I'm sure you've all read the news about poor WaMu. The question this weekend is; Do you think now that Chase Bank has taken over, will they abandon their two Rogers Park locations, leaving us with more vacant commercial real estate in the 49th ward?
The financial bloggers saw the WaMu failure coming for months. People are surprised it took this long.
Wachovia is next-everyone on the street has been anticipating it for months. National City is probably not far behind.
It's hard to say what branches Chase will keep, even though their stated intention is to keep as many as possible. However, Chase has saturated the north lakefront with branches already, a few of which are nonperforming, and others of which are located too close together to begin with, like the branch on Bryn Mawr & Winthrop that is right around the corner from the one at Broadway & Hollywood.
It probably depends on how much traffic there was at this branch on Morse to begin with. But they will surely close a few, and I'd think they'd start with those that are located within a couple of blocks of existing Chase branches already.
The WaMu at Howard and Clark is right across the street from a Bank of America branch but there's already a satellite Chase branch inside Dominick's. It will be interesting to see which one they choose to close.
By the way, is anyone else troubled by fact that our choices in banks is continuing to dwindle? These "buy outs," "bail-outs" and "take-overs" are resulting in less choices for the consumers and more opportunities for the remaining banks to levy harsh fee structures and reduce services. Not to mention (O.K., I know I'm mentioning it but obviously I don't have the kind of money for this to be an actual issue for me - but it might be for others) the loss of banks also limits the number of places I can park my money and still rest assured that it is FDIC covered. FDIC only insures the first $100K - after that you're on your own. Anyway, I’m just wondering if anyone else out there is getting as nervous as I am about the financial monopolies taking form in this country.
I'm really not too nervous about the current shrinkage in competition, Fargo, for I believe that situation will correct itself once the dust settles on this situation.
There is monster capital sitting on the sidelines out there that awaits only the final shakeout before stepping in to form new banks. Much of this money has been parked for years awaiting the right opportunity, which is being created right now. There has been way too much redundancy in financial services for the past few years, based on floods of easy fake money washing through the economy, but after this final shakeout, there will be ample opportunity for new players, who will operate much differently than the banks we are losing.
I've every confidence that the location on Morse will remain open as there is no Chase in the immediate area.
The location on Howard however... My understanding from the guys over at the Morse location, is that it will be based upon leases versus owned property and which makes more fiscal sense. In either case however, one of the locations WILL be closing.
Farfo Woman brings up a good point. Chase was quick to grab up WAMU along with others. I started banking with the Morse WAMU when I worked for LaSalle bank. I liked the location and the service. No both LaSalle and WAMU are history. From what I have read, the Morse loocation will be determined by t he conditions of the lease and the customer traffic. The lease, of course, being the primary issue. I think the Morse location serves more customers than Howard/Clark, but I would hate to see either closed. It is out of our hands, like the rest of the whole bail. Cinch up the seat belt, this might be a rough ride.
The Chase-Wamu deal is how the bail should be done.
It didn't cost the taxpayers or the FDIC a dime.
Chase did not buy the financial holding co., but only the secured (mortgage) assets and the banking end. They bought $307 Billion worth of assets for $1.9 Billion.
Sure, those assets are worth nowhere near $307 Billion or Wamu would not be insolvent, but they're worth a lot more than Chase paid for them.
The winners are JPM Chase, the WaMu depositors, the taxpayers, and the FDIC.
The losers are the WaMu shareholders, and the WaMu homeborrowers in trouble, for Chase will have no incentive at all to keep these mortgages on the books. They will foreclose quickly and sell the properties for inventory clearance prices, because they'll be way ahead selling the REOs for half what the owners paid for them.
This whole mortgage-bank failure mess reminds me of what happened in NH and MA around 1989-1993, but on a much larger scale. Out there, many jobs at that time were in the tech sector, and two of the largest employers in the area (with a combined total of over 100,000 jobs) tanked over the course of a couple of years. One was liquidated entirely and the other downsized radically (by over 70%).
The regional economy was not good at that point, and there were no jobs for most of the folks who lost theirs from those two companies. Anyone who could changed careers, started a business, went back to school or left the region for a place that had suitable jobs. Thousands of homes ended up being held by banks, either due to foreclosure or owners who had negative equity because the real estate market had tanked.
The banks were having auctions like crazy, and hardly anyone was buying. Then banks started failing. The FDIC ended up consolidating 21 small- to medium-sized banks into 3 larger regional banks and handled it well. But when that consolidation happened, the banks closed lots of branches. Imagine the duplication when you combine the branches of 7 banks in a town.
