Politics | 09/15/2008 7:30 am

Wilbur Ross Tells CNBC That 'A Thousand Regional Banks Could Fail,' FDIC Basics For Depositors

By The Staff at wowOwow.com

In an exclusive interview, Wilbur Ross tells CNBC that "possibly a thousand banks will close." Ross, the founder of private equity firm WL Ross & Company, is a billionaire investor who specializes in turning around underperforming companies. He is a respected commentator and prognosticator on financial matters.

Responding to the dramatic turn of events on Wall Street wherein 150+-year-old Lehman Brothers is preparing for bankruptcy, Merrill Lynch is bought by Bank of America in a forced marriage orchestrated by the Federal Reserve and insurance giant AIG is seeking capital, Ross sees the turmoil creeping into the commercial banking sector as the real estate and credit crisis continues to unwind.

While Ross sees investment opportunities for "vulture capitalists" in the coming banking carnage, for individual account holders at these regional banks, it is important that they take time to review where their money is and that all of their accounts fall under FDIC protection. The FDIC has online information to help depositors make sure their accounts are in FDIC-protected institutions and instruments and that they each fall under the $100,000 limit.

See the entire interview and video by clicking here.

FDIC Insurance Basics can be found by clicking here.

Read more about: Banking, CNBC, Credit Crisis, FDIC Basics, Financial, News, Wall Street, Wilbur Ross

206 Reader Comments (so far…) Sign In or Register to comment

Understand the mortgage crisis? It never would have happened if there was proper regulation and controls on lenders and the phony lending of masses of credit cards to those who didn’t even ask for them and had no way of paying for them. With Federal Rules,Regs,and transparency enforced Federally this would not have happened. The pigs were at the trough, and Reaganomics definitely played a part in this. Bush and GOP’s position on our economy………..work up huge deficits, lower taxes to the wealthy and corporations, and oh, yes….let it all trickle down as failed corporate CEO’s were left with 20 plus million packages for ruining their company’s balance sheet. This bubble has been bursting for 8 years ala the GOP’s reluctance to enforce regulations and safeguards. GOP and Reaganomics are a one of the same economic approach. We have always been left with huge deficits by the GOP.

By mitzi morris on 09/16/2008 6:46 pm

e-mail alert

Sorry Mitzi, but you are way off on this one. Read this article in Investors Business Daily from September 15—“The Real Culprit in this Meltdown”, the genesis of this sub-prime mortgage meltdown is in the Clinton administration. www.investors.com/editorial/editorialcontent.asp?secid=1501&status=artic… - 145k Government involvement is what caused this mess in the first place. Lenders faced penalties if they did not provide mortgages to those who were clearly not in a position to afford them or pay them back, thus, as I said before conditions were created for them to do so—read this excerpt: “But it was the Clinton administration, obsessed with multiculturalism, that dictated where mortgage lenders could lend, and originally helped create the market for the high-risk subprime loans now infecting like a retrovirus the balance sheets of many of Wall Street’s most revered institutions. Tough new regulations forced lenders into high-risk areas where they had no choice but to lower lending standards to make the loans that sound business practices had previously guarded against making. It was either that or face stiff government penalties. The untold story in this whole national crisis is that President Clinton put on steroids the Community Redevelopment Act, a well-intended Carter-era law designed to encourage minority homeownership. And in so doing, he helped create the market for the risky subprime loans that he and Democrats now decry as not only greedy but “predatory.”” And Clinton cronies benefited from this arrangement—-“As soon as Clinton crony Franklin Delano Raines took the helm in 1999 at Fannie Mae, for example, he used it as his personal piggy bank, looting it for a total of almost $100 million in compensation by the time he left in early 2005 under an ethical cloud.” …..”In the end, Fannie had to pay a record $400 million civil fine for SEC and other violations, while also agreeing as part of a settlement to make changes in its accounting procedures and ways of managing risk. But it was too little, too late. Raines had reportedly steered Fannie Mae business to subprime giant Countrywide Financial, which was saved from bankruptcy by Bank of America. At the same time, the Clinton administration was pushing Fannie and her brother Freddie Mac to buy more mortgages from low-income households. The Clinton-era corruption, combined with unprecedented catering to affordable-housing lobbyists, resulted in today’s nationalization of both Fannie and Freddie, a move that is expected to cost taxpayers tens of billions of dollars.” I encourage anyone who is interested in the truth to read this editorial in full.

By eleanor roche on 09/17/2008 3:43 pm

Say eleanor…did you know that real estate agents often got a higher commission when they sold a house with an ARM loan? the 30 year loan, that some were eligible for, often was not even offered, because of the huge difference—-sometimes as much as 10%…in the standard loan, commission was too low…. oh I know……that too is something we choose not to own…as it is much more fun to blame the buyer for their lack of judgement, while the professional person walking them thru the purchase, kept silent about the repercussions…..

