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Rumor has it that WCI Communities will file for bankruptcy.

WCI Communities Inc., the Florida homebuilder whose chairman and largest investor is billionaire Carl Icahn, fell 53 percent in New York trading on concern that the company is in danger of filing for bankruptcy.

"The situation is dire; the company can't meet financial covenants on its bank debt and it can't survive without borrowing," Vicki Bryan, an analyst with Gimme Credit LLC in Friendswood, Texas, said in a report yesterday. "Without covenant relief, all of WCI's $1.9 billion debt will cascade into default and it could tumble into bankruptcy."

As much as I never wish anyone or any company to enter bankruptcy, it is probably necessary that at least one homebuilder go bust to begin the cleansing process so the market can bottom.

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