I, Sherba am in my early 40’s and trying to get my self secure financially. I’m single with no children and want to be able to have businesses that will provide for me so I can stop working for others. I’ve started 2 companies one for real estate and the other for Factoring (Working with funding sources to buy business to business receivables).
Wednesday September 10th I went to a Meetup event, the New York Investing Meetup. I thought it would be a great way to maybe make some real estate contacts and get info on the banking industry which could be useful as far as investing in real estate and factoring.
The topic that was advertised was “Banks and Brokers Most Likely to Fail”. My surprise came when I went to register and found out the investing was not in real estate but in stocks, and precious metals. The other topics for the meeting were about silver and gold and “Credit Spreads: Earn Income from Options with Limited Risk”.
Going to the meeting I did not know what to expect but what I got opened my eyes. My main interest was about the banks and brokers failing. The speaker Daryl Montgomery who is also the organizer of the Meetup gave the talk. Mr. Montgomery gave new visitors a summary of the meetup, what they do and the benefits of the meetup. He stated that they were right about of a lot of things that are happening, that they new Indymac was going to fail. He said that during this meeting he was going to name names about the banks and brokers. He then went on to talk about the criteria to look for to tell if a bank or broker will fail. This is the list:
- They repeatedly raise capital
- They sell assets
- They get government loans
- They sell a stake in the company
- They fire their CEO
- They invest heavily in sub prime
- They have higher rates on CDs than their competition
- Their stock price drops 80% or more from their all time high
- They have big and numerous earnings losses, especially those well below expectations
- Reduced dividends
Mr. Montgomery then named names and gave a list of the major and medium banks and brokers that are in VERY bad shape. When he gave this list my heart sank because I bank at some of these banks and I was especially worried about my business accounts. This is the list of the major banks and brokers:
- Washington Mutual – Stock down 93% from their all time high *** (A matter of time before it goes under, he does not know what is holding it up. Just heard on the news that Washington Mutual could be the next bank to go very soon, that they have $19 Billion in debt and they may be trying to sell some branches***** I e-mailed Mr. Montgomery today with a question and he said WaMu will go anytime now.)
- Lehman Brothers – Stock down 91% from their all time high*** (In the newspaper yesterday I read that they plan to sell a major stake in its prized investment management business and said a sale of the entire company was possible. Lehman also said it would spin off a troubled real estate unit and slash its dividend. The article also said Lehman reported an almost $4 Billion third-quarter loss, boosting its losses so far this year to about $6.5 billion. Lehman also said it will spin off $25 billion to $30 billion of its commercial real estate operations and slashed its dividend to 5 cents from 68 cents in a move to save $450 million a year. Today I have been hearing how this company is scrambling for a buyer, that Bank of America may be interested in buying it. Looking at this article you can see they lost more in their third quarter than they did in their first two quarters combined, they are bleeding money.***** I e-mailed Mr. Montgomery today with a question and he said it looks like Lehman could go this weekend.)
- Wachovia – Stock down 87% from their all time high *** (Poster child for sub prime loans allegedly being investigated for drug money laundering)
- Merrill Lynch – Stock down 78% from their all time high
- Citibank – Stock down 75% from their all time high *** (Raised capital 5x in 5 months. Sold Citicapital, Citistreet and Diners Club. Plans to sell $400 - $500 billion in assets in the next few years. CEO ousted in November of 2007. This is the biggest bank in the U.S. the government can’t afford to let it fail.)
- UBS – Stock down 73% from their all time high ***(Clients jumping ship)
- Royal Bank of Scotland – Stock down 73% from all time high
- Key Corp – Stock down 82% from all time high
He then gave a list of medium sized companies failing:
- E-Trade – Stock down 92% from their all time high
- Corus Bank Share – Stock down 94% from their all time high
- First Horizon – Stock down 91% from their all time high
- National City – Stock down 88% from their all time high
- Provident Bank Share – Stock down 88% from their all time high
- Colonial Bank Group – Stock down 88% from their all time high
- Fifth Third Bank Corp – Stock down 83% from their all time high
- Regions Financial – Stock down 83% from their all time high
- Zions Bancorp – Stock down 80% from their all time high
- Huntington Bank Shares – Stock down 80% from their all time high
He then warned that the FDIC is going under, he stated that if Washington Mutual and Wachovia go under that would really hurt the FDIC. The FDIC is the entity that insures our money at banks. In my opinion with all these banks failing the FDIC can only do so much.
During the meeting he said 2 banks that are good to bank at that are healthy. After the meeting I went to talk to him, because I wanted a list of banks not just 2. I said what about Sovereign and Republic? He said “Oh no not Sovereign that was one of the next worst on the list” he then stated the 2 banks again; they are Bank of America and JP Morgan Chase as the best banks right now. He said there are more healthy banks not just these 2. Then his parting words to me were “But if you bank at Washington Mutual or Wachovia get out of them immediately.” Also during the meeting, he stated that GM and Ford early next year will be the failures.
I don’t mean to be an alarmist but knowledge is power. We are in a bad state and we have to get ourselves financially secure because these coming years will not be easy. There is a blog of the New York meetup where they discuss these financial topics and more, also their meetings are taped and posted on Youtube. The blog address is: www.nyinvestingmeetup.blogspot.com. I intend to check these out, I hope you do too.
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