The Hunt for the Victims
More bank failures on the horizon? National City reported “We’re no IndyMac” as the bears circled.
Richard Bove, a well respected banking analyst, says there may not be many others at risk of failure. In the wake of IndyMac he reviewed the performance ratios of all banks with assets greater than $5 billion to assess the probability of failure. His conclusion: there are a few smaller banks that may be on the edge, but the only large bank at significant risk is WAMU.
Overall, the data “indicate that the system is not anywhere near the danger that existed in the late 1980s and early 1990s despite all the whining by public officials,” he wrote. “Perhaps the second-quarter numbers will prove them right.”
Bove has a great track record. But he also published a report on March 20 titled “The Financial Crisis is Over.” We hadn’t hit bottom then, and it sure doesn’t feel like we’re there yet.
For a readable review of his research note and comments on the Schumer/OTS pissing contest, see “Few other banks appear on brink“.