Many of the mom and pop Main St. businesses that depended on bank employees as a large chunk of their customer base went under. These included restaurants, dry cleaners, bookstores, florist shops, etc. For a couple of years, over half of the commercial space on the main street of downtown Manchester, NH was vacant.
It took over 5 years from the bottom for things to really bounce back. Now Manchester looks better than it has since I first visited there in 1981, but it took a long time to get there. I've mentioned this story before, but it feels all too relevant at this point.
The fact that the current crisis is so much more widespread and not tied to one sector of the economy REALLY makes me nervous.
THAT's the part that makes me really, really nervous, Fargo... the fact that nearly half our banks are insolvent.
The lost bank competition can be easily replaced, but the money lost by the whole economy will not be.
This is worse than 1929-1930. We have a much bigger debt overhang both private and public than we had then. Also, we had ample natural resources then, and now we've tapped them out. We had brand new factories then, and now we have almost none.
The condition of our financial system is frightening. Losing a few bank branches in our neighborhood is nothing- losing our entire economy is what is deeply frightening.... and what's worse is that the people who run our economy saw this situation setting up years ago and just abbeted it instead of taking corrective action.
And it looks to me like the things our government people are doing to mitigate the situation are only making it worse, and setting us up for government insolvency.
Has anyone checked the bank accounts or should I say bed mattresses (since their banks are failing), of the top CEO's who saw this coming? Is this bail-out only going to fill their mattresses with more of the working person hard earned dollars? It seems like their retirement funds are sky-rocketing during these uncertain economic times while the retirement funds of the working class are slowly dwindling away. I see more slats disappearing on my white picketed fence every day..
Well,sandy, this proposed bailout will do that and more.
It will: 1. Reward Extremely Imprudent Behavior on the parts of failing financial institutions. 2.Guarantee that the offending executives will not suffer too badly for having endangered our entire financial system, and putting the economy in the tank for the next 5 years. 3. Most of all, it will shift the risk and fallout from these institutions to the U.S. Treasury, and place this country in very real danger of a Treasury insolvency. DON'T THINK IT CAN'T HAPPEN HERE.
The bailout is too risky, and IMO will place the entire country at risk of not being able to pay on our government obligations. We already have almost $10 Trillion in debt, and we pay over $400 Billion in INTEREST ALONE on it.
This might be the straw that breaks the camel's back. We will all be feeling enough pain because of the collapse of our financial system, but the suffering that will result if the U.S. becomes insolvent and unable to meet its obligations, will be unspeakable. We can't risk it. This bailout is INSANE.
We're in a heads-they-win tails-we-lose situation, a choice between horrible and just unthinkable. Paulson's solution is absolutely unthinkable.
I will post petition links up on my site today. There are several recently circulated. The public at large is vehemently opposed to this bailout, and 190 economists have signed a resolution opposing it. Michael Bloomberg of NYC opposes it, and he has one of the most astute financial brains around. In the meantime, go to www.globaleconomicanalysis.blogspot.com, and you will find petition links there.
J.P Morgan Chase has posted a list of Wa-Mu branches and what it intends to do with them. The Morse Ave branch is being closed and the lease has been snatched up by a firm out of Ohio that intends to open a planned parenthood type clinic. Yes, abortions will be available on-site. This will be a very welcome addition to the Morse Ave scene and should draw some pretty hefty foot traffic making our neighboorhood a safer place.
I hope the Morse branch survives, I've gotten great customer service there over the years (sadly, my last bit of help there was helping do some paperwork for my move out of states).
Now that Wachovia has bit the dust, next up is Citicorp. I hope they survive ingesting Wachovia's banking biz but I doubt it. They just took a $46 B hit on Wachovia's crap.
Fifth Third I doubt, though it's possible. You never know for whom the bell tolls next because they are so intertwined.
However, Fifth Third has a much lower default rate on their loans and mortgages than other banks, and did not participate in the riskiest mortgage lending.
This much is certain... even the strongest among them aren't feeling good right now. They all over-expanded and over-leveraged themselves (Chase is leveraged 74-1!!), and all are going to have to absorb some of the hits from failing institutions.
It's the biggest mess since 1929-33. I sure hope we all somehow live through it.
22 comments:
I sure hope not...that's where I do my banking.
The financial bloggers saw the WaMu failure coming for months. People are surprised it took this long.
Wachovia is next-everyone on the street has been anticipating it for months. National City is probably not far behind.
