1000 Banks may close says Bank Exec

[divine]

Wilbur Ross: Possibly a Thousand Banks Will Close
WILBUR ROSS, LEHMAN BROTHERS, FINANCIAL INSTITUTIONS, MERRILL LYNCH, BANK OF AMERICA
By CNBC.com
CNBC.com
| 15 Sep 2008 | 02:12 AM ET
In an exclusive interview with CNBC.com, Wilbur Ross, chairman and CEO of WL Ross & Co., says he sees possibly as many as a thousand bank closures in the coming months. And this will create opportunities for investors.

"I do think a lot of the regional ones will (close), just as they did in the last savings and loan crisis in the 1990s," Ross said. (Watch the full CNBC.com exclusive interview with Wilbur Ross on the left)

Ross says he will be looking to pick up smaller distressed institutions. "There will be opportunities, but we will need federal assistance in them, because what we're mainly looking for is stable sources of deposits, not so much the loan portfolio."

Ross feels that there will be too many people willing to provide capital to the large financials, which makes them less of a bargain than smaller banks.

When asked about his views on Bank of America's purchase of Merrill Lynch , Ross said that he didn't think that Merrill was in that dire a position.

"I think people in general felt better about Merrill's situation than about Lehman. I think ever since John Thain came in, he's done a wonderful job trying to fix what was a very difficult situation," Ross said.

He also noted that this was really now the second successful turnaround for Thain. "He (Thain)saved Merrill, went into BoFA ... Temasek, for example, went into something like a $5 a share profit out of this. So it's not a tragic ending."

"It will be very interesting to see where Thain ends up in the Bank of America hierarchy," Ross added.

© 2008 CNBC.com
URL: http://www.cnbc.com/id/26710362/

 

[divine]

I have a feeling they are doing this shit on purpose to get Federal Funds. Not saying there isn't a Financial crisis... but these top execs are trying to buy them up using Federal Funds... that's some bullshit. Could this all be related to Iraq (i.e. It is my opinion that Bush launched that war as a means to a redistribution of wealth... more money (controlled) in the hands of fewer people)... Now they are preying on Federal Funds to buy up shit and merge companies)

 

[Non-StopJFK2TAB]

I have a feeling they are doing this shit on purpose to get Federal Funds. Not saying there isn't a Financial crisis... but these top execs are trying to buy them up using Federal Funds... that's some bullshit. Could this all be related to Iraq (i.e. It is my opinion that Bush launched that war as a means to a redistribution of wealth... more money (controlled) in the hands of fewer people)... Now they are preying on Federal Funds to buy up shit and merge companies)

this post is all over the place.

 

[divine]

this post is all over the place.

no its not. Its just above your capacity of thought...

 

[Overkill2k6]

I have a feeling they are doing this shit on purpose to get Federal Funds. Not saying there isn't a Financial crisis... but these top execs are trying to buy them up using Federal Funds... that's some bullshit. Could this all be related to Iraq (i.e. It is my opinion that Bush launched that war as a means to a redistribution of wealth... more money (controlled) in the hands of fewer people)... Now they are preying on Federal Funds to buy up shit and merge companies)

I wouldn't put anything past bush & co; but shit's just an unwashed toilet bowl right now...

 

[Non-StopJFK2TAB]

no its not. Its just above your capacity of thought...

you ever heard the saying it's better to use their money than yours? well that goes out the window when the government is giving the money. lol @ you thinking those ceos are still going to have their title if the government gives them money.

and the whole iraq thing isn't that complicated.

 

[divine]

Are you stuck on stupid? Who gives a fuck about a title when they walk away with millions in a severance package. How old are you? Remember Enron, Tyco, the S&L scandal?

you ever heard the saying it's better to use their money than yours? well that goes out the window when the government is giving the money. lol @ you thinking those ceos are still going to have their title if the government gives them money.

and the whole iraq thing isn't that complicated.

