And Another One Bites The Dust

[cahwyguy]

This morning’s NY Times brings news of the demise of the banking operations of Wachovia, which have just been sold to Citigroup. What does the Wachovia web page say again... oh.... “We’re here for our customers”, doth say the Wachovia CEO. But I digress. Citigroup has apparently won the bidding for Wachovia over Wells Fargo (whose win would have

Comments

[terpsichoros]

National City did HELOCs - lots of them. They tended to have pretty good terms and to pay brokers reasonably well. HELOCs are problematic, as they tend to be variable-rate (though the rate on mine has stayed nicely low), and they're in second position, so they're the first to be wiped out when the house price falls.

World Savings did exclusively "portfolio" loans - they didn't securitize their loans. This meant they did a lot of loans which will be harder than normal to evaluate for risk, because they got the loans other banks wouldn't take. (They also had some sort of program for landlords which helped with cash flow, so they have a lot of apartment loans, though those should be better-quality than a lot of others.)

[cahwyguy]

I know Downey did a lot of Option ARMs (I think our first Option ARM was with them but then sold, our current 5/25 is with them and we're hoping to refi in the next week or two). I don't know if Downey securitized them or kept them, but I do know they are exposed. They could also be hit by a run on capital.

Don't know much about First Fed these days -- my first mortgage was with them back in 1979, when they were still First Federal Savings of Santa Monica.

[chessdev]

In a sense, things like this are maybe "the best" way this could have played out...but still a bit concerned about how fast things are falling.

[cahwyguy]

I think there are still a few failures to get out of the system and then things will turn around. I'm still thinking Downey will go. It's sort of like when you eat something bad for you. Once you worship at the porcelain goddess, you suddenly feel better. We've already projectile vomited BearStearns, IndyMac, Lehman Bros, AIG, WaMu, and now Wachovia. Once we get out Downey, perhaps our stomach will heal and we'll be ready to try the credit curry again.