Financial Ruin, who's next to Fall?

There is a lot of speculation as to the next victim of the subprime mess, first off all Country Wide had huge losses and gets taken out by Bank of America.

U.K's Northern Rock becomes a ward of the state after an adequate offer to buy could not be found. While Virgin did bid it was a low ball offered that was refused, leaving the Government holding the bag.

Bear Stearns received a bailout from JP Morgan who will borrow funds from the Fed discount window and funnel them over to Bear Stearns, while sounding kinda hinky there are laws allowing this. This however is initially a 28 day deal and a more permanent solution to Stearns insolvency must be found.

BREAKING NEWS, after the run on the stock Friday and the belief the bailout was a failure JP Morgan announces their purchase Bear Stearns for $240 Million, 1/15th of it closing value Friday. Two years and a hell of a lot of leverage and an 85 year icon goes poof!

So who could be next on the list?

Well ones to watch this week are Lehman Brothers who is expected Monday to write down $1 billion and has been granted a new $2 Billion unsecured credit line to sustain it's liquidity, and Goldman Sachs who is expected to have write downs Monday to the tune of $3 Billion.

Lehman and Merrill are both under specualtion as the cost of insuring their debt has skyrocket recently

Despite all the talk about the big boys in the banking industry small banks are also going under with 2 already reprted failed this year and 3 last year.

Hume Bank March 7 2008
Douglass National Bank Jan 25 2008
Miami Valley Bank Oct 4 2007
Netbank Sep 28 2007
Metropolitan Savings Bank Feb 2 2007

Expect to see more and more of the small players drop out as the big boys will be too busy saving their own asses or bargain hunting big game to even notice them the small banks failing.

For now I'd say a resonable watch list would be Lehman Brothers, Merrill Lynch, Citi, Goldman Sachs, ignore the bear it got eaten!