By Patty E on 09/16/2008 8:27 pm

e-mail alert

Patty E—If people were relying on and trusting real estates agents to explain the types of loans they were eligible to obtain, then they clearly were not informed and had no business signing anything until they knew what they were getting into. It’s up to a buyer to look out for him/herself—you should obtain your own mortgage and with the ease of going online to look for a competitive loan, there is no excuse. I think the buyer should be blamed for lack of judgement—it has nothing to do with “fun”—if they didn’t know what they were getting into they should have found out or not signed. We are all responsible for our own actions. All types of buyers were in this market taking on loans they couldn’t afford—not just lower income buyers, but upper middle income people—people of all income brackets. I know people from both camps, but I have to admit, those in the higher income brackets I have less sympathy for—just because you qualify for a certain amount doesn’t mean you can afford it. I don’t understand why anyone would put themselves at risk just to have a million dollar home when what they could actually afford was better than what most people have. Because of lax qualifying rules, 0% down and all the other “creative financing” arrangements that could be obtained, people were buying houses they couldn’t afford—in all income brackets. With the ease of obtaining borrowed money and the increase in housing prices in some areas, there was also lot of “flipping” going on as well where people were buying/selling properties they weren’t living in to make a quick buck—these people knew the risk and were willing to take it.

By eleanor roche on 09/17/2008 5:56 pm

Oh I am not one who disagrees with the ideal…..my house is paid for, knock on wood…but I did want to sell it last year, and contacted several realtors. In my town, one of the ‘mortgage companies’ actually went under, when he could not pay the bank note, due to the increased monthly payments, that his ‘clients’ could not afford. The number of realtor agents has delcined by 52%, I was told, while sitting in my kitchen, with an agent, shortly after the Countrywide hearings, that I watched on C-span. So I asked questions—and I got answers. She told me that even if one qualified for a 30 year loan, she had been encouraged to sell the ARM loan…and her commission was 9% higher, than the 30 yr contract. She was able to make a good living, despite the market. What is funny about my experience, is that she was telling me that I had ‘just the right personality’ and blah blah, and wouldn;t I like to be a real estate agent? as many had left the business, and ‘you would be good at that’! That is how I know the difference between what is correct, and what really happens. And as I reflect back on the day I bought my first house—-I was like a lot of other people—-I trusted that the realtor, and the bank, who were professionals, would be honest with me….fortunately, they were way back then….today, with a few years and a few houses under my belt—-I know enough to be dangerous!

By Patty E on 09/17/2008 8:20 pm

e-mail alert

Frank, please watch Charlie Rose since you are 3 hrs. behind me. The people who know about this stuff to a man, everyone I have read and heard today talk about the lack of transparency and the juggling of money and I really think we are going to see more cooked books where Lehman is concerned. It has to do with the lack of oversight and regulation, or the lack of it, no matter what the person below says. And, we are the ones that are going to have to pay in the end for the denial and greed that has been practiced. Lawrence Summers talked about the very thing I have said for years; you have to stimulate the economy from the bottom up, not the top down. And, that is priority.

By Diana T on 09/15/2008 11:46 pm

e-mail alert

Watch1ng

By Frank Peterson on 09/16/2008 1:03 am

What’s it’s about in essence according to those guys on Charlie’s show is that they did a helluva lot without using their own money just investors solely and the risks theytook were unbelievable. Why didn’t Chase of the Bank of American buy out Lehman> When they could have had it for next to nothing—the word is their books were a mess—cooked beyond belief and that their top spinmeisters and directors lied thru their teeth about the cos. well-being—so no one bought them. AIG is is a mess too and if those economists are to be believed Morgan Stanley and Goldman Sachs could go too. We are not through this credit mess yet and whose gonna pay? us. now what was really interesting iss who was advising the Sec’y of the Treasury? The same guys that got us into this mess in the first place; Top directors from Morgan Stanley, Merrill etc. What a lovely club those a*****s have. And Regulation was brought up too—i need to re-listen to that tonight at 5. Should be repeated or listen to it on the ‘puter.

By Frank Peterson on 09/16/2008 2:14 am

Lehman’s books were so cooked they were beyond well done. Plainly this is lying,stealing, and covering and should be punishable. But then, we haven’t had a Government for 8 years. These financial cheats were allowed to operate with public money and no constraints were federally protected. We will see more of this crooked behavior and financial implosion and then have to listen to GOP’ers twisting the blame on government regulation. And then again they are blaming Bill Clinton. Where was Bush?

By mitzi morris on 09/16/2008 6:53 pm

e-mail alert

This is what you get when there is no regulation is place—disaster waiting to happen. Who knows where Bus ever is? Clearing brush in Texas? hiding for 7 mins while the World Trade Towers fell? Lehman was really bad— I’m surprised Barclay’s bought some of their assets. But maybe the assets were ok not that we’ll ever know and now AIG is going the same way and Goldman Sachs could follow—this is not over by a long shot—MOrgay Stanley needs to do something fast. and So does Goldman.

