BANKS

The economy is improving, but the banking system is facing the "Alt-A" bomb...

Have you noticed how every Friday night (or weekend), regulators announce how some more banks have failed? Here's the last two weeks…

http://tinyurl.com/kqpahp

http://tinyurl.com/mbygk5

Obviously, regulators are trying to bury this bad news during the weekend, when most media sources aren't paying attention. But isn't it almost over? Well, according to this article, we now have over 400 banks on the watch list...

http://tinyurl.com/lpu6oy

Now, if you read the article, they do say that FDIC is well capitalized (right!) and the improving economy will help. But you'll notice that they aren't talking about something called "Alt-A".
It's what the mortgage industry calls the "option ARM" loans. You know the type, it's where you can pay a lot less than normal in the first few years, and then the loan turns into something more normal.

The sub-prime loans brought the banking system to it's knees. But the Alt-A issue is bigger, AND a big percentage of the homes affected are underwater. These loans will be coming due starting next year in a big way. The impact of defaults on these loans on an already shaky industry may be devastating.

Here's the article - you need to read it. It's short and sweet.

http://tinyurl.com/ku6mp4

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