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

Most of what you all say about the financial markets is over my head. I have simple questions that require very simple answers. Such as: — If my money is in regular savings and checking accounts in local commercial banks, so as long as those accounts are under $100,000 they are insured by the government and I won’t lose them, but I wonder, if the government is bankrupt, how the hey will it be able to give me my money except by printing bills which won’t be worth a thing if it comes to that?? — If I put money in CDs, again in a local commercial bank, aren’t they tied to stocks and bonds? and would they be guaranteed to $100,000 as well? — If the government had to honor its guarantees (insurance up to $100,000) and could, how long would it take for me to get my money back?? Would I lose everything waiting??

By rocky rocky on 09/15/2008 11:10 am

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Hi Rocky, The government is not bankrupt. It’s the strongest financial center in the world. Your CD is insured. If you have less than $100k in one bank, it’s insured. If you have more, let me know and I give you the links to check insurance. Your CDs aren’t tied to stocks and bonds. Stocks and bonds are never insured. Their value is determined by the capital markets. SIPC insures the fact that securities you own through a brokerage will be available to you. IndyMac savers got their insured money within 2 weeks. That’s about the average. Hope these answers were helpful, Rocky.

By K O on 09/15/2008 11:44 am

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You have been so patient with me, Kitty. Thank you for your answers. I’ll double check for myself, too. I’m poor in money but not so poor in brains, and I ought to make the time to learn. Thank you again, R.

By rocky rocky on 09/15/2008 1:14 pm

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Hi Rocky, My pleasure. Here’s the FDIC link http://www.fdic.gov/edie/

By K O on 09/15/2008 1:28 pm

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Kitty, I disagree that the US is the strongest financial center in the world….actually, I would say that the UAE is, perhaps the strongest, based on the money we have given them for oil, the fact that they are building a new ‘commerce city’ with that money, to expand their impact on the world , and then I remind you that the UAE and China, have both invested in America, the money was described as ‘sovereign funds’, which were used several months ago to provide us with a safety net, when we were dangerously short of money and needed help to ‘pay the bills’, for the war in Iraq, and to ‘cover’ our devalued dollar. Since this past weekend, it has become apparent to me, that a few months ago when the sovereign funds began holding us up, those leaders and others, in charge of making appropriate decisions to reduce spending and monitor money flow in America, forgot to be responsible with the money, and instead of healing the wound, only put a bad-aid on the problem, figured it was solved, and then forgot about it… the fake values of those derivatives, the depreciating value of our homes, and the appreciation in the cost of food and necessities, due to the decreased value of the dollar, speaks much louder than any actions that were or were not taken to prevent us from negatively impacting the rest of the free world….Our ‘financial strength’ turned out to be nothing more than smoke and mirrors. Yes, it is true that savings is insured to $100K……but I really believe we are just printing paper money, expecting the other world powers to under-write what we need, as usual. My problem is that I do not want to live in the United States of China…and some say we are dangerously close to that idea. With inflation, and the inability to curb spending, which only leads to more inflation—-$100K does not buy what it used to buy…..when looked at, from THAT perspective, our savings are really not that well protected.

By Patty E on 09/16/2008 8:08 pm

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Well, Patty, we’ll agree to disagree on that. While the UAE has a lot of money, it’s a resource based economy. Ours has some of the finest educational facilities in the world, a venture capital structure capable of bringing products and services from our intellectual capital to global markets, skilled labor and enormous productivity. I agree we have problems - big problems. I am not trying to minimize or ignore them. I just continue to think this is the most capable financial system in the world based on the parameters on which I measure it. Hopefully, we’ve come to understand the importance of deleveraging the corporations and individuals in our country. It’s productive that you point out our flaws and demand that your government address them. I respect that. By the way, 25% of all our $9.7 trillion debt is held by other countries, as follows: (As of 4/2008, in billions) Japan 592.2 China, Mainland 502 United Kingdom 251.4 Oil Exporters 153.9 Brazil 149.5 Carib Bnkng Cntrs 115.4 Luxembourg 84.8 Hong Kong 63.1 Russia 60.2 Norway 45.3 Germany 44 Taiwan 42.6 Switzerland 42.5 Korea 40.5 Mexico 38 Singapore 33.3 Turkey 31.1 Thailand 27.9 Canada 24 Ireland 18.5 Netherlands 15.5 Sweden 13.1 Egypt 12.7 Belgium 12.5 Poland 12.5 Italy 10.6 India 10.5 All Other 154.2 Grand Total 2601.8

