Dont say "bank run", you'll just cause a panic

Wow - E-trade is taking a pounding following a combination of announcements about "continued declines" in the value of its $3bn asset backed securities portfolio and analyst downgrades.

It has lost $9.2bn in market value since July now standing at $1.5bn. This won't be helped by Citigroup, which has issued an analyst report declaring a 15% probability of E-trade winding up in bankruptcy, further noting that
- 50% of e-trade deposits exceed $100k Federal deposit protection, equating to $15bn of deposits and accounting for 25% of e-trade funding.
- were investors to withdraw uninsured funds, e-trade would be forced to unload assets, incurring further losses with an enforced wind-down of their book, losses which they put at $5bn
- $12.5bn mortgage book expected to experience significant reduction in value

Hmmm. So if you were an e-trade customer, would you sit on your hands or get out quick just in case. After all, they aren't handing out medals for bravery in this situation!

posted by John Wilson @ 2:28 PM Permanent Link newsvine reddit


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