Vikings Message Board.Com

Can you please tell me where you're getting 4.5% in a MMkt account as I would like to move some cash into that. My core account is in a muni mutual fund that is yielding 1.6% today. Six month CDs are averaging around 3%. Who is offering a MMkt account at 4.5%???

Gold is off about 30% from its July high (using the SPDR etf). It's down 1% today in a market where is should be up. Inflation is in check and the dollar is still surprisingly strong and that makes be a bear on gold. Dennis Gartman is saying to stay away from gold (although Gartman isn't quite the commodity guru that CNBC thinks he is).

Today's market is not for investors; it's strictly a traders market.

How does this effect people that bought a house during this time period and *can* afford the loan they took out? If you have a mortgage (that you pay on time) from one of these banks that goes under what does that mean for you?

Mr. X wrote: We are in the worst financial crisis since 1929. Wall Street is disintegrating.

The investment banks (i.e. Merrill Lynch, Bear Stearns, Leham Bros., Goldman Sachs, etc) have no minimum capital regulations. Over the last decade they have used excessive leverage to help foster the housing bubble along with other things. Lehman, before they went out of biz was leveraged 40:1. Commercial banks like Wells Fargo are leveraged around 6:1. Commercial business that are levered more than 2:1 are usually considered risky.

Here's an example. Me = investment bank. You = customer.

I lend you $400K and have $10K of capital to back that up. You take that $400K and buy a house with no money down. My only collateral is a mortgage on the house you cannot afford. I allow you to buy that house without verifying your income or doing any credit underwriting that used to be in place to qualify for a mortgage. You decide to take a teaser rate in the form of an adjustable mortgage that resets in two years. Two years pass, your rate adjusts, you fall past due on your mortgage and are headed toward foreclosure. Both you and I were betting that your home would keep increasing in value but instead it has declined by 25%.

Repeat that about 20 million times in the US and then go over to Europe and repeat the same model.

I have to raise capital as I usually do to keep funding operations but now I can't do it because no one is willing to invest in me. The reason no one will invest in me is because my balance sheet if full of crap and I don't have anywhere near enough capital in relation to my liabilities. I go out of business, you lose your house and all of your purchasing power. You aren't buying anything and that helps to put the economy into a recession.

A year from now we might not have a single investment bank on Wall Street. We're talking about firms that have been in business since the early 1900s. Oil is now in the low 90s. That's a 40% decline from early July. In "normal" times that should have been a catalyst for a nice run up in the market. Instead we had the 6th largest point decline in the Dow yesterday. This is serious stuff.

Will the economy recover?

What does this mean for future housing markets, and also stocks? And 401K? Will that be safe? Be gentle, I am a complete zero when it comes to economics.

PurpleMustReign wrote:
Wow. It makes much more sense now. Thanks.

I have a question that may border on politics, but how much of this is due to the war and oil prices? Will the economy recover? What does this mean for future housing markets, and also stocks? And 401K? Will that be safe? Be gentle, I am a complete zero when it comes to economics.

(getting into politics, but need to complete my thought) Everybody wants to blame the government because its the easy thing to do. But it ain't their fault people are buying houses way out of their price range. It ain't their fault everybody absolutely had to drive a gas guzzling SUV (even though most were used in town and to haul four or less people around.) And it ain't their fault people are using their credit cards to buy wants. Its the citizenry and not the government. I don't expect, or want them, to try and fix it because government intervention usually backfires. We have to take our medicine. Its going to hurt, but we as a people have only ourselves to blame.

S197 wrote:Sure, http://www.everbank.com. They're offering a 3-month introductory rate of 4.76% APY. They also pledge to keep their yield in the top 5% of all MMA's so even after the intro rate, their MMA is still yielding 3.51% APY. Very respectible in this current environment.

wang_chi7 wrote: Everybody wants to blame the government because its the easy thing to do. But it ain't their fault people are buying houses way out of their price range.

Mr. X wrote: Today the volume in AIG is over 1.1 billion shares. That is truly amazing. It got down to 1.25 but it's bouncing back based on rumors of a government backstop. So much for the "moral hazard" concern.

