Tuesday, August 26, 2008

Major bank about to go under? Reliable source says yes.

A major American bank is not just teetering perilously close to failing, "it's unavoidable", a source has told The Knight Shift.

Details about the possible imminent failure first came this way a little over two weeks ago, and I've been doing a lot of calling and checking around since then. The individual who first told me has been a longtime (over ten years) source whose information has previously turned out to be exceptionally reliable. And all the evidence that I've been gathering over the past few weeks jibes bigtime bad with what the source has been saying.

For various reasons I'm not able to divulge the name of the bank. But this blog can report the following details:

- The bank in question is one of the top five financial institutions in the United States.

- The bank has posted a high profit loss but this is "not even close" to how much money it has actually lost, according to others in addition to the original source.

- The biggest contributing factor to the bank's dwindling financial security has been "fast credit for every Tom Dick and Harry demanding a mortgage". This has been especially severe in the southwestern portion of the United States, where this bank has apparently loaned too much to people with little or even no collateral at all. And apparently this bank has thrived on business with people who weren't even supposed to be doing business in this country at all: parse that as you will.

- Some branches of this bank have already told customers that it might be days or even months before they can access their funds. You read that right. I've spoken with enough customers and one branch manager who confirmed this to be able report it as factual information.

- FDIC "could never" fully compensate depositors if/when this bank goes down. Source says that it will be like IndyMac but "much worse".

I debated long and hard about whether or not to post even this much information. In the end I decided that it would be better to publish what I can talk about now, so that there'd never be the nagging in my brain that I didn't do something about this.

There's not much else to say at the moment other than this: it seems a trend lately that bank failures are only reported on late Friday afternoons or early evenings, after the markets have closed for the weekend. I'd wager a dollar (however much that's actually worth these days) that if/when the institution under discussion takes a dive, that'll be when you first hear solid word about it.

I'll try to write more about this as it becomes available.

10 comments:

Anonymous said...

NO inside info here, but I am guessing it is Wachovia.

Anonymous said...

What are the top five financial institutions?

Troy Matthews said...

It sounds like Wachovia or Bank of America since those are the banks that have sought customers from unlawful immigrants the most. Of them I'll guess Bank of America.

Anonymous said...

Top 5 by $ on deposit(in order) are:

-- Bank of America
-- JP Morgan Chase
-- Wachovia
-- Wells Fargo
-- Citibank

Chris Knight said...

It's one of those five.

Anonymous said...

Considering that this Friday is the start of a holiday weekend and college football season, many people will be distracted.

Very likely bad news will come out Friday after the markets close (imho)

Troy Matthews said...

It seems your source is right.

FDIC: 117 troubled banks, highest level since 2003

Bank profits plunged by 86 percent in the second quarter because of slumps in housing and credit markets.

Your report beat the main wires by nearly a day.

Anonymous said...

How about we take all our collected savings out of the top five and start Knightbank? Send it all to Chris. ;)

Lindley said...

It must be Wachovia.

Borrowing is going to cost Wachovia $35 billion in debt

SEC probing Wachovia

Wachovia cutting home equity credit lines

And Chris, you also made the report before these stories were published. Can you tell us more?

Chris Knight said...

"How about we take all our collected savings out of the top five and start Knightbank? Send it all to Chris. ;)"

And as your financial manager the first bit of advice I would offer would be to take your out of my bank (and the way things are going any other bank) and put it somewhere much safer and trustworthy. Like in an old sock underneath your mattress.

For extra security you can have a hound dog laying on top of that.