Posted on 11/12/2007 7:51:07 AM PST by Moonman62
Shares of E-Trade Fall on Plans for Mortgage-Related Writedowns in the Fourth Quarter
NEW YORK (AP) -- Shares of E-Trade Financial Corp. plunged in early morning trading Monday as investors worried over a Friday announcement the company would take larger-than-expected writedowns on its holdings of securities backed by home loans.
Shares of E-Trade fell 4.33, or 50 percent, to $4.26 in morning trading. Shares had traded between $8.02 and $26.08 during the past year.
Citi Investment Research analyst Prashant Bhatia cut E-Trade's rating to "Sell" from "Hold." Bhatia said there is a 15 percent chance E-Trade will have to declare bankruptcy and the company may be forced to sell loans and securities at a significant discount.
Bhatia said clients could also close deposit accounts, reducing the company's funding. Half of deposit accounts, representing about $15 billion, are higher than the Federal Deposit Insurance Corp.'s $100,000 threshold. Those are the most likely accounts to be closed if customers are worried about the company's future, Bhatia said.
E-Trade holds about $3 billion in asset-backed securities in a portfolio. Much of the portfolio is invested in securities backed by mortgages, which have increasingly gone into default in recent months, reducing the value of the securities. E-Trade did not disclose how big a writedown it would take in the fourth quarter.
Just another isolated incident...
I cannot imagine any account over the 100k/500k mark not looking to acat or wire funds out immediately. The news on this the next few days should be interesting....ameritrade and schwab are both up slightly on this.
do you have anything fresher than this 10/31?
http://www.nasdaq.com/asp/quotes_full.asp?mode=&kind=shortint&symbol=ETFC&symbol=&symbol=&FormType=&mkttype=&pathname=&page=short&selected=ETFC
What do you mean by that? Are you saying that trouble in their banking business wouldn't impact the brokerage customers?
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