Another bank hit the skids today - Silver State Bank in Nevada.
Silver State had 12 branches in Nevada and Arizona as well as loan offices in Nevada, Utah, Colorado, Washington, Oregon, California and Florida. As of June 30th, Silver State had $2 billion in assets and $1.7 billion in deposits. All insured deposits will be assumed by Nevada State Bank and brances will be open on Monday.
Ok, a small bank isn’t too bad but there is news that Fannie Mac and Freddie Mac will be taken over by the government this weekend. In terms of big business events, this one is HUGE. According to the article the cost to the tax payer is yet known but you can be 99.999% sure that any share holder equity will be wiped out. (Translation - the stock will be worthless)
While I would never have been a long term share holder of either company, I think it is highly irresponsible for for Treasury Secretary Henry Paulson to come out and claim there would be no Bail Out of either company. Also, in July, each company said they had plenty of capital to withstand the mortgage meltdown. Either conditions drastically changed or the companies were lying to investors, as well as the public.
Expect banks to continue to fail over the next several months but, remember, we are not in a banking collapse, we are experiencing a correction.
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