Wachovia doesn’t fail
|
Wachovia was the last bank to not fail according to the FDIC. Of course, Wachovia’s banking operations are being sold to Citigroup, wihch isn’t usually signs of success. While this deal sounds great to anyone that owned stock option PUTS in Wachovia, it’s not really a stellar thing for the United States economy.
The problem is that Citigroup will absorb a $42 billion loss from Wachovia’s $312 billion loan portfolio, with the FDIC covering any remaining losses. This means that you, me, and the non-illegal immigrants (who don’t pay taxes) are going to be paying for losses for a not-failed bank.
There’s a growing list of failed banks and in order to watch for the future, you can check out the FDIC official failed bank page online. The list includes banks which have failed since October 1, 2000.
http://www.fdic.gov/bank/individual/failed/banklist.html
The deal greatly expands Citigroup’s retail outlets and secures its place among the U.S. banking industry’s Big Three, along with Bank of America Corp. and J.P. Morgan Chase & Co. But it comes at a cost — Citigroup said Monday it will seek to sell $10 billion in common stock and slashed its quarterly dividend in half to 16 cents to shore up its capital position.
Wachovia, like Washington Mutual Inc., which was seized by the federal government last week, was a big originator of option adjustable-rate mortgages, which offer very low introductory payments and let borrowers defer some interest payments until later years. Delinquencies and defaults on these types of mortgages have skyrocketed in recent months, causing big losses for the banks.
The FDIC asserted Monday that Wachovia did not fail, and that all depositors are protected and there will be no cost to the Deposit Insurance Fund.
One Response to “Wachovia doesn’t fail”
- Congress takes over GM and launches it?s first new car
- What conspiracy theory really killed David Carradine
- What really happened to Air France Flight 447?
- Which cartoon characters are gay?
- KISS rock band Lego set
- Ten best shows on TV
|
|
Carbon neutral pledge:
If you believe that Wachovia didn’t fail then maybe you’ll believe that the earth is flat.
Wachovia’s share price fell from $10.00 on friday to $1.75 a share when the FDIC took them over. If the FDIC didn’t move before the markets opened on Wall Street, Wachovia would have gone belly up as soon as the opening bell was struck.
The Government claiming that the bank did not fail is an attempt to manipulate market psychology. Wachovia did indeed fail on the heels of news that three major European banks failing.
The Government is blatantly lying in an attempt to quell market panic. The fact is the $700 billion bailout bill that is going to cost over $18,000 dollars per US household is going to work. The failure of Wachovia is simply the markets sending a signal to the government that bailout isn’t going to work.
But the Government isn’t going to listen. It will ignore the markets just like its ignoring the 80% of voters that oppose this Wall Street bailout bill. Until the government acknowledges this bill isn’t going to work, more banks in America and around the world will continue to fail.