I had a very interesting conversation today with a friend who used to be a mortgage broker (until the company he started imploded) and now works at a bank selling REO property. Now, this is a guy who made millions flipping, and when I told him two years ago that the whole house of cards was going to collapse shortly, he laughed at me.
He ain’t laughing anymore.
I get on the phone with him, and he immediately tells me that his wife just got laid off from Indy Mac, so life is kind of sucking for them right now. Then he proceeds to tell me that both he and his wife (who have very close contacts at banks) have heard from reliable sources that the industry FULLY expect a massive run on savings and loans in the very near future. We’re talking weeks, if not days. We are now officially on Banking System Deathwatch, ladies and gentlemen, because the next big bank that falls will be the domino that unleashes the runs on the other banks.
He said WaMu is certifiably D.O.A and will almost certainly be the next victim. He said the industry would be surprised if WaMu makes it another 30 days. Downey Savings and First Federal are the next dogs to die, according to him.
If it hadn’t been so sad and scary, I would have actually enjoyed my I-told-you-so moment. But this guy is genuinely frightened now. You can hear the panic in his voice. He told me, point-blank: “It’s all coming down. The whole system is crashing.” He is quickly turning into an urban survivalist — outfitting his home with solar, buying biodiesel, stocking up on food. It’s truly fascinating to watch the variations in human behavior as this unfolds. This guy needed some prompting, but after the Fannie/Freddie news broke last week, he immediately got the clue. On the other hand, I work with a lawyer, and he’s married to another lawyer. She banks at WaMu. I’ve been telling him for months, “Man, you’ve got to tell your wife to get her money out of that bank.” Even after Indy failed, she was resisting because it was a “pain” to decouple her billpay and set up new auto debits and other crap. It’s just pure laziness. So here you have someone who has SEEN the lines snaking around the corner, has clearly heard that people are having trouble getting their money, and she thinks, “Nah, I’ll just wait and see what happens with WaMu.” Finally, he put his foot down and basically demanded that she yank her money out. So she’s beginning the “transition” this week.
There is going to be a LOT of roadkill before this thing is over. Be prepared to step over the bodies, my friends. They will be littering the streets.
Back to top
View user’s profile Send private message