withdraw their money. As the anxiety spread through the financial markets, two other big banks, one in Ohio and another in Washington State, were compelled to assert that they were sound.

Even as federal regulators issued assurances that depositors’ savings were safe, Wall Street analysts circulated lists of lenders that might be vulnerable. Shares of regional banks plunged in one of the sharpest declines since the 1980s.

No More Surprises!

Posted by Charlie Kilo on July 15th, 2008

FDIC can only cover 1% of all deposits:

In the case of bank collapse, the FDIC has to step in to insure the value of deposits. Normally the FDIC attempts to maintain a fund at 1.25% of the value of its potential obligations. In recent months, however, this fund has slid to 1.19%, driven primarily by a rise in deposits, said Sheila Bair, chair of the FDIC. If this figure slides further to 1.15% it forces the FDIC to make moves to shore up the fund.

Second biggest bank failure…ever

Posted by Charlie Kilo on July 11th, 2008

IndyMac Seized by U.S. Regulators Amid Cash Crunch. Who’s next? Wachovia? WAMU?

IndyMac Bancorp Inc. became the second-biggest federally insured financial company to be seized by U.S. regulators after a run by depositors left the California mortgage lender short on cash.

Let Big Brokers Fail; Buy Gold Not Oil: Marc Faber

Posted by Charlie Kilo on June 28th, 2008

This is right on:

The Federal Reserve should let the big investment banks go bust if they made unwise investment decisions, and investors should take refuge in gold, because the central bank has been “misleading” the markets, Marc Faber, editor and publisher of “The Gloom, Boom & Doom Report,” told “Worldwide Exchange.”

Fears that another major investment bank may get into trouble have hammered stocks recently but some analysts have said the major Wall Street banks were safe as the Fed cannot afford to let them fail.

“I think there’s a good chance that the Fed itself will fail one day if they say ‘We’re not going to let you fail,’ and the government will have to bail out the entire system,” Faber said.

“If I’m a bad businessman and I go out of business, who’s gong to help me?” he said. “But Bear Stearns and the Wall Street elite, because they are tied into the Treasury and the Federal Reserve and they have lunch together, it’s a club and so forth, they’re bailed out. It’s a joke!”

Cramer: Banking Doom Is Upon Us

Posted by Charlie Kilo on June 25th, 2008

Jim Cramer says the banks and the automakers are the stocks that could sink this market:

Only 32% of Americans have confidence in our banks

Posted by patriot on June 23rd, 2008

Which side of the line are you on?

The percentage of Americans saying they have a “great deal” or “quite a lot” of confidence in U.S. banks has fallen to 32% — down nine percentage points from June 2007 and 17 percentage points from June 2006 — matching the 32% of March 1991 and near the three-decade low of 30% in October 1991.

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