A rush to pull out cash - Worried about the stability of mortgage giant Countrywide Financial,

[BR_Parkway]

http://www.latimes.com/business/la-fi-countrywide17aug17,0,1835165.story?coll=la-home-center

Worried about the stability of mortgage giant Countrywide Financial, depositors crowd branches.

Anxious customers jammed the phone lines and website of Countrywide Bank and crowded its branch offices to pull out their savings because of concerns about the financial problems of the mortgage lender that owns the bank.

Countrywide Financial Corp., the biggest home-loan company in the nation, sought Thursday to assure depositors and the financial industry that both it and its bank were fiscally stable. And federal regulators said they weren't alarmed by the volume of withdrawals from the bank.

The mortgage lender said it would further tighten its loan standards and make fewer large mortgages. Those moves could make it harder to get a home loan and further depress the housing market in California and other states.

<snip>

At Countrywide Bank offices, in a scene rare since the U.S. savings-and-loan crisis ended in the early '90s, so many people showed up to take out some or all of their money that in some cases they had to leave their names.

[yurbud]

1. If Limbaugh is pulling his money out, I am too.

[hang a left]

2. And so it goes...

there is now a run on the banks.

OMG

[Eurobabe]

4. could be a deadly contagion. shades of 1929?

the US is being slowly squeezed from all angles.

[Double T]

3. What a mess. Criminals in suits are still criminals.

Time to install strong regulations and oversight on ALL financial institutions including banks, mortgage lenders, hedge funds, private equity, corporations, bank credit card divisions, etc.

[Selatius]

5. The funny thing with fractional reserve banking is that...

if everybody withdrew their money out, they would find only a fraction of the funds that they deposited. The rest was loaned out, but their books still say you have all your money there. Without any funds to make up the difference, the bank becomes insolvent and enters bankruptcy proceedings. Of course, in 1929 when this happened, there was no one there to bail out the bank. The depositors were pissed. Today, we have the FDIC, and they're working like mad to ship capital to this bank to ensure they can meet depositor withdrawal demands.

[HereSince1628]

8. Doesn't the bank suffer loss in assets on it's books when the value of mortgage collateral drops

Isn't that a loss in liquifiable (is that a word?) assets that alters the banks reserve?

[fasttense]

6. Hmm, I've been worrying about withdrawing a lot of cash

until this blows over. But most of my banking is done with a credit union that has been very conservative about loans.

I don't like keeping cash around the house especially since one of our deadbolt locks had been drilled out by an unknown person last Friday. We have since replaced the lock but don't have a clue of why the middle of it was lying on the front porch Friday morning.

[no_hypocrisy]

7. Just another good old fashioned run on the bank . . .

[KharmaTrain]

9. I Have A Friend Attempting To Close Today

Talk about shitty timing...he's on pins and needles as to be sure that his financing and finance company will be there at the close...and I don't blame him. It's double tough on him as he still has a home elsewhere that he's had few bites on and looks like he'll be stuck paying two mortgages (providing the other house closes)...but he had to make the move and now is at the mercy of a market that could make this day a very, very tough one. Hopefully the close will go well, but he's prepared for the worst.