The Intergalactic Cowboy

The financial markets had a volatile week here in the U.S. this past week. The coming week looks just as unstable. Friday was the crescendo of panic when the market sold off on rumors of financial institutions Freddie Mac and Fannie Mae being close to financial insolvency. These two institutions facilitate home loans to millions of Americans each year. At about 3pm on Friday, a rumor was broadcast over the media that the Federal Reserve Bank had agreed to loan these two institutions enough money to keep themselves afloat. Those of you in the know will understand what I mean when I say that the Fed Discount Window was alledgedly made available to them. On the announcement of this rumor, the stock market reversed all of its losses for the day and regained an even keel. At about 3:30 pm, the Federal Reserve Bank told the media that they had no comment on the rumor. If the rumor was true, they would have no reason to deny it. Then the markets sold off a little until 4 pm when the market closed. At about 4:15 pm, the Federal Deposit Insurance Corporation announced that they had taken over a California bank, which happens to be the second largest mortgage lender in the United States. This after the bell announcement, was not a rumor. This California mortgage bank had accepted a billion dollars of deposits and was approaching bankruptcy. The FDIC is required to insure accounts of up to $100,000. At last count, the FDIC will have to pay out 500 million dollars of money on insured account holdings, but will not be responsible for the other 500 million dollars of lost money. It is estimated that 10,000 people will not be reimbursed for their account holdings of over $100,000. It is also predicted that this news could cause a stock market panic during this coming week.
Caveat Emptor,
I.C.
10:13 pm I was just informed that 90 U.S. banks informed the U.S. government today that they might not be able to fulfill their customers’ withdrawals on Monday morning !