Monday, March 10, 2008

Top media news: Bank Failures Ahead

Regional and local banks are under stress. Previous HingeFire articles discussed just how bad the situation is with local banks, the continuing cycle of downgrades due to souring commercial loans, and asked if it was time to short these institutions.

Today the financial press headlines focused on the probability of upcoming bank failures. (Remember you heard it first at HingeFire). The lead article, Billionaire Investor Wilbur Ross Sees Bank Failures Ahead, outlined a reasonable case of why a number of regional banks were prone to fail as commercial real estate loans turn sour.

The primary lesson is that account holders need to pay extra attention to the financial condition of their local bank at this time. Nothing is more painful then having your money locked up for weeks when a bank goes under or losing all of your funds over the FDIC limit.