Out here in California another bank went down. Somewhere in the inland empire (east Orange County). Hundreds of banks will go under and it is not at all clear that the FDIC can cover a systematic meltdown. In fact, the Yale graduate Bob Prechter, among others, specifically believes that at some point the FDIC will not be able to return all money to depositors. Even if he is wrong my viewpoint is not to take any chances. The bank rating site is the best one I could find for getting information on the best and worst banks in your area. Just go to tab that says 'Banks and Thrifts' and then enter in your state.
Here are the ratings for the major banks... you know the bastion of financial strength that is buying troubled businesses like Merill Lynch, Countrywide, Wachovia... In a word: scary... that is until you see all the D/D- and E/E- (yikes) banks on the list...
Major Bank Ratings
JPM: C+
BAC: B-
WFC: C+
C: C-
Here are some of the best in Cali:
First Security, Orange A+
Interins Exch of the Automobile Club: A+
Silicon Valley Bank: A/A+
California Pacific Bank: A
Farmers and Merchants Bank: A
While we wish to learn about the markets this should be done with a healthy amount of backup cash in case this does turn out to be the Great Depression 2... or even worse... I really think the risk of this ocurring is very very real... and it scares the sh*t out of me.
I am an optimist but also a realist. Please be smart and don't forget to guard your flanks with cash.
"In times like this, when it comes to savings, far more important than return on capital is return of capital".
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Edit: BTW here are the worst banks in Cali on the list...
Actually the first one on the list is now F as in FDIC controlled.
"The Yellow Rose Street Beat" is for informational purposes only. It does not give investment advice.
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