 

[water]

I have a feeling they are doing this shit on purpose to get Federal Funds. Not saying there isn't a Financial crisis... but these top execs are trying to buy them up using Federal Funds... that's some bullshit. Could this all be related to Iraq (i.e. It is my opinion that Bush launched that war as a means to a redistribution of wealth... more money (controlled) in the hands of fewer people)... Now they are preying on Federal Funds to buy up shit and merge companies)

Fed funds= your money

U.S. Considers Bringing Fannie, Freddie on to Budget


Sept. 11 (Bloomberg) -- The Bush administration is considering whether to fold Fannie Mae and Freddie Mac's $5.2 trillion in debt into the federal budget, the White House budget office and the U.S. Treasury Department said.



``We're discussing how to present this in the federal budget with Treasury and stakeholders right now, but a conclusion hasn't been determined,'' said Corinne Hirsch, a spokeswoman for the Office of Management and Budget. The Government Accounting Office and other federal agencies are also weighing in on the issue.


The federal takeover of the government-sponsored enterprises, or GSEs, on Sept. 7 failed to address whether the debt of Fannie and Freddie should be included in the budget, or whether it carries an explicit government guarantee. In an interview this week, Treasury Secretary Henry Paulson cited the ``incongruities'' in the law and said ``we should be clear, is there a government guarantee or isn't there?''



Any decision to add Fannie and Freddie to the budget wouldn't automatically translate into an explicit government backing for the companies' combined $1.7 trillion in unsecured debt and $3.5 trillion of mortgage guarantees. Granting the full faith and credit of the U.S. would require an act of Congress to change the companies' legal status.



``You can't even be a senior debt investor at this point beyond the 15 month period because you really don't know if the federal government will back away from its commitment to support the debt,'' said Christopher Sullivan, who oversees $1.3 billion as chief investment officer at United Nations Federal Credit Union in New York.


Under Control



The Treasury is talking to the budget office about how to treat Fannie and Freddie in the budget, said Jennifer Zuccarelli, a Treasury spokeswoman. She declined to discuss what options are being considered.



``The reason Fannie Mae was originally turned into a GSE was to take it off the budget,'' said Peter Wallison, a fellow at the American Enterprise Institute, a conservative policy think tank in Washington. Wallison was general counsel for the Treasury during the Reagan Administration. ``The U.S. budget is a completely cash flow system, it's like a Mom and Pop candy store. They don't have any reserves or deferred expenses like private corporations do. It's completely cash in, cash out.''



The Treasury and Federal Housing Finance Agency put the beleaguered mortgage-finance companies back under federal control for the first time in about 40 years after their $14.9 billion in net losses threatened to further disrupt the housing market. The Treasury committed to invest as much as $200 billion in preferred stock and extend credit through 2009 to prevent a collapse of Fannie and Freddie, protecting investors owning more than $5 trillion of their debt and mortgage-backed securities.



Treasury Risk
If the companies were given explicit backing, their debt costs would plunge to bring them closer to the U.S. Treasury debt, Wallison said.
Fannie's five-year debt trades at 65 basis points more than Treasuries and has averaged 40 basis points more for the past five years.
Investors in the credit-default swap market for U.S. Treasuries are already concerned a guarantee is coming, demanding record high fees to offer investors protection against losses on Treasuries.



Five-year credit-default swap contracts on U.S. government debt increased 3.5 basis points on Sept. 9 to a record 18, up from 6 basis points in April, according to CMA Datavision in London. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a country or company fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality.
Losses



The U.S. budget deficit will grow next fiscal year to $438 billion from $407 billion, the Congressional Budget Office said Sept. 9, making it harder for President George W. Bush's successor to either cut taxes or increase spending.



The CBO, a provider of independent assessments on U.S. economic and budgetary decisions to Congress, said the Treasury should incorporate Fannie and Freddie's assets and liabilities into the budget. The CBO, which doesn't set budget policy, will include the projections in its own data starting in January.



