Is today the day?
I’ve been saying for quite some time that the banks need to step into the confessional box and tell us just how much of the $2 Trillion drop in the value of US housing (so far) they are on the hook for. So far we’ve had a Billion here, a Billion there but the big boys have so far had their heads firmly in the sand and that means it’s time for a kick in the ass.
Since ostriches are herd animals, we can expect one admission to follow the others as banks would always prefer to say "Yeah, I lost money too" AFTER someone else admits it. As usual, we have to look to Europe for leadership and we were on top of this story over the weekend (thank you Richard) as ING announced on Saturday that they would take over accounts at NetBank, WHICH WAS SHUT DOWN BY THE US GOVERNMENT FOLLOWING LOSSES ON "SUBPRIME MORTGAGES AND OTHER LOANS." Gee, wouldn’t you think this should be a more prominent story in the US? Once again the sharpies at the WSJ seemed to miss this one.
Aside from $2.5Bn worth of people being dumb enough to give their real cash to a virtual bank, it turns out that $109M in 1,500 accounts was in excess of the $100,000 FDIC insurance cap and those people will now stand in line with other creditors now that NetBank has filed for bankruptcy. For $15M, ING will take on $1.5Bn of NetBank’s insured deposits and will buy out $724M in assets. While the deposits are a no-brainer, would you trust the assets? ING has to: Arkadi Kuhlmann, ING Direct chief executive, said his bank stepped in partly to ensure continued consumer confidence in lenders – such as his and NetBank – that conduct all their business on the web and do not operate branches. "This is all about confidence in the market," he said. "Since we are the largest direct bank we were very pleased to assist and help out and hopefully take on these customers who will continue to do business on the internet."
Damn, I love Europeans! They actually give you their real motives when they do something!
The next domino to fall in Europe this weekend was UBS, who are writing down $3.4Bn in assets, attributable to hedge fund losses and, of course sub-prime issues. There has already…