It's hard to say what branches Chase will keep, even though their stated intention is to keep as many as possible. However, Chase has saturated the north lakefront with branches already, a few of which are nonperforming, and others of which are located too close together to begin with, like the branch on Bryn Mawr & Winthrop that is right around the corner from the one at Broadway & Hollywood.
It probably depends on how much traffic there was at this branch on Morse to begin with. But they will surely close a few, and I'd think they'd start with those that are located within a couple of blocks of existing Chase branches already.
The WaMu at Howard and Clark is right across the street from a Bank of America branch but there's already a satellite Chase branch inside Dominick's. It will be interesting to see which one they choose to close.
By the way, is anyone else troubled by fact that our choices in banks is continuing to dwindle? These "buy outs," "bail-outs" and "take-overs" are resulting in less choices for the consumers and more opportunities for the remaining banks to levy harsh fee structures and reduce services. Not to mention (O.K., I know I'm mentioning it but obviously I don't have the kind of money for this to be an actual issue for me - but it might be for others) the loss of banks also limits the number of places I can park my money and still rest assured that it is FDIC covered. FDIC only insures the first $100K - after that you're on your own. Anyway, I’m just wondering if anyone else out there is getting as nervous as I am about the financial monopolies taking form in this country.
- PEACE -
I'm really not too nervous about the current shrinkage in competition, Fargo, for I believe that situation will correct itself once the dust settles on this situation.
There is monster capital sitting on the sidelines out there that awaits only the final shakeout before stepping in to form new banks. Much of this money has been parked for years awaiting the right opportunity, which is being created right now. There has been way too much redundancy in financial services for the past few years, based on floods of easy fake money washing through the economy, but after this final shakeout, there will be ample opportunity for new players, who will operate much differently than the banks we are losing.
I'll play.
My bet is the one on Morse closes, leaving us with yet another abandoned business.
I've every confidence that the location on Morse will remain open as there is no Chase in the immediate area.
The location on Howard however... My understanding from the guys over at the Morse location, is that it will be based upon leases versus owned property and which makes more fiscal sense. In either case however, one of the locations WILL be closing.
Farfo Woman brings up a good point. Chase was quick to grab up WAMU along with others. I started banking with the Morse WAMU when I worked for LaSalle bank. I liked the location and the service. No both LaSalle and WAMU are history. From what I have read, the Morse loocation will be determined by t he conditions of the lease and the customer traffic. The lease, of course, being the primary issue. I think the Morse location serves more customers than Howard/Clark, but I would hate to see either closed. It is out of our hands, like the rest of the whole bail. Cinch up the seat belt, this might be a rough ride.
The Chase-Wamu deal is how the bail should be done.
It didn't cost the taxpayers or the FDIC a dime.
Chase did not buy the financial holding co., but only the secured (mortgage) assets and the banking end. They bought $307 Billion worth of assets for $1.9 Billion.
Sure, those assets are worth nowhere near $307 Billion or Wamu would not be insolvent, but they're worth a lot more than Chase paid for them.
The winners are JPM Chase, the WaMu depositors, the taxpayers, and the FDIC.
The losers are the WaMu shareholders, and the WaMu homeborrowers in trouble, for Chase will have no incentive at all to keep these mortgages on the books. They will foreclose quickly and sell the properties for inventory clearance prices, because they'll be way ahead selling the REOs for half what the owners paid for them.
This whole mortgage-bank failure mess reminds me of what happened in NH and MA around 1989-1993, but on a much larger scale. Out there, many jobs at that time were in the tech sector, and two of the largest employers in the area (with a combined total of over 100,000 jobs) tanked over the course of a couple of years. One was liquidated entirely and the other downsized radically (by over 70%).
The regional economy was not good at that point, and there were no jobs for most of the folks who lost theirs from those two companies. Anyone who could changed careers, started a business, went back to school or left the region for a place that had suitable jobs. Thousands of homes ended up being held by banks, either due to foreclosure or owners who had negative equity because the real estate market had tanked.
The banks were having auctions like crazy, and hardly anyone was buying. Then banks started failing. The FDIC ended up consolidating 21 small- to medium-sized banks into 3 larger regional banks and handled it well. But when that consolidation happened, the banks closed lots of branches. Imagine the duplication when you combine the branches of 7 banks in a town.
Many of the mom and pop Main St. businesses that depended on bank employees as a large chunk of their customer base went under. These included restaurants, dry cleaners, bookstores, florist shops, etc. For a couple of years, over half of the commercial space on the main street of downtown Manchester, NH was vacant.