``What the administration chooses to incorporate in its budget is up to them, but we hope they will agree,'' CBO Director Peter Orszag said in an interview yesterday.
Though much of the companies' unsecured debt will likely be counted as new federal debt, their mortgage securities won't necessarily translate into the same amount of federal debt since loans and other assets back those liabilities, Orszag said.
The degree of government control suggests the companies' expenses, including salaries and electricity bills, should be counted as federal spending and all fee revenue and other income from operations should be reflected as revenue, Orszag said.
CBO will treat Fannie and Freddie's debt similar to that of government-owned electricity producer Tennessee Valley Authority, which Orszag said won't directly affect the federal debt ceiling.



Any cash investments by the Treasury, such as buying mortgage securities or preferred stock, will directly add to the federal debt outstanding. U.S. officials said Treasury plans to buy $5 billion of the companies' mortgage bonds this month. Fannie and Freddie are also issuing $1 billion each this week in senior preferred shares to Treasury without any cost to the U.S. government.



http://www.bloomberg.com/apps/news?pid=20601109&sid=adr.czwVm3ws&refer=exclusive#

 

[divine]

Fed funds= your money

that's my point of the REDISTRIBUTION OF WEALTH COMMENT. They are taking our money and handing it over to these multinational companies ( so they can merge and buy other comapnies. Can you say MONEY LAUNDERING or GRAND THEFT?

 

[Coldchi]

seeing that Bank of America is buying Merrill Lynch for $50 billion.......i think im pretty safe........for now.

 

[Non-StopJFK2TAB]

that's my point of the REDISTRIBUTION OF WEALTH COMMENT. They are taking our money and handing it over to these multinational companies ( so they can merge and buy other comapnies. Can you say MONEY LAUNDERING or GRAND THEFT?

and where are those companies headquartered?

 

[divine]

and where are those companies headquartered?

Again.. you are stuck on stupid? Its about the REDISTRIBUTION OF WEALTH. The Unitied Nations released a report over a year ago saying that 40% of the WORLDS wealth is in the hand of 1% of the population, and 85% of the WORLDS wealth is in the hands of 10% of the population. Keeping thinking this shit is JUST about Wallstreet if you want to... nigga.

 

[Non-StopJFK2TAB]

Again.. you are stuck on stupid? Its about the REDISTRIBUTION OF WEALTH. The Unitied Nations released a report over a year ago saying that 40% of the WORLDS wealth is in the hand of 1% of the population, and 85% of the WORLDS wealth is in the hands of 10% of the population. Keeping thinking this shit is JUST about Wallstreet if you want to... nigga.

i read the book a farewell to alms and i still wasn't impressed. i'm trying to figure out what exactly is the problem: the rich getting richer?

 

[divine]

i read the book a farewell to alms and i still wasn't impressed. i'm trying to figure out what exactly is the problem: the rich getting richer?

Yes that is a problem, but moreso, the dumb get dumber.. people like you.

 

[Non-StopJFK2TAB]

Yes that is a problem, but moreso, the dumb get dumber.. people like you.

lol @ complaining that survivors are surviving.

 

[Greed]

The only people that have a problem with the rich getting richer are the people who never see themselves as rich, now or in the future.

Black people have fully conceded they will never be part of the rich, so why not support taking away the rich people's wealth from now into eternity.

Black people feel totally detached from the rich independent of how many individual black people get rich. It will always be looked at as a fluke.

 

[Non-StopJFK2TAB]

The only people that have a problem with the rich getting richer are the people who never see themselves as rich, now or in the future.

Black people have fully conceded they will never be part of the rich, so why not support taking away the rich people's wealth from now into eternity.

Black people feel totally detached from the rich independent of how many individual black people get rich. It will always be looked at as a fluke.

I'm a socialist. But I'll be damn if you take money away from someone to make live better. If it was up to me, ignore the rich and tax the living crap out of me. I'm more than willing to give 60% of my check to live in utopia. These other weirdos just don't. They want to live like kings on a paupers budget.

And in this day and age where everything is almost global, being regional just doesn't cut it anymore. Lol at taxing one company like they can't just close one office and move all their stuff to the next.