Bank of America and Wachovia could be next

Are BofA, Wachovia readyto weather financial crisis?
Banks say they are prepared; financial stocks sink amid fear of failures

By Rick Rothacker

Investors pummeled bank stocks on Monday as new jitters about the health of the financial system erupted ahead of another round of miserable earnings reports.
The latest slide came despite regulators' efforts over the weekend to calm roiled financial markets as well as rattled bank customers.

At Charlotte's big banks, Wachovia shares plunged nearly 15 percent to $9.84, a level last seen in 1991. Bank of America shares dropped about 7 percent to $20.15, around an eight-year low. Both are scheduled to disclose dismal second-quarter earnings next week, making it four straight ugly reports.

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The recent decline in Bank of America and Wachovia stocks should have all real estate professionals in the Charlotte area nervous. Although I have an account with Wachovia, I am not so worried about them collapsing, but rather with the possibility of more layoffs. Charlotte is a city that greatly depends on the banking industry for its growth. The recent collapse of Indy Mac, as well as the steady decline of bank profits over the past year, is very frightening to Charlotte’s future. If Bank of America and Wachovia seek federal protection in the future, it will still greatly hurt the real estate market in Charlotte, because layoffs and cutbacks would soon follow. Whatever the Fed decides to do will hurt our city either way, and I hope that everyone is prepared for the fallout that could take place. I personally believe that we have not seen the worst of the fallout that has taken place due to the subprime meltdown. I just hope and pray that people are prepared to weather the storm for another two years.

I realize that in my first few posts, I have been really only stating my personal opinion. Please look for my next post where I will explain in greater detail why I feel the economy will not rebound until 2010.


Thanks,

Mike S. - Texo Properties (www.texonc.com)