It took over 5 years from the bottom for things to really bounce back. Now Manchester looks better than it has since I first visited there in 1981, but it took a long time to get there. I've mentioned this story before, but it feels all too relevant at this point.
The fact that the current crisis is so much more widespread and not tied to one sector of the economy REALLY makes me nervous.
THAT's the part that makes me really, really nervous, Fargo... the fact that nearly half our banks are insolvent.
The lost bank competition can be easily replaced, but the money lost by the whole economy will not be.
This is worse than 1929-1930. We have a much bigger debt overhang both private and public than we had then. Also, we had ample natural resources then, and now we've tapped them out. We had brand new factories then, and now we have almost none.
The condition of our financial system is frightening. Losing a few bank branches in our neighborhood is nothing- losing our entire economy is what is deeply frightening.... and what's worse is that the people who run our economy saw this situation setting up years ago and just abbeted it instead of taking corrective action.
And it looks to me like the things our government people are doing to mitigate the situation are only making it worse, and setting us up for government insolvency.
Hey Craig, don't forget the vacant real estate between your ears, some one might pay 2 cents for that vacant property
Has anyone checked the bank accounts or should I say bed mattresses (since their banks are failing), of the top CEO's who saw this coming? Is this bail-out only going to fill their mattresses with more of the working person hard earned dollars? It seems like their retirement funds are sky-rocketing during these uncertain economic times while the retirement funds of the working class are slowly dwindling away. I see more slats disappearing on my white picketed fence every day..
Well,sandy, this proposed bailout will do that and more.
It will:
1. Reward Extremely Imprudent Behavior on the parts of failing financial institutions.
2.Guarantee that the offending executives will not suffer too badly for having endangered our entire financial system, and putting the economy in the tank for the next 5 years.
3. Most of all, it will shift the risk and fallout from these institutions to the U.S. Treasury, and place this country in very real danger of a Treasury insolvency. DON'T THINK IT CAN'T HAPPEN HERE.
The bailout is too risky, and IMO will place the entire country at risk of not being able to pay on our government obligations. We already have almost $10 Trillion in debt, and we pay over $400 Billion in INTEREST ALONE on it.
This might be the straw that breaks the camel's back. We will all be feeling enough pain because of the collapse of our financial system, but the suffering that will result if the U.S. becomes insolvent and unable to meet its obligations, will be unspeakable. We can't risk it. This bailout is INSANE.
We're in a heads-they-win tails-we-lose situation, a choice between horrible and just unthinkable. Paulson's solution is absolutely unthinkable.
I will post petition links up on my site today. There are several recently circulated. The public at large is vehemently opposed to this bailout, and 190 economists have signed a resolution opposing it. Michael Bloomberg of NYC opposes it, and he has one of the most astute financial brains around. In the meantime, go to www.globaleconomicanalysis.blogspot.com, and you will find petition links there.
smells like trouble
J.P Morgan Chase has posted a list of Wa-Mu branches and what it intends to do with them. The Morse Ave branch is being closed and the lease has been snatched up by a firm out of Ohio that intends to open a planned parenthood type clinic. Yes, abortions will be available on-site. This will be a very welcome addition to the Morse Ave scene and should draw some pretty hefty foot traffic making our neighboorhood a safer place.
chipp bagg - I looked at the JP Morgan site and the Wachovia site - I didn't see anything about the Morse location - can you give us the link
whoops sorry - meant Wash Mutual site (not Wachovia)
I hope the Morse branch survives, I've gotten great customer service there over the years (sadly, my last bit of help there was helping do some paperwork for my move out of states).
Now that Wachovia has bit the dust, next up is Citicorp. I hope they survive ingesting Wachovia's banking biz but I doubt it. They just took a $46 B hit on Wachovia's crap.
After that, National City.
My guess is '5th Third Bank' is going down the tubes next.
Fifth Third I doubt, though it's possible. You never know for whom the bell tolls next because they are so intertwined.
However, Fifth Third has a much lower default rate on their loans and mortgages than other banks, and did not participate in the riskiest mortgage lending.
This much is certain... even the strongest among them aren't feeling good right now. They all over-expanded and over-leveraged themselves (Chase is leveraged 74-1!!), and all are going to have to absorb some of the hits from failing institutions.
It's the biggest mess since 1929-33. I sure hope we all somehow live through it.
In the end there will only be one bank, it will be called.....
...The Federal Reserve Bank of Chicago
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