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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerThe level of bad loans at US banks is getting worse and not better. According to the FT, "Sheila Bair, chairwoman of the Federal Deposit Insurance Corporation, said it was likely loan-loss provisions and bank failures would rise in coming quarters as the fallout from market turmoil hits the real economy."
Three banks have failed this year and the FDIC says the number of "problem" banks sits at 90.
All of this may be tough on regulators who may have to bail banks out, but it could be tougher on shareholders who have stock in mid-sized and regional banks. NCC (NYSE:NCC) has already had to raise $7 billion. Its shares are down to $5.68 from a 52-week high of $35.83. Other banks in the same category, such as Fifth Third (NASDAQ:FITB) and KeyCorp (NYSE:KEY), have lost about half their price compared to 52-week highs.
The news from the FDIC shows that investing in financial firms remains tricky and dangerous. It is not for the faint of heart.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
5-30-2008 @ 11:48AM
Ronald Chambers said...
The weak will fall and the strong will go on. The problem with this is the larger a bank - or any other enterprise -- gets the less they care about the customers. That is a proven fact. Larger the company the less quality customer care. The banking industry has long proven that it cannot be trusted in the first place. I just received a infromation notice from my bank --CHASE --- that has modified changes to checking, savings and CD accounts. It isn't a case of weather you like it or not--- this is how its going to be!!! After I write this, I'am going out to look for a new bank or S&L.
This B.S must stop now!!!!
6-22-2008 @ 3:55PM
Walter Zweifler said...
We have assembled an investor group interested in buying distressed mortgage debt from regional banks. We will commit resources to a webinar or face-to-face meetings with loan portfolio managers – THIS WEEK. Can you be of any assistance?
Walter Zweifler
973 763 5534
wzweifler@zweifler.com