By Frank Peterson on 09/16/2008 7:08 pm

Frank, I thought I was the only one thinking this today when I saw McCain on the news say that the economy was fundamentally sound, that he made me think of Herbert Hoover. Of course, there are many safeguards protecting us now that were not in place in 1929. But, I heard the same thing mentioned tonight by one of the economists that I listened to. And, then I ran across this: http://arizona.typepad.com/blog/2008/09/john-mccain-ech.html

By Diana T on 09/16/2008 12:54 am

e-mail alert

I thought this was interesting. Copied from Politico Top recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008 Name Party/State Total $$s 1. Christopher Dodd D-CT $133,900 2. John Kerry D-MA $111,000 3. Barack Obama D-IL $105,849 4. Hillary Clinton D-NY $ 75,550 5. Paul Kanjorsky D-PA $ 65,500 6. Robert Bennett R-UT $ 61,499 7. Tim Johnson D-VA $ 61,000 8. Kent Conrad D-ND $ 58,991 9. Tom Davis R-VA $ 55,499 10. Christopher Bond R-MO $ 55,400 11. Spencer Bachus R-AL $ 55,300 12. Richard Shelby R-AL $ 55,000 13. Rahm Emmanuel D-IL $ 51,750 14. Jack Reed D-RI $ 50,750 15. Tom Carper D-DE $ 44,389 16. Barney Frank D-MA$ 40,100 17. Carolyn Maloney D-NY$ 38,750 18. Melissa Bean D-IL $ 37,249 19. Roy Blunt R-MO$ 36,500 20. Deborah Pryce R-OH $ 34,750 21. Gary Miller R-CA $ 33,000 22. Nancy Pelosi D-CA $ 32,750 23. Tom Reynolds R-NY $ 32,700 24. Steny Hoyer D-MD $ 30,500 25. Darlene Hooley D-OR $28,750 Totals: Democrats $966,778.00 Republicans $419,648 C’mon you guys, they are all in this together.

By Frannie Em on 09/15/2008 10:41 pm

e-mail alert

frannie, the republican spin is that both parties are equally to blame. and both parties did contribute—the democrats by letting bill clinton sign the rollback of glass-steagall, the republicans by controlling the reins of government and never using the reins of regulation on a runaway horse. the republicans also turned a budget surplus into a huge deficit, with spending on the iraq war and financial bailouts off the books. ok, so what are the candidates going to do about it? obama is going to regulate. as far as i can tell, mccain thinks we should do nothing.

By mary lou s on 09/16/2008 11:04 am

e-mail alert

mary lou Being an independent, I am not real interested in either party’s spin. The numbers speak for themselves. Although the numbers above indicate that democrats were much deeper in the Fannie Mae and Freddie Mac pockets than even the republicans. Actually, when I saw those numbers, I was surprised with the amounts, I thought it would have been the other way around. I agree, so what are the candidates going to do about it? Can Obama bring regulation under his thumb? Does he have the legislative wherewithal to accomplish that? What if he encounters resistance from his own party who have bills in play that have depended on no regulation? I disagree with McCain, I believe the system of regulation has to be overhauled, but I do believe he knows where all the bones are buried and may be able to strong arm to get things changed. My biggest concern is special interests and their influence. Can either of these guys reform special interests? For me, that is the big question.

By Frannie Em on 09/16/2008 5:46 pm

e-mail alert

Hi Sherrie - sorry for the delay - I’ve been very busy today gathering my millions from the various banking establishments. It’s taken me all day to get it stuffed into the mattresses in my 10 thousand bedroom house….at least I think that’s what republicans do (wink). To keep it simple I’ll try to address all of your responses as a reply to this post and again on the last page. Dear DeBúrca obj on 09/15/2008 9:14 am - Um, I didn’t suggest that. Kitty on 09/15/2008 11:46 am - I think the Republican label was meant for me, but I’ll let you have the “Comment Nazi”. BTW, you are well versed in the field of finance. Oh how I long for the day-trader frenzy days…….ah, that’s were I made my millions and officially traded up (joke). Props to you in explaining that the sky is not falling and the pros/cons of privatizing Social Security option. If you have time, will you explain the backlash, if any, regarding AIG. And, I don’t think Rush liked being on time out. Marjorie on 09/15/2008 11:41 am - You are very supportive of the voices of reason…..thanks for watching my six. DT on 09/15/2008 12:06 pm - if that article was meant for me I did read it and it sounds like a good description of consumerism and companies running off with the profits rather than reinvesting into a stable commodity which also is also job producing. That would be an interesting cycle; create, earn, buy, and distribute. - GREED it’s an ugly thing. And to James on 09/15/2008 12:57 pm - What can I say but the spell checker failed me, I’d fire him but he has kids and can use the insurance. Not so sure about the remainder of your post, but I will do a little more research. Thanks for the info. JJ GB on 09/15/2008 1:18 pm - dude, you could have added “spell checker failure” as an option. Sheryl S 09/15/2008 9:55 am - you are my hero - it is all about the greed. By Frannie Em on 09/15/2008 10:41 pm - NICE FIND! An the truth shall set you free - it’s everyone and not just one. And, regarding my original post, it did come to pass. Senator Obama did take the bait, and it is disappointing. I think he is better than that. Insert shameless plug - I watched the Columbia University interviews. Senator McCain confirmed that he does believe in party cooperation. It was disappointing to hear Senator Obama’s response regarding cooperation with Senator McCain. - OMG, I’m sounding like a Republican!

By Hobo Questioning Almost Everything on 09/15/2008 11:11 pm