Too big to fail: list of 19 institutions.

[harry123]

I made an attempt today to gauge which banks are too big to fail and which are not. My analysis is linked.

http://www.creditwritedowns.com/2008/07/too-big-to-fail.html

The long and short of it is no regional bank makes the list except US Bancorp and their not going to fail. That leaves regionals much more exposed than large banks in the US.

What's your take? Comment here or at Credit Writedowns.

[Sanity Claws]

1. Washington Mutual is not on the list

I thought it was bigger than it is. It is in trouble and may be allowed to fail.
I better make some moves because my money is there.

[harry123]

2. Too big to fail: list of 19 institutions.

WaMu isn't on the list because it is an S&L. It is NOT on the SEC's famous list of 19. Basically, they have no backstop. But are they too big to fail? I guess I'd have to add them and take Prudential off for consistency sake. I'll update adding them. But, not sure they would get bailed out.

Here's their profile at Google Finance with over $300 billion in assets.

http://finance.google.com/finance?q=NYSE%3AWM

[Sanity Claws]

4. Is WaMu still a S&L?

It started as one but I thought it changed in the 1990s. I think I'll do some research on this.

Update: Its website says that WaMu became a capital stock savings bank in 1983. A savings bank is different from an S&L, right?

[harry123]

5. WaMu still an S&L

here's the info from Wikipedia. They are an S&L, whatever that means. For all intents and purposes they are a bank.

http://en.wikipedia.org/wiki/Washington_Mutual

They are also FDIC insured.

From Wikipedia:

The most important purpose of these institutions is to make mortgage loans on residential property. These organizations, which also are known as savings associations, building and loan associations, cooperative banks (in New England), and homestead associations (in Louisiana), are the primary source of financial assistance to a large segment of American homeowners. As home-financing institutions, they give primary attention to single-family residences and are equipped to make loans in this area.

Some of the most important characteristics of a savings and loan association are:

1. It is generally a locally owned and privately managed home financing institution.
2. It receives individuals' savings and uses these funds to make long-term amortized loans to home purchasers.
3. It makes loans for the construction, purchase, repair, or refinancing of houses.
4. It is state or federally chartered.

[harry123]

6. Mish's comments on WaMu

I am not quite as bearish as Mish on WaMu, but you should read wha he has to say:

http://globaleconomicanalysis.blogspot.com/2008/07/death-spiral-financing-at-wamu-merrill.html

[Joanne98]

3. Unless the smaller banks where more careful with their loans.