Show your support by donating any amount. (Note: We are still technically a for-profit company, so your
contribution is not tax-deductible.)
PayPal Acct: 
Feedback: 
Donate to VoyForums (PayPal):
| [ Login ] [ Contact Forum Admin ] [ Main index ] [ Post a new message ] [ Search | Check update time | Archives: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 ] |
Subject:  Come on now bev.... |
|
|
Author: Stephen |
[
Next Thread |
Previous Thread |
Next Message |
Previous Message
]
Date Posted: 15:41:56 03/16/08 Sun In reply to: Bev 's message, "More on banks possibly going down ." on 12:07:32 03/16/08 Sun Duncan7 says it's all our fault for buying Sony Playstations. lol > >href="http://www.msnbc.msn.com/id/23638138/">http://www >.msnbc.msn.com/id/23638138/ > >After Bear Stearns, others could be at risk >Investors nervous after Fed-backed bailout; Lehman >stock falls 14 percent > > Bear Stearns bailout >March 14: After facing a severe cash shortage, Wall >Street giant Bear Stearns will rely on JPMorgan Chase >to stay afloat, making investors nervous about the >country's financial outlook. CNBC's Carl Quintanilla >reports. > >updated 4:32 p.m. PT, Fri., March. 14, 2008 >NEW YORK - After Bear Stearns Cos. said Friday it will >have to borrow money through JPMorgan Chase & Co., >backed by the New York Federal Reserve, investors are >curious: What does this mean for other banks, and who >might be next? > >Q: Is this going to happen to other investment banks? > >A: Nobody knows for sure, but it could. Until proven >otherwise, the market will probably act as if there >are more near-collapses to come — just as it did on >Friday, when investors sold off their bank holdings >and sent the Dow Jones industrial average down 200 >points. > > >"Even though Bear was probably on the fringe, pushing >the envelope anyway, traders are saying that because >it happened, it could happen to somebody else," said >Brandon Thomas, chief investment officer for Portfolio >Management Consultants, the investment arm of >Envestnet. > >Which other institutions might need funding? > >Bear Stearns has been the weakling among the five >reigning Wall Street investment banks: Bear, Merrill >Lynch, Morgan Stanley, Lehman Brothers and Goldman >Sachs. Many market watchers will recall that last >spring, Bear was the first of these institutions to >reveal big problems with mortgage-linked debt when it >had to pump cash into two hemorrhaging hedge funds. > >Also, Bear is the smallest of the five big investment >banks, the least diversified, and the biggest issuer >of mortgage-backed securities. > >But Lehman Brothers Holdings Inc. appears to be an >investment bank that investors are very worried about >right now — mainly because it is the investment bank >that is most similar to Bear in structure and >exposure. Its stock dropped more than 14 percent on >Friday. > >Banks gave Lehman a vote of confidence of sorts, >however, on Friday — Lehman Brothers said its new >credit facility was "substantially oversubscribed," >and that some of world's largest banks participated. > >Other banks certainly have their own troubles — >Merrill Lynch, for one, wrote down more than $14 >billion in the fourth quarter as the value of bonds >and debt backed by souring mortgages fell. > >However, "there's not the same questioning of their >franchise. It's not anyone saying, what are they going >to do for a living next year," said Tanya Azarchs, S&P >banking analyst. "At the same time, though ... the >markets are very nervous, very skittish. Asset prices >are very volatile. The repo markets are very tight, >very illiquid. When the repo markets are illiquid, >things can get very unpredictable." > >The repo, or repurchase, markets are temporary loan >markets that are relied upon by banks, hedge funds and >other investors to invest their extra money or borrow >against collateral. > >What will happen to Bear Stearns? > >Few industry experts believe the 28-day loan will be >enough for Bear to become liquid on its own again — >most are viewing it as delaying tactic as Bear and the >Fed figure out how to proceed. > >It is possible Bear will be bought, perhaps by >JPMorgan. If that happens, the buyer would have to >take over Bear Stearns' $176 billion worth of >distressed securities and its $42 billion in loans — >not a rosy prospect for even a healthy bank. >Furthermore, there are regulatory issues that may >arise if a commercial bank wants to buy Bear's >troubled assets. > >Another scenario is that the Fed attempts to organize >an orderly winding down of Bear Stearns into a much >smaller company by selling off its assets. > >How is Bear's loan different than other steps troubled >financial institutions have taken? > >Bear Stearns is not the first company to seek out cash >— Citigroup Inc., Merrill Lynch and Morgan Stanley >have pulled in several billion dollars by selling >stakes to outside investors, including foreign >governments, while the bond insurer MBIA Inc. sold a >significant stake in itself to JPMorgan, Lehman and >other investors. > >But Bear Stearns' agreement with JPMorgan is not a >stake sale — it's financing planned and backed by the >U.S. government. > >Why can't the Fed just let Bear Stearns collapse? > >Typically the Federal Reserve bails out struggling >commercial banks, but because Bear Stearns is >inextricably linked to a huge number of institutions, >a failure could cause "a ripple effect," said Ali >Samad-Khan, head of operational risk management >consulting for the Enterprise Risk Management practice >at Towers Perrin. >"They probably fall into the too-big-to-fail >category," he said. "The fact is, they recognized that >this is an important enough issue for them to get >involved in." > >Bear Stearns is interconnected with other banks, hedge >funds and investors that are its "counterparties." >Essentially, if Bear can't meet obligations to these >counterparties, those counterparties will lose their >money. > >Big banks like Citigroup Inc. could see big losses but >are probably large and diversified enough to survive >them. But smaller players on the edges — particularly >hedge funds — are at risk of going under if Bear can't >repay them. A Carlyle Group fund has already said it >is near collapse. Failing hedge funds could be another >hit to major banks, who have lent huge amounts of >money to the funds. [ Next Thread | Previous Thread | Next Message | Previous Message ] |
| Subject | Author | Date |
| What ever happened to the lending institutions checking to see if people could make their house pmts . | Bev | 21:19:49 03/16/08 Sun |
|
||