By K O on 09/17/2008 4:25 pm

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not for long…..check into the reason why the UAE and the USA have signed a 123 agreement….ask yourself, and research to learn why the UAE is going nuclear with thorium to energize their country, in an exponential way (why they prefer to sell their oil to us, rather than use it for themselves) —-things are changing re: their relationship with the rest of the world…..their intent is to be an economic world mecca…..they are even loosening up their ‘tolerances’ to become more of an International participant with countries they have not historically been partners with…. Now take a look at China. China just signed an agreement with Iraq, for the exclusive contracts on Iraqi Oil….How is it, that all those oil companies from the USA and other countries, physically got ‘booted out’ of Iraq? when that happened. Now take a look at what is happening in our markets—-a literal meltdown in the midst of a lack of transparency, and who knows where this will lead to, once all the crooks and cranny’s get cleaned out? Our dust balls are full of fleas and ticks, infested bad enough that it is affecting the rest of the world—- IT seems to me that America is tottering at the edge of NOT remaining the country deemed the strongest. We do have some fine educational institutions, I agree. But there are other countries whose educational system k-12 is far superior, France, Pakistan….shall I name some more? I knew a young man once, who told me he wanted to come to America to go to college because it would be easier to get a good grade here, than in his country…..I just think we can do better than we have in so many areas, and MUST, or we will lose not only the respect of the rest of the world, but respect for ourselves…….

By Patty E on 09/17/2008 4:47 pm

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Exactly the questions I am asking myself. We are not supposed to panic but even if you have a tiny savings account, that amount means a lot, so will the cd’s hold their own? Will my bank hold up with this government insurance ? Will this administration have to go to China for a loan to pay us back? Everything is a possibility. What about the people who no longer have a job as of today and worried all week end. Will the CEO’s get out with a neat sum and the small guy go home with nothing?

By Jeannot Kensinger on 09/15/2008 11:52 am

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“Hi Sherrie, Please provide credible evidence that the country is on the brink of a Depression.” By Kitty OKeefe on 09/15/2008 10:35 am Do you think the numbers in those reports you just linked to are credible evidence that we aren’t? Just because some of the measures that were implemented by FDR to prevent another depression are still in place that doesn’t mean they will stand on there own in the face of the results of the deregulation of others. We can’t have another depression of the same nature as that of the ’30s because the American economic base has changed so completely since then. We no longer have an economy based primarily on farming and small business. Our economy is now based on nothing but corporate and financial earnings. If a depression happens it will be of a completely different nature and using the same indicators to predict it probably won’t. Where is the money for all of these bailouts really going to come from? What is the impact of that going to be? Nobody knows. Lots of people can spin lots of numbers a lot of ways based on lots of different scenarios and end up with a myriad of different projected outcomes. They don’t mean anything. I don’t think selling more of the country to China and Dubai is going to stop the crumbling of our economic system. We haven’t hit bottom yet. All of the most credible economist I’ve heard and read the opinions of agree on that. They don’t foresee a depression of exactly the same nature as that of the ’30s because of the FDIC, but that doesn’t that another form of economic depression that will ultimately be just of devastating to our current economy can’t or won’t happen. I do agree with you on one point though. Panicking is the worst thing we can do.

By Sherrie Crews on 09/15/2008 11:15 am

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Hi Sherrie, I’m so happy we agree on something. I’m happy to join you in not panicking.

By K O on 09/15/2008 11:48 am

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“— If my money is in regular savings and checking accounts in local commercial banks, so as long as those accounts are under $100,000 they are insured by the government and I won’t lose them, but I wonder, if the government is bankrupt, how the hey will it be able to give me my money except by printing bills which won’t be worth a thing if it comes to that??” By rocky rocky on 09/15/2008 11:10 am rocky, that’s the most important question of this whole debacle and the one that nobody in the current administration is going to give an honest answer to.

By Sherrie Crews on 09/15/2008 11:21 am

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Trickle down my ASS! This is why we need a President in office that understand the complexities of economics and finance, and doesn’t have the mentality that he must be “in bed” with corporations. Yet again, another example of what our next president will have to clean up from the current administration….and they want 4 more years…give me a break! That’s my rant on this subject for the day. What I really want to say is my prayers go out to all those who are now out of work due to this monstrous debacle and I pray that you and your families will endure through this most difficult of times for you.

By Belinda Joy on 09/15/2008 11:27 am

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Now Belinda, We must protect the institutional investors from the consequences of their decisions and actions. It’s only fair that John Q. Public pick up the tab.

By Rush L on 09/15/2008 12:43 pm

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It seems the McCain camp wants to have it both ways with the economy: http://www.huffingtonpost.com/2008/09/15/mccain-fundamentals-of-th_n_126…

By DeBúrca obj on 09/15/2008 11:57 am

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Please note that Wilbur Ross, the author of this piece, is “a billionaire investor who specializes in turning around underperforming companies” who “sees investment opportunities for “vulture capitalists” in the coming banking carnage.” He has a vested interest in driving down the stock prices in order to purchase them at bargain basement prices. That is the definition of a “vulture capitalist.” Keep in mind the point of view of this author when you read this piece.

By K O on 09/15/2008 12:14 pm