Bank Failures Due To Spike?

A bank failure - particularly the failure of a large bank for reasons that are not idiosyncratic - should sound alarm bells in the brain of anyone who knows the statistical distribution of bank failures. (Click chart to enlarge.)



Prediction: the chart will soon have another spike of bank failures.

One other observation: the FDIC is going to use up a huge chunk of its capital paying IndyMac claims. Expect them to raise deposit insurance premiums for other banks. This means even lower profits for banks.

Comments

[BioInvestor:]

Agreed. Bank failures are a pretty rare occurrence. It was really clear for some time that IndyMac was in trouble, but it's nonetheless very dramatic news that a bank of its size should be seized.

2008 Jul 12 01:12 PM

[TKTK53:]

Here is another good example of putting thoughts in peoples heads
Look at the chart he has in his article, (does it recover -YES)
But the writers make everybody afraid of bank stocks and they sell and the market goes lower and lower
Remember buy when the market is low and hold on for the profit
How long was it down - about two years and it jumped right back up just as strong Now is the time to buy TKSK

2008 Jul 13 11:33 AM

[glassbox:]

Agree that many traders (both long and short) love to put thoughts in people's head. In fact, of late, I realised the shorts are even more inclined to do it for obvious reasons. One way to prevent esp shorts from doing this is to have the shorts disclose all their positions - just like longs have to disclose positions. The SEC should insist that all shorts should disclose the ultimate beneficial owners of these positions - subject the shorts to the same playing field as the longs and let's see if they will shoot of their mouth so easily.

2008 Jul 13 01:47 PM

[Urbane Gori...:]

The author provided a short article a supporting graph and an opinion. I don't see anywhere that he is short anything. Stating opinions on what the **shorts** are or are not doing and why is kinda like not mentioning to an audience that the movie theater is on fire. Sure yelling 'fire' would cause a panic, but letting everyone sit there eating popcorn and watching 'Get Smart' as the building is consumed seems just a little bit too PC....

Although the chart doesn't really show any such spike occurring now, it seems a good guess that more banks will follow.... And I'm not even sure why no-one figured that this couldn't happen... Lord knows I expected it..

Thx jegan ;-)

2008 Jul 13 03:19 PM

[Badgolfer:]

Has anyone done an analysis of first financial closed end bank fund ?

2008 Jul 13 04:44 PM

[Cash_and_Fetal:]

I wish there were a way that F--K nut Chuck Schumer could be held PERSONALLY responsible for his RECKLESS disreard for his words....what a stupid &()&*()&*)
I sure hope he fails in re-election.....He WIPED OUT BILLIONS of equity in two short weeks

2008 Jul 14 06:01 PM

[commoinsens...:]

Chuck Schummer didnt cause these banks to fail - letting any turd who couldnt find a real job become a mortgage lender make loans to anyone who could fog a mirror (i.e. no credit, no assets) buy an overpriced home did. It's the those in congress (i.e. mostly republicans and especially the likes of Phil Gramm) who are the root cause of this mess.

2008 Jul 19 10:10 AM