To: wafflehouse; Leisler; PAR35; TigerLikesRooster; AndyJackson; Thane_Banquo; nicksaunt; ...
*Ping!*
2 posted on
07/06/2009 9:52:09 AM PDT by
rabscuttle385
("If this be treason, then make the most of it!" —Patrick Henry)
To: rabscuttle385
But the hot money also came with a high cost. To lure the money from brokers, banks typically had to offer unusually high rates. That, in turn, often led them to make ever riskier loans, leaving them vulnerable when the economy collapsed. Magnet failed early this year and Security Bank is barely hanging on.
Though few people have heard of it, hot money or brokered deposits, as it is also known in the industry is one of the primary factors in the accelerating wave of failures among small and regional banks nationwide.
This was the same thing that was happening 20 years ago in the S & L debacle. The press could have dusted off articles about the failing savings & loans and run them today, except they would need to substitute the word "bank" wherever "S & L" appeared in the story.
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