The theory of bailing out Bear Stearns was that the systemic risk was so high that the cost of allowing it to fail would have been much more expensive than doing the bail out. AIG is a huge player in Credit Default Swaps and is much larger than Bear Stearns. AIG's systemic risk has to be much higher that Bear Stearns. I abhor the idea of a government bailout but on the other hand a failure of AIG could be the thing that stimulates a panic. Rock meet Hard Place. Hard Place meet Rock.

I wonder what the federal budget deficit will be next year? $800 Billion? $1 Trillion? I don't see how we can be adding all this crap debt to the balance sheet of the Fed without the deficit going through the roof.

Mr. X wrote: I've never been comfortable wiring money to an online bank just to park funds for the short term. Not worth the hassle for me. I prefer to keep everything consolidated in one account with one brokerage firm.

When I checked BankRate, the national average for MM savings is 2.4%. EverBank is paying almost double the national average. That's a red flag for me and a reason to stay away even if it is FDIC insured. When IndyMac went down the average length of time it took depositors to get their money was 4-5 weeks. Interest stops accruing on the date the FDIC takes over. EverBank has a decent rating but IndyMac also had a decent rating before it went down. Banks usually don't pay double the national average unless they are squeezed for liquidity.

Jacksonville, FL - EverBank® Financial Corp. today announced record earnings of $44.7 million for the first half of 2008, an increase of 162% over the $17.1 million recorded in the first half of 2007. 2008 year-to-date earnings benefited from EverBank's gain from the sale of its share of EverBank Reverse Mortgage LLC to MetLife, Inc. Earnings from continuing operations, which exclude this gain, also reached a record $18.5 million, an increase of 8% over the first half of 2007. The strong earnings bolstered EverBank's equity position to over $402 million, further demonstrating the financial strength of the company. EverBank's assets and deposits grew to $6.0 billion and $4.1 billion, respectively.

"EverBank's financial health and performance have never been greater" stated Rob Clements, Chairman and CEO of EverBank Financial Corp. "EverBank is in a unique position in the banking and lending industry: during a time when many other banks and financial institutions are in distressed or weakened positions from relying on risky lending, unpredictable capital markets funding and unsustainable leverage, EverBank maintained disciplined risk and credit management practices. As a result, EverBank's distinctive, diversified and disciplined business model generated record earnings, record bank capital, record deposits and record assets, positioning the company for significant growth."

Mr. X wrote: Slightly disagree. Greenspan kept interest rates artificially low for too long. That cheap money helped to fuel the housing bubble. In addition to that Freddie and Frannie went way off the reservation. They were set up years ago to help bring liquidity to the mortgage market with the idea of fostering home ownership. They were GSEs (government sponsored entities). Because of that they were able to raise capital at much lower rates which made mortgages more affordable than they otherwise would have been. No one knew for sure what "sponsored" meant. Now we know. It meant government guaranteed. The problem was that Freddie and Frannie were private corporations using the implied backing of the US Treasury but they were being run like huge hedge funds with no regard to risk. They morphed into something that was inconsistent with their original purpose.

What I would like to know is what happened to credit underwriting standards for mortgages that qualified for repurchase by Freddie and Frannie? It seemed to go out the window about seven years ago. If you had a pulse you qualified. Who signed off on that? Why wasn't anyone screening these mortgages? As usual no one will be held accountable for the US Treasury assuming hundreds of billions of dollars worth of mortgage paper and when a big chunk of that stuff craps-out it's the taxpayers (you and me) that get stuck with the bill.

S197 wrote:I wouldn't wire funds as the fees are expensive. Most of the time it's done by ACH transfer (or you can write a check I suppose).

As far as EverBank's financial strength

Keep in mind the muni fund you're invested in is only as good as its insurers, most municipals are only investment grade because of their insurers, they themselves are usually not.

And the monoline insurers (Ambac and MBIA) have both been downgraded as of late. There's no FDIC for money market funds.

In the end, its what you're comfortable with so if you're uncomfortable with online banks then you're probably right to stay away. Myself, I'll take a high yield, 100% insured, profitable bank MMA over a money fund any day.

Did you open an account at EverBank? If yes, did you do it online or at a branch (do they have any branches in your area)? I'd be interested in knowing what your experience was. Have you withdrawn any funds at any time and how did that work in terms of the length of time it took you to get your money.